Altius & Great Bay agree $45m solar-storage royalty financing

Altius Renewable Royalties Corporation’s (ARR) jointly controlled subsidiary, Great Bay Renewables, has agreed a $45 million deal with US renewable energy developer, Hexagon Energy to gain future royalties related to Hexagon’s portfolio of solar, solar plus battery storage and standalone battery storage development projects. 

Great Bay is jointly controlled by ARR and certain Apollo-managed funds.

Hexagon, based in Charlottesville, Virginia, is committing its portfolio of 43 development projects totalling 5.3 GWac located across 12 states and four regional transmission organisations as well as any additional projects added to its portfolio in the future to this new royalty investment structure with Great Bay. Great Bay will receive a royalty on all projects developed and vended by Hexagon until a minimum target return threshold is achieved.

The $45 million royalty investment into Hexagon will be invested in tranches over approximately the next three years as Hexagon achieves certain project advancement milestones, with an initial investment upon closing of $15 million.

As individual pipeline projects are developed, Great Bay will receive a 2.5% gross revenue royalty on each solar and solar plus storage project and a 1.0% gross revenue royalty on each standalone storage project. This will continue until the target minimum total return threshold is achieved. Once created, individual royalties will continue for the full life of the solar and solar plus storage projects, and for seven years on standalone storage projects. Great Bay anticipates that the royalties on the standalone storage projects will contribute less than 5% of the total value received by Great Bay on its investment. In addition to royalties, Great Bay has the option to receive a portion of the cash proceeds from project sales. Any cash Great Bay elects to receive under this option would count toward the target return.

As part of the transaction, Great Bay has the option to invest an additional US$10 million into Hexagon as royalty financing in the future.

Commenting on the new partnership with Hexagon, Frank Getman, CEO of Great Bay, said “We are excited to add another high-quality developer to our developer royalty financing portfolio. Our financing program has helped create significant entity value for our other development partners, and we are confident that our flexible, partner-like capital, coupled with Hexagon’s attractive portfolio and experienced team, will again result in a winning formula.”

Matt Hantzmon, Founder and CEO of Hexagon Energy. “The passage of the 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. Our partnership with Great Bay will also allow us to expand our geographic reach, currently focused on PJM, MISO, ISO-NE, SERC, and ERCOT to add SPP, WECC, and CAISO projects to our growing project pipeline. The team at Great Bay has shown a keen understanding of development and ways to accelerate that. We look forward to working with the Great Bay team to scale Hexagon.”

Great Bay was advised on this transaction by an advisory team from CCA Capital LLC led by Martin Pasqualini and a legal team at Pierce Atwood LLP led by Kris Eimicke. Hexagon Energy was represented by a legal team at JWM Law, PLLC led by Cliff Moorman.

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