TSX:ARR
TSX:ARR
Altius Renewable Royalties (“ARR”) was formed to satisfy a need for flexible capital in renewable energy. ARR utilizes a financing structure called a royalty, common in other industries but innovative in the renewable energy sector. With this novel approach to financing renewable energy projects, ARR was able to quickly scale its investments while providing much needed capital to those building wind and solar energy projects. Traditional means of financing these projects, including debt, tax equity and common equity, were not keeping up with the unique requirements of a rapidly expanding industry. Our mission was to align ourselves with leaders in the development and construction of renewable energy through this unique financing structure. Through ARR’s initial investments, the Company has royalty interests in the project portfolios of two leading U.S. wind and solar development companies.
In finance, royalty agreements typically outline payments that are paid as a percentage of revenues for the life of a project
ARR funds the development of renewable energy projects with an upfront cash payment that allows our partners to engage in development activity for new or existing projects. In exchange, ARR receives a royalty by way of a percentage of revenue for the life of those projects. The royalty percentage is fixed for as long as the project continues to generate power which means that if the project is expanded or the life of the project is extended through repowering (e.g., replacing less efficient wind turbines with higher efficiency versions), ARR receives the additional revenue without having to pay any of the additional costs associated with expansion or repowering.
After founding ARR, Altius minerals corporation funded ARR to complete US$66 million in investments in renewable energy developers in the United States, and in October 2020, ARR announced a Joint Venture with certain funds managed by affiliates of Apollo Global Management Inc. (“Apollo Funds”). Apollo Funds have stated their intent to contribute approximately US$200 million to this business, with a US$80 million investment required to earn a 50% interest in the Joint Venture. Following the initial US$80 million expected to be solely funded by Apollo Funds, Altius and Apollo Funds would then continue to fund new approved opportunities on a 50/50 basis.
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