By Brian Lantier, CFA
READ THE FULL SUUN RESEARCH REPORT
SolarBank (NASDAQ:SUUN) is a vertically integrated solar and battery energy storage system (BESS) project developer, engineering, procurement, construction service provider (EPC), and independent power producer (IPP) principally focused on community solar and corporate projects in New York and Ontario. As the company moves into 2025 it will expand its offerings to include a greater focus on operating its own solar and BESS assets as an IPP and the design and building of battery energy storage systems (BESS) to meet the growing demand for electricity driven by broad electrification efforts (including greater EV penetration rates) and data center projects.
The company has a potential development pipeline of over 1 GW of solar capacity at various stages of development and has delivered projects to date with a total capacity of more than 200 MW. The company has roughly 25 MWp and 60 MWh of solar and BESS projects under construction with another 149 MWp of solar currently in late-stage development. We believe that the company intends to roughly triple its owned and operating solar and BESS capacity in the next two years which could add up to 60 MWp and 60 MWh of capacity to the company’s independent power producer (IPP) business.
Despite the apparent shift in energy policy at the Federal level in the US with the new administration taking aim at every renewable energy source from wind to solar, we anticipate that the demand for electricity generating capacity that can be planned and built quickly will be so strong that corporate, industrial and community solar projects will remain a very popular option for the foreseeable future.
While the overall solar market is forecast to grow modestly through the balance of the decade in the US and Canada, there are pockets of exceptional growth in this market. Solar installations accounted for 64% of all new electricity generating capacity in the United States in the 3rd quarter of 2024 and the installed base of solar systems in the US is now capable of powering up to 37 million homes. Utility-scale installations, community solar, and commercial solar deployments are poised for significant growth while residential solar continues to contract. Our full report offers a deep dive into the solar and BESS markets in North America and the drivers of growth that we see through the balance of the decade.
The Battery Energy Storage System (BESS) market is finally emerging in North America and is projected to be the fastest-growing market in the energy sector over the balance of the decade. Demand for power generation that can be rapidly deployed and battery storage associated with that power is anticipated to be strong through 2030.
We are forecasting FY2025 revenues of $52 mil USD ($73 mil CAD) and FY2026 revenues of $70 mil USD ($100 mil CAD) due largely to the Qcells and Honeywell transactions which we will discuss below, as well as increased IPP revenues and BESS projects completed over the next 24 months. Our revenue forecast are based on our analysis and the company has not provided guidance.
SolarBank’s shares have been very volatile over the past three months as the prospect of a more challenging operating environment for renewable energy companies emerged after the US elections in November. The company’s compelling story and strong regional presence have attracted new investor interest, but the recent financing at a below market price impacted the shares. We believe SolarBank’s shares could be worth $5.00/share based on our discounted cash flow analysis, our analysis of other integrated solar companies, and recent transactions in the market, however, we note that there remains significant headline risk associated with trade between the US and Canada and the prospect of a further shift in US energy policy away from renewables.
SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR.
DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks SCR provides and Zacks SCR receives quarterly payments totaling a maximum fee of up to $40,000 annually for these services provided to or regarding the issuer. Full Disclaimer HERE.