“I’d put my money on the sun and solar energy,” Thomas Edison told his friend Henry Ford in 1931.
Wall Street likes the advice and has been pouring money into green-energy firms, betting that strong demand will support renewable developers through rising interest rates and economic uncertainty. One such green energy company is ReVolve Renewable Power Corp (TSX-V:REVV) which has been making great strides since going public on the TSX Venture Exchange in March 2022.
The Vancouver-based company is focused on the development of utility-scale wind, solar, and battery storage projects and distributed generation projects in the US and Mexico.
“Edison’s advice was good back then. Probably even better now. The investment case for renewables is well established over the last ten years. What you’re seeing is the acceleration in the investment case,” Revolve co-founder and CEO Steve Dalton told Proactive.
“I've been involved in the renewable energy business for 20 years and the investment case was always there, but it's just grown due to demand and a positive push on the regulatory side.”
Dalton, who has led Revolve since its inception in 2012, was a project financier working for the Irish subsidiary of the Royal Bank of Scotland, where he led the financing of over 35 renewable energy projects.
“Revolve’s origins stem from a team effort. We have several founders who sit on the board. Between us, we had different pieces of the puzzle that got us here,” said Dalton.
Revolve has five founders — Dalton, Omar Bojorquez, who is the president and director, Roger Norwich who is the board chairman and a major shareholder, and Joseph O’Farrell, who is also a director and a major shareholder. These were joined early on by investors JP Maguire and Finn Lyden who also sit on the board, along with former UK diplomat Jonathan Clare.
Diversified portfolio
Having started in 2012 as a project developer, Revolve has since built a strong diversified portfolio of projects across different renewable energy technologies across the US and Mexico consisting of:
- 10 utility-scale greenfield projects totaling 2,350 megawatts (MW) that will be taken to the ready-to-build (RTB) stage and then sold to large utilities;
- A distributed generation business with 2.85 MW of operating projects, 6.2 MW in construction, and a 60+ MW pipeline. In line with the owner-operator model, these projects are being financed, constructed, and operated by Revolve and will provide long-term recurring revenue.
"We’ve continued to develop and expand our utility-scale project portfolio, which currently stands at 2.35 gigawatts (GW) across 10 wind, solar, and battery storage projects in the US and Mexico,” said Dalton.
Key sale of two US projects
In 2021, Revolve expanded into the US market and established an exciting early-stage development portfolio of 8 solar and battery storage projects across Arizona, New Mexico, Utah, and Colorado with a capacity of 2 GW.
In January this year, Revolve caught the market’s attention. It achieved a key milestone by selling its Bouse and Parker solar and storage projects to ENGIE SA. The deal has positioned Revolve on the growth fast track by securing additional resources to advance the company’s remaining development portfolio.
The total value of the sale includes an upfront payment of US$2 million which is inclusive of reimbursement of development costs.
“We are limited as to what we are allowed to say about the total value of the sale because of confidentiality considerations with ENGIE. This is common practice with the larger industry players who are actively engaged in acquiring other projects in the market and treat transaction details as proprietary information,” explained Dalton.
“The total value is within range of guidance that the company has provided in its investor presentation for the sale of utility scale development assets,” he added.
Revolve’s now sold 1,000 MW Bouse solar and battery storage project in Arizona is in the interconnection process, while the Parker project, is a 250 MW utility-scale solar and storage project in Arizona, which is expected to be ready to build in 2024. It will have the capacity to light up 300,000 homes.
“This is our second major sale of a utility-scale project,” noted Dalton. “The company has transacted on 300 MW of projects previously that sold for $17 million and provided shareholders a 5X return on investment.”
Development works are pushing ahead on Revolve’s 80 MWh Vernal BESS battery storage project in Utah. It also has a 50 MW Primus Wind project in Colorado, which will power an equivalent of 60,000 homes.
Strong track record in Mexico
Revolve established operations in Mexico in 2012 and has delivered over 300 MW of projects through the development cycle.
“Mexico is where we started out and we’ve had great success there as a private company over the years, generating a lot of value for our shareholders,” said Dalton.
Revolve was listed on the TSX Venture Exchange in March 2022.
The company’s Mexican portfolio includes the following:
● The Presa Nueva 400 MW wind project in Nuevo Leon
● The El 24 103.4 MW wind project in Tamaulipas which is in an advanced stage of development
● The Florida 400 MW wind project in Nuevo Leon which has started the permitting process
● The El Mentillo 330 MW wind project in Nuevo Leon has also begun the permitting process.
In May 2022, Revolve kicked off its transition to recurring revenue and cashflow generation with a new division — Revolve Renewable Business Solutions — to focus on the fast-growing distributed generation (DG) market in Mexico and the US. The new division targets projects that are up to 5 MW that are installed at a customer’s premises (rooftop solar, CHP, battery storage).
Revolve installs these projects at its own cost, then enters into a long-term Power Purchase Agreement (PPA) of up to 10 years for the sale of electricity from the projects with the customer.
To speed up its entry into the DG market, Revolve acquired Centrica Business Solutions Mexico in August 2022. Centrica’s Eric Hickert has also joined Revolve to lead the expansion of the new division.
“A recurring theme from investors since we went public is that they are also interested in long-term recurring cash flow,” said Dalton.
“That's where the distributed generation business is a good fit for us — the projects are smaller, quicker to generate revenue and we can use our own capital to build out those projects. We've demonstrated that we can also access debt financing through partners like RE Royalties,” said Dalton.
Centrica provided Revolve with a 2.85 MW portfolio of operating rooftop solar and combined heat and power (CHP) projects, along with another 3MW CHP project that’s under construction. It also helped Revolve expand its pipeline of new DG opportunities, which led to the signing of its first battery storage project in September 2022.
The 3.2 MWh BESS project in Cancun has lifted Revolve’s distributed generation portfolio to 10 MW of operating and under-construction assets. Revolve's growing project development pipeline now stands at over 60 MW.
The investment case
Revolve is primed to deliver large utility-scale development projects combined with its fast-growing distributed generation business.
“Through the sale of our Arizona projects we’ve successfully demonstrated our development approach as well as our strategy in working with experienced utility partners to deliver significant returns for our shareholders,” said Dalton.
“We’ve also delivered historical revenue of US$17 million from around 300 MW of development assets based off US$3 million equity capital raised pre-listing on the TSXV in March 2022,” he added.
Against this backdrop, Revolve’s shares are clearly undervalued as it has over 2.35 GW under development and a market cap of $25.53 million.
“We provide a diversified investment strategy giving investors returns from utility-scale project development balanced by recurring cashflow from distributed generation projects,” said Dalton.
The US Energy Information Administration estimates that renewables — wind, solar and hydropower — will be the most-used energy sources in the world by 2050.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive
