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BTOES Insights Official
By
August 03, 2020

BTOES Financial Services Live - SPEAKER SPOTLIGHT : Financing the Green Economy to Minimize the Impact of Climate Change

 

Courtesy of RE Royalties Ltd's Peter Leighton, below is a transcript of his speaking session on 'Financing the Green Economy to Minimize the Impact of Climate Change' to Build a Thriving Enterprise that took place at BTOES Financial Services Live Virtual Conference.

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Session Information:

Financing the Green Economy to Minimize the Impact of Climate Change

According to the International Energy Agency, carbon-based electricity generation contributed over 30% of total global greenhouse gas emissions in 2018, by far the largest source of global GHG emission. To minimize the impact of climate change and meet the Paris Agreement's goal to limit the increase in global warming to 2°C, Morgan Stanley Research estimates that the world needs to spend US$50 trillion over the next 30 years in clean energy and technology. The International Renewable Energy Agency forecasts that US$750 billion a year is needed in renewables alone over the next decade.

The question on the minds of many investors is not whether to join in this growth, but how to channel capital into wind, solar, hydro-electric, bioenergy, energy efficiency and geothermal projects to help slow and mitigate climate change. RE Royalties represents an exciting opportunity for socially and environmentally conscious investors, who want to make sure their dollars are going towards protecting and restoring the environment.

RE Royalties’ innovative royalty financing model is well proven in other industries, but we are the first to apply it to the renewable energy sector on a global scale. Sourcing financial capital for renewable energy leaders is a crucial issue for new projects that want to get off the ground quickly to take climate action. A small, or start-up company can rarely source capital by borrowing from a commercial bank, and accessing capital is the biggest hurdle to getting renewable energy projects built.

The projects that RE Royalties invest in are helping to solve the world’s climate issues and create a more sustainable economy. RE Royalties helps their clients by taking a unique approach with the royalty-financing model to fill a gap in the renewable energy finance market.

Outcomes:

Renewables produce energy by harnessing the energy created by the sun, wind, or water, making them an indispensable ally in the fight against climate change. If we truly want to build a more sustainable energy future, then we need to ensure that renewable energy entrepreneurs have access to the capital they need to get their projects off the ground.

In this webinar, attendees will learn:

  • How you can get project financing for your renewable energy project.
  • How you can invest in the growing renewable energy market.

Session Transcript:

And I'm very excited to welcome Peter Layton. He's the co-founder and Chief operating officer officer of R E royalties. So Peter, please come on, turn on your camera, great to see you. Peter is an innovative R E royalties, I should say, is an innovative financing company that's helping to create a cleaner future by investing globally in renewable and sustainable energy. Peter has been involved in the Clean Energy sector for over 25 years and has brought over one billion dollars worth of clean energy projects from the embryonic stage of development, all the way to the build stage.

Peter holds a Master's in Business Administration from the Saudi School of Business and it was named as a non array of Canada's clean 542220 theater. It's a real privilege to have you here and share the journey with us.

Thank you, Jose. I really appreciate the introduction.

I'm just going to share my screen here, so hopefully everyone will be able to see that presentation.

So, good afternoon, everyone.

Normally, as the last presenter at a conference, I would be watching everyone Bundling Up: to Catch an early Flight, so the good news is, I can't see. You're doing that now, and I really do thank you for taking the time today to attend my presentation.

My name is Peter Layton and I am the COO and File and co-founder of our royalties.

R E royalties is the first royalty company focused entirely on the renewable and sustainable energy sector, and I'm here to tell you today about R E and how we're helping to finance the Green economy.

Before I started that, though, Jose was reminding me of one kind of funny story. Someone asked me, Why did we name it? R E royalties.

Screenshot - 2020-08-03T183120.219And, if anything is that, we applied to the corporations registrar in Canada under the name of renewable energy, royalties And, they came back to us and told us, that wasn't descriptive enough, they did, let us go with our E royalties.

On the second side here, I'd like to point out, via this incredibly small print, that this presentation will contain some forward looking statements, and we are a publicly traded company. So please refer to our SEC filings for more information.

