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SolarBank to acquire Solar Flow-Through Funds in $45M deal

Adds 28.8 MW of solar projects, 14.97 MW of battery systems to SolarBank's portfolio

The 35 Sinclair Ave. solar rooftop project completed by Solar Flow-Through Funds. (Courtesy Solar Flow-Through Funds Ltd.)

SolarBank Corporation (SUNN-NE) has announced it will acquire Vancouver-headquartered solar developer Solar Flow-Through Funds Ltd. (SFF) in a transaction which values SFF at $45 million.

The all-stock deal will see Toronto-based SolarBank acquire all the issued and outstanding common shares of SFF for a consideration up to $41.8 million, excluding shares already held by SolarBank.

SFF’s portfolio includes 70 operating solar power projects in Ontario which total 28.8 megawatts, three battery energy storage projects with a capacity of approximately 15 megawatts, and electric vehicle charging stations.

"This acquisition advances our strategy of creating stakeholder value through growing our portfolio of high-quality cash-generating independent power producer assets,” Richard Lu, president and CEO of SolarBank, said in a release.

Matthew Wayrynen, CEO of SFF, said his company has been working with SolarBank for over a decade. Lu said SolarBank has been involved in the construction of SFF projects that have long-term government power purchase agreements extending into the 2030s.

The boards of directors of SolarBank and SFF have unanimously approved the acquisition, according to the release.

Wayrynen will join SolarBank’s board of directors once the acquisition closes.

About SFF and SolarBank

SFF operates as a series of limited partnerships that own, develop and operate solar projects in Ontario. According to the company’s website, it operates under the flow-through concept for mineral exploration, which provides “income tax deduction benefits similar to those of mineral exploration.”

The limited partners’ investments provide approximately 20 per cent of the capital costs of the projects that SFF funds. “These expenses are expected to qualify as Canadian Renewable Conservation Expenses. The common shares of the subsidiary companies purchased by the partnership are expected to constitute 'flow-through shares' for the purposes of the Tax Act,” according to SFF.

The remainder is funded through debt from banks, institutions and project developers.

Those funds are invested in solar projects that meet the requirements of the Independent Energy System Operator’s (IESO) feed-in-tariff program – a policy to promote renewable energy development by offering long-term contracts at an above-market price.

According to an investor deck published in March 2023, SFF’s nine limited partnerships have received $67.8 million in investment with an expected return of $76.5 million. A merger with a publicly traded Canadian renewable energy entity was named as a listing option.

As of Dec. 31, 2023, the annual revenue of its projects was approximately $9 million, according to SFF’s Q4 2023 investor update.

The investor deck outlined plans to explore opportunities to:

  • acquire a 100-megawatt operating portfolio and a 100-megawatt U.S. solar development portfolio;
  • develop five battery energy storage systems totaling 100 megawatt-hours; and
  • have 24 electric vehicle charging stations across 10 major retailer locations in Canada totaling 2.3 megawatts of capacity.

SolarBank says it has developed over 60 megawatts of projects in Canada and the U.S. Like SFF, it participates in the IESO’s feed-in-tariff program and has won almost 200 megawatt-peak of contracts under the policy, SolarBank says on its website.

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