SolarBank's BESS Project: A Milestone in Ontario's Energy Storage Market

SolarBank Corporation (NASDAQ: SUUN) (Cboe CA: SUNN) (FSE: GY2) has announced the commencement of construction for its first Battery Energy Storage System (BESS) project in Ontario, marking a significant milestone in the province's energy storage market. The project, known as SFF-06, is expected to start construction during the week of February 10, 2025, and is being financed through a combined loan for two projects (SFF-06 and 903) in a principal amount of $25.8 million from Royal Bank of Canada (RBC).



The SFF-06 project is owned by 1000234763 Ontario Inc. (ProjectCo), with SolarBank holding an indirect 50% interest. The remaining 50% is held by a partnership formed by First Nations communities in Ontario. The project is expected to have a daily contract capacity of 4.74 MW, with a fixed contract capacity payment of $1,221/MW per business day, significantly above the weighted average price of $876/MW for all storage category projects under the Expedited Long-Term RFP (E-LT1 RFP). This underscores the competitive positioning of the project in the Ontario energy storage market.

The SFF-06 project is also eligible for the Clean Technology Investment Tax Credit introduced in 2024, which provides up to 30% reimbursement of eligible capital costs for new clean technology. This refundable tax credit significantly enhances the economic returns of the project, aligning with SolarBank's commitment to leveraging government incentives to accelerate the transition to renewable energy while optimizing financial performance.

The battery energy storage market is forecast to grow at a 16.3% compound annual growth rate (CAGR) from 2022 to reach US$31.2 billion by 2029, driven by factors such as growing demand for renewable energy, government incentives, and market growth (Fortune Business Insights, 2022). SolarBank's entry into the BESS market, with the SFF-06 project, positions the company to capitalize on these growth opportunities and further diversify its project portfolio.



The 22-year contract awarded by the Independent Electricity System Operator (IESO) under the E-LT1 RFP contributes to the financial viability and risk profile of the SFF-06 project by providing a long-term, fixed revenue stream, reducing market risk, and aligning with SolarBank's strategic objectives. The project's competitive positioning, government incentives, and alignment with market growth trends make it an attractive investment opportunity in the Ontario energy storage market.

In conclusion, SolarBank's commencement of construction for the SFF-06 BESS project marks a significant milestone in the company's growth and the Ontario energy storage market. The project's competitive positioning, government incentives, and alignment with market growth trends make it an attractive investment opportunity, further enhancing SolarBank's commitment to renewable energy and optimizing financial performance.