Yeah, fundamental vision and objective of our company is simple. We want to build a cleaner and more sustainable world and we want to generate a strong, economic, longer term return for our investors while doing it.

How we set out to accomplish this objective is by acquiring a portfolio of long-term, stable and diversified royalty streams from operating and near term operating renewable energy projects that will provide our investors with resilient, sustainable, long term growing cash flows.

We operate based on four fundamental helander pillars.

We want yield growth.

We want to make an environmental impact, and we want to ensure that we protect the capital over our shareholders.

We are the first royalty company entirely focused on the renewable energy sector.

Royalty financing is not always well known, But it is omnipresent in our daily lives. A lot of times, we don't see it.

To give you an example, before this presentation, there were probably 4 or 5 touchpoints and my morning routine, which had a component of royalty financing involved. For instance.

As a true Canadian, when I stopped by Tim Horton's this morning to pick up a cup of coffee, three G capital of Brazil was pay a royalty on the coffee seal made by the Tim franchise, the Tim Hortons franchise owner.

When I took my daily vitamins this morning, a pharmaceutical royalty company was paid a royalty on each, but I can see it.

When I use my i-phone to check e-mail, Qualcomm received a royalty on the chips that Apple used.

When I opened Spotify to listen to music to relax before the stress of this presentation, a music label or musician was paid a royalty.

And when I ordered lunch on an Uber eats, Uber received a royalty, even though they did not make my lunch, nor did they deliver it.

So you can see that royalties are pervasive pervasive in most of our modern daily lives, except for the renewable sector.

We started out in 20 16 with a small team of executives, from both the mining and renewables industry. We recognized the opportunity to apply a well proven royalty business model to the renewable sector, where royalty financing did not exist.

We saw similar parallels to the exponential growth of royalty financing in the mining and oil and gas sectors in the mid two thousands, which is, establish the mining royalty giants of today, like franco nevada and weeding precious metals.

In 20 18, we took the company public through an RTO listing on the TSX venture exchange.

Today, we have invested 24 million into a number of transactions and our compounded Revenue growth rate has been 141%.

We have been able to achieve this growth due to two main factors: one, the explosive growth of the renewable energy industry over the past five years. And to the exceptional value, a royalty financing model has been able to provide to our clients.

Btog CTAThis has created a very strong demand for our product with, I must say, minimal advertising on our part.

Being first to market means that we're able to cherry pick the deal, the premium deal flow that fits our investment mandate, and to establish a leadership position in the sector.

We currently have 86 royalties from solar, wind, and hydro projects located in Canada, the United States, and the European Union.

These projects generate significant amounts of clean energy per year, which is equivalent to powering approximately 116,000 homes, and removing 960,000 tons of greenhouse gas emissions on an annual basis.

As you are aware of, the markets have undergone tremendous disruption due to covert in IT, while we hope the world will recover quickly from this global pandemic.

Our clients and our financial results have had minimal impact from this.

In many jurisdictions, energy generation continues to be an essential service.

Attached is a brief bio of our team, I won't drain this in its entirety, but my partner and co-founder, Bernard Tan, is a long term financial executive. Prior to starting, ... was the CFO of a resource based private equity group where he was involved in several royalty based financings as a client. And in fact, in one case, a royalty financing helped him take a publicly traded company, not only keep it alive, but then sell the company. Very shortly after the world through financing was put in place for it, significant premium for shareholders.

... is a CPA and also our CFO. It was previously with Ernst and Young and has experience serving as a CFO for a number of publicly listed companies.

Price is our VP and investments in the CFA Charter holder.

He holds the Responsible Investment Certificate from the Responsible Investment Association of Canada, Antalya, as our VP Communications, and as a Masters from the University in London, and as a recipient of the BC Export Awards for International Business.

The real message from this slide is that this is our entire team. We have a very small team, which allows us to be nimble while keeping our costs low.

Currently, and we trade on the venture exchange under the symbol R E We have approximately thirty two point five million common shares outstanding with a market capitalization of approximately 35 million.

Our share price ranges in the dollar to a dollar 10 range with a 52 week range of between 70% and a dollar 45.

We also currently pay an annualized dividend of 4.4% per share so approximately at 4% yield.

Our shareholder base consists mostly of family offices, and accredited and retail investors.

To date, we don't have any institutional shareholders, management, board, and insiders currently own about 35% of the outstanding shares.

As you can see, our balance sheet is also quite healthy, with very little debt on the books, and a very strong working capital position.

In the first quarter of 2020, we actually realized our best quarter in terms of revenue growth, despite the global locked down and do the impacts of Kogod 19.

What this has shown is that our strategy continues to pay off in generating that stable cash flowing return, and it's been very resilient, despite the complex market challenges to paraphrase one of our shareholders, as long as the sun shines, the wind blows or the water flows, we will continue to make money.

You can get more details that were published, financials and DNA, which is available on our website or on cedar.

The key message to this slide is that the global market for renewables is massive. More than $200 billion more money was invested in renewables than either mining or oil and gas in 20 18.

The jump from 26% of world production to almost 45% expected by 2030.

Indicates that renewables are not a passing fad, nor are they a science experiment. It's, it's here to stay.

The chart below is a complex one that shows a traditional global electricity production mix being heavily weighted to coal and natural gas, But this mix is changing dramatically and very quickly.

The real driver in this, as shown on this slide, is it the cost of renewable generation is declining rapidly.

Solar, for example, is on an asymptotic decline curve with installed costs dropping from $3 million per megawatt 10 years ago to less than $800,000 per megawatt today.

Wind generation costs have also declined by an order of magnitude in the last 10 years.

And both solar and wind are an order of magnitude more efficient over the same timeframe.

Now, I'd be the first to admit that there's a fair bit of publish political misinformation that likes to note how expensive renewables are. Lots of politicians seem to want to point that out. But the fact is that solar and wind are the cheapest sources of new electricity in more than two thirds of the world right now.

And we'll be the cheapest everywhere by 2030.

For us, it's interesting that the fastest growing market for renewables in Canada is Alberta, the home of the Canadian oil and gas industry.

28And in the US, it's Texas, also, as you know, a major player in oil and gas.

Currently, there are $80 billion in projects in ERCOT.

That's the self contained distribution grid in Texas, $80 billion worth of projects on the books to be built. And 75% of those projects approximately are solar projects.

So, it's a big market, and it's growing. How do we take advantage of this?

As I discussed earlier, the ... business model, as well utilized and well proven in many businesses and many industries except for renewables.

So, we're a first mover looking for three things, one, renewable or sustainable energy projects.

two, we look for proven technology. We have a bias for operating projects are those that will reach operations in the very near term?

We, like, near term cash flow, and three, geographical distribution because or diversification, because electricity does not trade as a global commodity, Markets are very regional, there are 12 in Canada and over 150 in the US alone. So, we wanted to diversify our risk across multiple jurisdictions.

We're currently active in BC. British Columbia, Ontario, Nova Scotia, Texas, and Eastern Europe, but we continue to look at opportunities in Australia, Japan, and central Europe. For the time being, we're focusing on the OECD jurisdictions.

Our targeted returns are generally in the teens, which allow us to support a strong yield to our shareholders.

We feel that try investors' we're delivering on the trifecta, growth, and yield, well, helping the planet.

We essentially have two products. one we acquire, acquire long term, 20 year gross revenue royalties.

Or, two, we land on a short-term basis six months to three years, and acquire a long term royalty.

This is our favorite product, because it allows us to recycle our capital.

As you can see from the graph on the R that, I guess it's a chart on the right.

Based on a three year term of a loan, we can land the same capital seven times in 20 years, and generate seven different royalty streams.

Again, as one of our investor says, it's the power of 72, so those of you who are forgetting or don't have young children in math, power of 72 is the power of compounding.

What it means is that same money that we land seven times in 20 years, and create seven different royalty streams, it makes our return on capital employed off the charts compared to someone who invests a certain amount of money just into one project. So, we're really able to continue to deliver that growth.

The idea is to allow our clients to recycle their capital and allow them to build more projects. And as a former developer, one of the most enjoyable things about the job for me is providing financing that allows the developer to hit their dream because every developer wants to build a new project. And it's can sometimes be very challenging. So it is really a lot of fun to enable that.

Currently about 80% of our portfolio utilizes the loner royalty structure.

We like it because the loans are secured and collateralize against our clients' operating assets.

The royalties acquired or long term, 15 to 20 years. They're calculated off of gross revenues and they're underpinned by long term off take agreements for the end product of the of the operator.

The loans are repaid by our clients and a short-term horizon, allowing us to recycle our capital and acquire new royalties.

I'll give you an example of one project that we announced, I guess.

We closed about four weeks ago, and in the press release, it's, all this information is available, it's an ontario based operator.

And we basically put in place a short-term loan for them, a one-year along that enabled them to complete some of their pre construction projects.

And we took a 20 year royalty on the full portfolio of their projects, they had 57 operating projects, and three that were under construction.

In terms of the mix of interest revenue that we get, we will earn about $500,000 for a one-year short-term loan to that group. And then we will earn one hundred thousand dollars a year in royalty payments for the next 18 years.

So, it really is a nice combination of we get our return on our capital while it's being deployed. We get our capital back and then we continue to get that royalty out for till the end of time.

This slide highlights the advantage of investing in a royalty company like RE royalties versus investing directly, in either a renewable energy, project developer or operator.

I will drain this slide in its entirety, but the five key takeaways are as follows one.

Royalties are based on gross revenue, sheltering our cash flows from unpredictable factors like rising taxes or increasing operating cost environments, two, compared to renewable operator developer, our supplier, we can maintain very low overheads. We don't need a huge pile of people.

Screenshot (4)Three. We don't need significant construction or sustaining capital to get an asset operational and generate cash flow for our shareholders.

For we can achieve cash flow diversification much more quickly, we spread our investments over multiple projects and five, we're in the nice position of being a first mover in a large and fast growing renewable energy industry.

This page highlights the investments we've made to date.

Today, we've accumulated 86 royalties. Of these 86 royalties, 82 royalties, or 82 projects, are already operating, which means, that the projects are cash flowing and servicing the royalties and we don't have to wait for them to be built.

Most of our investments are either wind or solar with a very small portion and run a river hydro.

Our projects are located in Canada, the US, and the EU jurisdictions with well defined and regulating electricity markets.

And you can also see on this list who operates the plants and purchases the electricity, which are primarily investment grade entities, like Crown Utilities.

Finally, you can see the impact these projects generate.

Several of our investments are in high carbon electricity in areas like Nova Scotia, which is 95% coal generated or Texas, which also has significant coal and other fossil fuel generation facilities. And, and so these projects can make a significant impact in reducing the GHGs that go into the atmosphere.

Our plans for 2020 is to continue to grow our existing portfolio and complete creative investments. So far, in 20 20, we've acquired 22 royalties from different portfolios, operational, wind, and solar projects.

We continue to see incredible demand from our existing and prospective clients for royalty finance, and we expect to continue expanding the diversity and growing the size of our portfolio.

I would say one of the surprising things that we have found is, one, the repeat business, where it so, existing clients come back to us. Our very first client, we purchased a royalty off an operating project.

He had a 1% interest in that project.

He took that money and he that we provided, and he re-invested in a new development project, where he is able to climb up to a 25% working interest.

We're now in discussions with him about taking a royalty on that project.

And that money that we would provide on that project, would enable the same client to begin development of his third project, where you will be able to climb up to a 50% working interest.

So, it's a great outcome for us. We get a repeat client, and it's a great outcome for the client, in that he is gradually climbing the curve of ownership of projects, by getting more and more ownership and each project. And, we're providing the funding to do that.

So, it's it, it's a great outcome.

Uh, and then, the other thing that I think we have found that has been surprising is, again, without advertising, many of our client referrals come from service providers. So, the very first transaction we worked on, the lawyer, on the opposite side of the fence, brought to us a client who needed similar financing.

The third transaction, another lawyer, brought another client. We've had accountants bring clients. We also find that fund raising drives an awful lot of business every time we were looking for capital.

