Canadian investor Altius Renewable Royalties has invested US$45 million into US renewable developer Hexagon Energy, through its subsidiary Great Bay Renewables.
The deal will see Great Bay receive royalties from all of Hexagon’s development projects, including those it plans to build in the future. Great Bay will receive a 2.5% gross revenue royalty on each solar and solar-plus-storage developed by Hexagon, plus a 1% gross revenue royalty on each standalone storage project.
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The deal will last “until a minimum target return threshold is achieved,” according to Altius, although none of the companies involved in the deal specified the monetary value of this threshold.
In return, Hexagon will receive the funds in tranches over the next three years, beginning with an initial investment of US$15 million. The company currently owns four operating projects in the US, with a combined capacity of 11MW, but has considerable plans to expand this capacity further, with a potential capacity of 5.3GW across its proposed sites.
The US firm is expected to use the funds to develop some of the myriad facilities in its portfolio of development projects in the US, including the 1.2GW Steward Creek Solar project in the state of Illinois and the 150MW Half Step Solar project in Mississippi.
“The passage of the Inflation Reduction Act (IRA) and support from the Great Bay development facility has created the predictability and incentives we need to aggressively invest and grow our team and development pipeline,” said Matt Hantzmon, founder and CEO of Hexagon. “The team at Great Bay has shown a keen understanding of development and ways to accelerate that.”
Under the terms of the deal, Great Bay also has an option to invest an additional US$10 million as royalty financing in the future, suggesting that the company is eager to expand its investments into Altius’ portfolio in the future.
The news follows new guidance from the US Treasury, concerning which projects can apply for tax credits under the IRA, as interest in investing in US solar power grows.