Disseminated on behalf of Solar Bank Corp (SUUN.NASDAQ)
Sixty years ago, Rolls-Royce bought out an airplane engine manufacturer called Bristol Siddeley.
They soon found out they got much more than they bargained for.
Instead of just making money off of selling airplanes, Bristol Siddeley wanted to make money for every hour those planes were in flight.
So, they’d been experimenting with a brand-new revenue model they called “Power by the Hour.”
With the new model, they offered service contracts to customers, charging them per hour of flight time.
Customers wanted the peace of mind offered by the plan, and Bristol got to build stronger relationships with customers—a win-win. Revenue soared.
But most importantly, Bristol gained long-term, recurring revenue. In fact…
- The Power by the Hour program now constitutes more than half of Rolls-Royce’s revenue.
The Katusa Research Special Situations team has identified a company bringing the Power by the Hour model to a new sector: solar.
And like Rolls-Royce, it’s set to give them profit margins and revenue that make them a success in the solar industry.
This company has been working on their Power by the Hour roadmap for the past decade—and all the pieces are falling into place right now.
They’re on the verge of taking the last step in their journey to real profitability.
As you’ll read below, this is the inflection point in their “overnight” solar success story.
And investors paying close attention have an opportunity to consider.
Already this year, this stock is up 114%.
In October 2023, SolarBank began implementing the fourth and final phase of its roadmap: becoming an Independent Power Producer (IPP).
Reaching the elusive IPP phase unlocks maximum value from a solar company by enabling it to own facilities that generate and sell electric power.
Without it, solar companies are reliant on one-off revenue—and growth is limited.
With it, SolarBank receives recurring revenue that can be used for long term strong growth.
SolarBank already builds out all its own solar projects, then sells them. That gives it an advantage as it expands into the IPP space.
They know which projects are the most likely to see strong profitability in the marketplace.
- So SolarBank can build the best projects… then keep them and make money off of them for decades.
That’s exactly what they did last year with Solar Flow-Through Funds. They had built many of the company’s projects and knew just how much revenue the contracts were generating.
SolarBank was actively involved in the construction of many of Solar Flow-Through’s projects and knows the assets well. They all have long term government power purchase agreements at favorable rates that continue into the next decade. – SolarBank CEO Richard Lu
So they bought the whole company.
Every time SolarBank completes another solar power plant, they have the option to just keep owning it and generating from it as an IPP.
The company’s IPP portfolio has already grown to more than 30MW.
The over $100M in assets are expected to generate $15M in long term revenue.
And SolarBank is just getting started.
Making It Rain From the Sun
Already—in just Q1 2025—SolarBank has gone from almost nothing in ‘Power by the Hour’ revenue to $4M in revenue from solar and storage facilities it owns.
The graph below depicts the entire SolarBank business plan—and the payoff in the pipeline.
- From 2013-2017, they learned development.
- From 2018-2023, they learned engineering, procurement, and construction.
- Now, they’re moving strongly into IPP.
Revenue doubled, from $10M to $19M, in 2023.
Then it more than doubled, from $19M to $58M, in 2024.
That’s what a Bristol-Siddeley plane taking off looks like.
And management has an over 1 GW pipeline to continue to support growth for the next 3-4 years.
It’s a virtuous cycle, with the model providing both immediate cash flow from projects that are sold and long-term recurring revenue from projects that are held as IPP assets.
As SolarBank secures financing, it can bring new SolarBank IPP projects online, with a handful expected throughout 2025.
SolarBank’s foray into the IPP market, alongside its vertically integrated approach, has set it up for huge growth in the next few years.
And they’re intent on growing via both organic growth and strategic M&A—as seen in their Solar Flow-Through Funds acquisition.
As with Rolls-Royce, there is real value in the two-tier revenue model:
- Fee-based income from development, construction, operations and maintenance, and
- Asset-based income from owned assets.
While other solar companies hunt and beg for work, SolarBank has built out more than 100MW in projects so far.
- And they have a large 1GW+ pipeline of contracted projects they plan to execute in the next 3-5 years.
Look for SolarBank to become a player in the renewable energy sector based on stable, predictable long-term IPP contracts.
Anyone paying attention to SolarBank just might find that they get much, much more than they bargained for.
Of course, every project comes with challenges…
SolarBank still has to navigate permits and interconnection approvals, secure financing, and manage potential battery and solar panel degradation over time. Shifting government policies on incentives could also pose risks.
SolarBank has a 10+ year track record managing these risks and it is well positioned for the future.
Regards,
Marin Katusa
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HIGHLY BIASED: In our role, we aim to highlight specific companies for your further investigation; however, these are not stock recommendations, nor do they constitute an offer or sale of the referenced securities. Katusa Research partner company, New Era Publishing Inc. has received cash compensation in the amount of nine hundred thousand dollars from SolarBank Corp. for a 6 month marketing agreement starting January 1, 2025, and is thus extremely biased. It is crucial that you conduct your own research prior to investing. This includes reading the companies’ SEDAR and SEC filings, press releases, and risk disclosures. The information contained herein regarding SolarBank Corp. has been derived from its SEDAR+ and SEC filings, including scientific and technical information. Information regarding the projects underlying SolarBank Corp.’s interests has been derived from the publicly available disclosure of the underlying operators and owners, including where referenced herein.
Katusa Research, and its directors, employees, and members of their households own shares of SolarBank Corp (SUUN) and stand to benefit from any increase in the stock price. However, Katusa Research is extremely biased since this is a sponsored editorial.
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FORWARD-LOOKING STATEMENTS: Certain information presented may contain or be considered forward-looking statements. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in these statements. There can be no assurance that any such statements will prove to be accurate, and readers should not place undue reliance on such information. These statements are subject to known and unknown risks including those set forth in SolarBank Corp.’s most recent annual information form and other public filings available at www.sedarplus.ca and www.sec.gov. Neither Katusa Research nor SolarBank Corp. undertake any obligations to update the information presented or to ensure that such information remains current and accurate, except as required under applicable law.