We talk about our business. It turns out that many of the capital providers have clients who are looking for financing that we provide. So it's been a joy that way.

In order to accelerate our growth, we've been exploring several options to secure a non dilutive capital so that we can foster more and more lending.

Are options going forward or to one look at an issuance of green bonds, which provide a fixed vehicle, fixed income vehicle for investors, but would allow us to lever the returns and cash flows to our existing shareholders.

The demand for Green Bonds has been extremely robust so far, especially from investors that are looking to make a strong, socially responsible and environmental impact, while also making a good return.

To give you an example, Coal power, which is an early pioneer of Green bonds in Canada and now a subsidiary of van Citibank announced a new $20 million issuance of five year green bonds at the beginning of March by early April, they announced that they were entirely sold out.

And another option we're looking at is the implementation of a co investment fund.

Screenshot - 2020-08-03T183120.219This would allow larger institutional investor investors to utilize our royalty investment platform. While our shareholders receive a return through management and performance fee, a royalty sharing arrangement.

This kind of co investment model is a way for us to bring a large-scale institutional investor into our capital structure without them having to become significant shareholder. It's one of the challenges of having a market cap in that sort of $35 million range is that if someone wants to invest $10 million into our company, they become a significant shareholder. They want to invest $100 million in our company, then, sale in the company, essentially. So, the co investment vehicle is a way to access much larger amounts of capital without having to get involved in the ownership issue.

So, I do, thank you today for your time.

In summary, our E royalties is a unique and high value investment opportunity because we're deploying a very successful royalty financing model into a large and rapidly growing renewable industry.

We create value for our investors by one, growing our portfolio through a re-investment of capital to create new royalties to providing long term recurring cash flows from the world's easily acquire.

three, providing a strong risk adjusted return by investing in lower risk operational projects, while securing pyre development style returns.

For, by being a first mover, We have the luxury of selecting attractive deals.

five, the cash flows from our royalties are resilient, predictable, and sustainable.

And six, we focus on capital preservation by employing a combination of protection strategies, such as senior secured loans over ... and Guaranties.

seven: We diversify our portfolio to mitigate any single project or any single jurisdiction risk.

eight, We have the right team to make this all happen.

So, I thank you all for attending our presentation. And I will now pass it back to Jose and open it up for questions.

Peter? Terrific. Thank you for you. Thank you for sharing that, and the insights on a fascinating area of renewables renewable energy financing. So we had questions that have come in during, during the call. The first one, I think you've talked about this already, but if you can reframe for us, what was the key criteria for, for the projects that you're looking at investing in this space?

So yeah, The key criteria for us is to look, and we have a bias for operating projects, We don't have an interest in long term tying up our money and **** and cash flow. So we're very, very biased towards immediate cash flow. So we love operating projects. We are focused on renewable projects. So that includes solar generation, wind generation, run a river.

We are looking at biomass and other types of renewable energy generation, but we are not able to invest in projects that involve the use of fossil fuels very well. And I think you mentioned that your, your focus on North America and Europe is there, right.

To date, we have been focused in North America, or we have royalties in North America and Europe. We are looking, as well as australia Japan, other OECD companies. Countries were definitely the most interesting jurisdictions. For us, are ones that have a large current carbon footprint of their generation, because that's where we see the most opportunity for renewables.

Farewell farewell. Another question has to do with the State of Wind, wind, solar, and batteries. And you and you talk about in one of your panels, you had the dramatic decrease in costs on those technologies.

And the question is on what other trends, or what other trends, or technologies or business models you are observing in the marketplace that may impact the viability of renewable energy projects?

Yeah. So we're definitely excited about storage. It is a game of incredible technical advancement and US, we don't we didn't draw the graph for storage costs but they are also coming down on an asymptotic basis. But I think there is still there's a lot of time to figure out who has the best mousetrap.

And we're, we're following it very, very closely and checking that the Act's applicability is intense. But we have not yet engaged in a storage project because we're not 100% sure who's got the best solution.

The other two massive trends that we see are, one, is distributed generation and distributed storage.

So folks who are interested in perhaps going off grid or communities that are looking to be self-sufficient, so we're seeing tremendous push in that area.

