Solar Alliance, a Toronto and Knoxville, Tenn.-based renewable energy developer, is returning to its Canadian roots to explore potential projects after a critical year for its business that saw important projects completed in the U.S.
The company (SOLR.V) was founded as a Canadian wind energy developer in 2007 with completed projects in B.C., Alberta and Ireland. It transitioned entirely into the solar energy business after acquiring a Tennessee-based company in 2016, which became its operating entity in the commercial space.
Though it has an office in Toronto and is traded on the TSX Venture Exchange because most of its investors are based in Canada, it does not currently operate or build solar installations in the country.
Instead, it focuses on the Southeast U.S. via its office in Knoxville comprised of a team of approximately 25 employees. They design, engineer and install solar systems for clients in the commercial, utility, industrial and residential sectors.
It chose to acquire the American company because it felt the Southeast U.S. was “very under-served in terms of solar, so a great market opportunity,” thanks to a large population and the availability of investment tax credits, Solar Alliance CEO Myke Clark said.
Having reached a sufficient scale in U.S. after a “transformational” 2022, Solar Alliance has its eyes set on further growth and the Canadian market.
Solar Alliance’s 2022
In 2022, Solar Alliance signed or completed a bevy of solar energy installations across the U.S. as it moved from smaller projects into higher revenue, commercial-scale light industrial and small utility projects.
“It took a bit of time to make that transition, but it was very deliberate and we really wanted to set ourselves up for a future where we are pursuing these larger commercial and smaller utility projects,” Clark said.
He described Solar Alliance as a “relatively small” microcap company that is growing quickly, pointing to its largest quarterly solar revenue during Q3 2022. It reported a 94 per cent increase in year-to-date revenue for the nine months ended Sept. 30, 2022, earning almost $4.4 million compared to about $2.3 million in the same period in 2021.
Solar Alliance signed a contract with the Knoxville Utilities Board in February 2022 for the design and installation of a one-megawatt solar project that is currently being commissioned.
In July 2022, Solar Alliance completed a 500-kilowatt project for Louisville Gas & Electric and Kentucky Utilities in Kentucky.
By the end of 2022, the company completed construction, energized and took project ownership of its first two solar sites in New York State. They are VC1, a 298-kilowatt project in the Village of Cazenovia; and US1, a 389-kilowatt project in the Village of Union Springs.
The two New York projects will sell power to local communities in Upstate New York under a 30-year power purchase agreement.
The passing of the Inflation Reduction Act (IRA) in the U.S. added more momentum: Clark described it as a positive for the solar and renewables industry because it cemented more certainty.
Returning to its Canadian roots
Solar Alliance hopes to maintain that drive in Canada. Clark said the Canadian solar sector became more attractive due to the 2022 Fall Economic Statement that proposes a 30 per cent investment tax credit to compete with the U.S. IRA.
But he also noted that even without the economic statement, the Canadian market is at a stage where Solar Alliance would be considering its options. There is a “booming” solar market in Alberta and Ontario, Clark said.
Solar Alliance is focused on Alberta and Ontario where it can “grow responsibly” and concentrate on its specialty in commercial solar.
Alberta's businesses “generally understand energy,” Clark said, as it fosters an environment that is welcoming for solar energy. Ontario’s large population and manufacturing base means it needs a lot of electricity, opening an opportunity to extol the virtues of lowering electricity bills with solar.
Solar Alliance's plans for 2023
As part of its step up to larger developments, Solar Alliance announced a $1.8-million project for the design, engineering and construction of an 872-kilowatt solar project for a manufacturing company in Tennessee. It expects to begin construction in Q2 and to complete it by October.
Solar Alliance has a backlog of contracts worth $3.8 million, according to Clark. There are also plans for corporate growth opportunities through partnerships, joint ventures, and possibly strategic acquisitions.
Despite worries over economic downturn or a recession, Clark has a positive outlook for his company.
In the market where Solar Alliance operates, Clark is not seeing a downturn in demand for solar because it works to reduce costs for its customers.
“If there is a significant and/or prolonged recession, sure it will impact everyone, but we’re not really seeing that right now in the U.S. — touch wood.”