Renewable power will play a bigger and bigger role in the world’s future energy needs, especially if the impact of global warming is expected to be contained.
According to a recent report from S&P Global Market Intelligence, as much as 44 gigawatts of utility-scale solar is expected to come online in the US next year, nearly double 2021′s estimated 23 gigawatts of new capacity.
In the US, the Biden administration has called for a carbon-free power sector by 2035, which is being backed, at least partially, by the recently-passed infrastructure bill that includes billions of dollars for clean energy projects. As well, the larger $1.75 trillion 'Build Back Better' legislation consists of $555 billion in climate-related spending.
Canadian company Heliene Inc is expected to benefit greatly from the clean-energy spending south of the border. The solar module manufacturer serves the utility-scale, commercial, and residential markets. Heliene is a highly-responsive, customer-focused business that provides competitively-priced solar systems made to order in North America to help deliver solar projects on time and on budget.
Heliene CEO Martin Pochtaruk, a former vice president of business development at Algoma Steel Inc, has over 30 years of experience managing manufacturing and innovation businesses across Europe and America while having founded Heliene in 2010.
Proactive caught up with Pochtaruk who explained how the company plans to grow its business as well as how it expects to benefit from renewable energy spending in the US.
Proactive: Tell us a bit about your business. What are solar photovoltaic modules?
Martin Pochtaruk: That is what people generally call solar modules for solar panels. A solar panel is a glorified window that receives the light of the sun and generates electricity.
How is your company different from other solar suppliers?
The product we make is very similar; it's intangible with other companies. We are a North American supplier and that is a marketing differentiation in terms of being a North American supplier versus receiving the product from elsewhere in the world. We partner with our clients instead of just being a hardware supplier from the other end of the planet.
How do you plan to grow your business? What are the company’s goals over the next 6-18 months?
Over the next six or eight months, we are increasing manufacturing capacity by 100%. And that's something that has already started. So if you look at our press releases from September 9, 2021, we had the ground breaking for our upcoming Minnesota expansion, a new factory that will be in place by June 2022, which increases the capacity of the company by 100%.
So the main market we sell to is the US not Canada. What we manufacture in the US stays in the US and what we manufacture in Canada goes to the US. There are several incentive packages coming in the 'Build Back Better' legislation in the US, which is the next big package that Congress is working on. It is planning to be put to a vote in the House of Representatives and Senate by the end of the month.
The big infrastructure package was finally passed by Congress recently, so' Build Back Better' is the next one up. And that has several provisions to accelerate climate change abatement and accelerate electrification. So when you hear people talking about electrification that means the advancement of renewable energy and solar within it. Solar right now in the US is 50%, if not a bit more, of what people use as a renewable energy source.
How will you benefit from the legislation in the US?
There's two parts to that. One is what is going to consumers. About 70% of the market is infrastructure investments, large solar farms, and that's mainly the market we go after.
Currently, the investment tax credits US companies receive is 26%. And that is going down to 22% in 2022 to 10% the following year and zero after. This legislation brings it up to 30% all the way to 2031. That's one thing that will accelerate investment.
The other one is that there is a 10% bonus, a tax credit. And that 10% bonus goes to domestic content. And that domestic content is exactly what our company will provide. So for people to claim that 10% bonus, they will need to buy all of the content on US product.
The other part within the same package is the Ossoff Bill, named after the Georgia senator elected in January 2021, because it brings a direct tax reimbursement to solar module making in the US, which is monetarily important because it’s basically between 15% and 17% of the product price that the company will be able to claim for everything that is made in the US.
And there’s more. There is a tax credit on capital expenditure. So for every dollar invested in new equipment in the US we get a 30% tax credit. So that's why the 'Build Back Better' legislation is important to the company.
Why should investors be more optimistic about the solar industry than they were 20 years ago?
The main point is what is called the levelized cost of electricity (LCOE), which is the cost of electricity compared with all fuels. And the lowest cost in the US today is solar. Just five years ago the lowest cost was natural gas. When you look at quarter by quarter in the US, what is the new power generation made up of? Over 50% of the new power generation is from solar. And that shows you a trend – solar is expected to be over 50% of all the power generated on the planet by 2050. It’s possible we will see this because it's already happening today.
Finally, please talk a bit about Heliene’s plans to go public?
Buzz Capital 2 Inc, a shell company, recently announced a reverse takeover which will allow Heliene to go public on the Toronto Venture Exchange sometime in the next 45 days.
Heliene will also complete a concurrent financing for minimum gross proceeds of $35 million, at a price of $1.00 per subscription receipt, up to a maximum of $45 million. Each unit of the financing will consist of one common share of Heliene plus one common share purchase warrant, which will entitle the holder to acquire one Heliene common share at an exercise price of $1.25 for a period of 24 months. Heliene will have 179,517,005 fully-diluted shares outstanding if the maximum of $45 million is raised.
Contact Sean at sean@proactiveinvestors.com