We're following that, and the other area is, the concept of, corporate power purchase agreements. So if you watch any of the advertising, Budweiser now advertises that they're 80% fueled by renewables Amazon Claims. They're 100% fueled by renewables and, so in markets like Texas, or Alberta, where it is a deregulated market and where an end customer can buy directly from a generation project, we're seeing tremendous growth in behind defense projects where it's, it's the end user of electricity who is buying the electrons from the generator as opposed to state owned, utility, or or monopoly.

Another question that came, Thank you for that. Very helpful. Well, another question that came up here is that, what the regulatory landscape is looking like, right now. And specifically, in terms of government support or hindrance on investment when it comes to investing in renewables, what are you seeing in the marketplace from a regulatory standpoint?

Well, I think we are seeing a move away from the subsidization of the direct subsidization. And so, there is still some tax incentive within the United States market.

But we're definitely seeing that renewables can now, on a non subsidized basis, They are at grid parity, meaning it is now cheaper. In 48 of the 50 contiguous states. It's cheaper to generate using renewables than it is to use either natural gas or coal, and that's without subsidies. So we are definitely seeing the doors opening there. In Canada, what we find is it's a very, it's a very regulated monopolistic environment in most of the Canadian jurisdictions.

And so there is definitely, I think, government influence. And so socio economic development is kind of driving the bus and those areas. So we're not as optimistic about it, developments in Canada for the next little while.

Europe. What we're seeing is that the European market was well ahead of North America and the advancement of renewables, but they because land is a scarce resource in most of Europe, they tended to be small projects that were built by small developers. And so there's a massive consolidation that is happening of project ownership in order to get synergies on operating costs and maintenance costs, that kind of thing.

28So, that's that's the big trend we're seeing in Europe, is consolidation very well.

Farewell.

We have someone here who is talking about coal fired power plant investments in Florida, and, specifically, a large utility in Florida who apparently has got to the conclusion that it's actually cheaper to build renewables today than to not, not, not just build, but maintain a coal fired power plant. I'm curious if that economic situation is peculiar to that state, or it's something that you're seeing more regionally or globally. where the cost of renewables has gotten to a point that not only you'll maybe replacing capacity that was previously coal fire power plants are combined cycle power plants, but also even replacing capacity. Because it's easier to cheaper to build the renewables then to maintain existing coal fired power plants. Is that something that works out another place, or this is just a regional situation?

I know, I think, that is, it is taking place in a number of jurisdictions, specifically, areas where every age put a dollar value on on carbon emissions. That's, that is definitely one area that we'd be driving down, or driving up, the cost of operating a coal plant. But, as well, they are significantly higher, in terms of their labor costs.

It's labor intensive business, running a coal plant, whereas running a solar plant, or a wind farm, relatively little labor cost, in terms of ongoing maintenance. And the fuel is free.

So you don't have transportation cost, or you don't have that whole logistical exercise, and getting a fuel to cite the fuel arrives by dint of mother nature. And that's probably the cheapest way to get fuel that you can possibly imagine.

Very good. Another question we have here and there are a number of questions around this topic has to do with the impact of pandemic of the pandemic. Not only on the energy market which certainly in oil and gas has been massive and the energy market as a whole. But how has that affected your business and the royalties model you know pre pandemic and during the pandemic now?

Yeah and it really is interesting to date none of our clients have been impacted by by the pandemic.

So, the projects continue to generate electrons, the electrons continue to go to the grid and they can consumed by the grid unlike primarily transportation fuels. I think what we're seeing in areas with air conditioning load is that people are staying at home, or they're working from home. They're probably using more electricity at homes. Yes, the office buildings are not using as much, but, you know, that's almost more of a fixed cost for most of those offices. So that they can't really turn them down as easily. So, so, yeah, to date, we have not seen any exposure and in the areas where there's a retail or a market for electricity, as opposed to it being monopoly control. We're not seeing market prices drop the way that we have seen in the oil and gas sector.

Very good. Very good. There's other question is related to technology and the the price performance decreases in technology, well increases the price performance increases in technology or just say on different way. I guess decreases in cost there have been exponential decrease in cost for wind, much more.

