The loan, on a non-recourse basis, will be used for the construction, operation and maintenance of two 4.99 MW Battery Energy Storage System (“BESS”) projects to be located in Ontario, with project names SFF 06 and 903 respectively. The Projects are owned by 1000234763 Ontario Inc.(ProjectCo) and ProjectCo is the borrower under the terms of the Loan. The Projects represent SolarBank’s initial foray into battery energy storage, a market forecast to grow at a 16.3% compound annual growth rate from 2022 to reach US$31.2 billion by 2029. SolarBank’s interest in ProjectCo was acquired as part of the $45 million valued acquisition of Solar Flow-Through Funds Ltd. that closed in July 2024.

In July 2023, the Projects were awarded contracts by the Independent Electricity System Operator (“IESO”) under the Expedited Long-Term RFP (E-LT1 RFP). These contracts, which have a term of 22 years, include 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 E-LT1 RFP. This underscores the competitive positioning of these projects in the Ontario energy storage market. The Company expects that once operational each project will have 4.74 MW of daily contract capacity available (at a capacity payment of $1,221/MW per business day) for 251 business days in a year.

Furthermore, the Projects are eligible for the Clean Technology Investment Tax Credit introduced in 2024. This refundable tax credit provides up to 30% reimbursement of eligible capital costs for new clean technology, significantly enhancing the economic returns of the projects. This aligns with SolarBank’s commitment to leveraging government incentives to accelerate the transition to renewable energy while optimizing financial performance.

Executed by RBC’s Corporate Client Group Project and Infrastructure Finance team, the Loan is part of RBC’s efforts to support client decarbonization efforts. As announced by RBC, the bank plans to triple lending for renewable energy across RBC Capital Markets and Commercial Banking and to grow RBC’s overall low-carbon energy lending to $35 billion by 2030.

SolarBank expects the ProjectCo will be able to receive a return of $1.7 million in excess equity that has been contributed to develop Project SFF06 to date.

The Loan will initially be advanced as a construction loan facility (the “Construction Facility”). The Construction Facility shall be converted into a term loan (the “Term Facility”) following the commercial operation date (“COD”) of each Project. The Loan also includes an ITC bridge facility (the “ITC Facility”).

The Loan is available for draw down by ProjectCo based on its construction schedule for each of the Projects and the satisfaction of relevant conditions precedent. ProjectCo is expecting to commence construction on the SFF 06 project during the current quarter and on the 903 project during the second calendar quarter of 2025. The Loan is secured by a first ranking security interest over all assets of the ProjectCo.