So even for solar and storage, as you mentioned, are those are we getting to the asymptote here? Are we getting to the point where it's starting to level off? Or that trend is expected to continue in the next 5 to 10 years.

Yeah. I mean, and that is interesting, because I would have said, I would have told you 5 or 6 years ago, that I've thought we're getting to the Asymptote on wind wind costs And the decrease in wind costs. And what, and the increasing efficiency. And what we have seen, as the manufacturers, have gone to the next level of size of wind turbines. And it's actually, it's blowing the doors off in terms of the efficiency. And I would not have told you, that was gonna happen five years ago, but it is happening still.

So I think there's continued room for, for a economies of scale of size of turbine and the efficiencies to continue.

The other thing on the wind side, you're seeing, is, people spending a lot more time with the analytics, looking at how much time in advance they can see the wind direction changing. And can they move the turbine more quickly to, to embrace that wind direction change.

And that's adding three or 4% annual production, which can be massive on the solar side. The the big new development is by facial panels, which means you're not only generating electricity from the photovoltaic coming directly from the sun, but you're picking up on reflection off of the ground, or in northern environments, like Canada, you're picking, you can pick up a reflection of the snow, Which means the, the efficiency of a solar panel in what they call a great environment, as opposed to sunny environment, like where you are in Texas, is, has actually increased dramatically as well. So I think there's still lots of room on the solar side for efficiency. And as we talked about on storage, the floor is, is a long way away yet. I think that that curve is going south in a bakery.

How much should the electrification of the economy, especially driven by electric vehicles, impacts your own forecasts of the shift?

For us, Electric vehicles? And I think from, you know, and there's lots of research out there about what the impacts of electric vehicles will be. For the most part, I don't think people are seeing that it's going to generate a huge increase in demand, but it will change the shape of the demand curve on a 24 hour basis and on a seasonal basis.

So, again, electricity in the northern hemisphere is predominantly used for heat, and so there's a massive spike in electricity consumption during the during the winter. And not so much in the summer where you are, there's a massive spike in the summer versus winter. So I think what most people are predicting is that the the increased use of electricity for transportation will smooths out that seasonal curve.

And then we're not yet sophisticated enough and time of use rates to know how it's going to impact time of day.

But I can easily see a scenario where a electric vehicle will not only be a transportation device, but it will be a movable electricity storage device, so you would be able to plug it in when you get home from work. And then at midnight, once it's fully recharged, you can turn it on and say, OK, I'd like to send back to the I'd like to generate electricity for the utility and re-use my battery. that way. Then charge it up again, Starting at four in the morning so that you're ready to go to work. And when you're at work, it can also be used as a storage device. So I think I think that side of it is going to be, there's going to be a massive business in the whole analytics piece, trying to figure out exactly what that impact is, but nobody's sure yet.

Screenshot (4)Very good, very good. We have one final question here, and this one has a bit of commentary on the, the, The Observed Shift from utilities to renewables, and some utilities were actually moving faster than the regulatory body would request them to do. either, there was a mention of Duke Energy and some other utilities in the north-east, who are ahead of the plans for the shift into renewables. The question is really Weird celani's remain viable or the distributed energy model will ultimately cannibalize utilities market, if you will. I don't know. I know you have a deep background in that in the utilities area. Just, you know, and it's hard to predict what's going to happen there, but just, kind of your thoughts on, on this shift that's going on and what impact it will have on the business model for utilities.

Yeah, I think there is a, There's certainly as we move along the storage, the local distribution side and there will be pressure on the utilities. And utility death spiral has been predicted for a few years. And I think there is definitely, if I were sitting in a utility shoes, I would be worried about 10 to 20 years out.

Is he? What I used to work many years ago for one of the, the gas utilities and Canada, and we used to say that.

As long as we were more popular than the cable company, and we had better customer service rep, and the cable company, we're OK by this, but people really dislike the idea that there's a monopoly that's plugged into their house, and that they're reliant on for customer care or for service.

And so I think, especially in the US, with that view to independence and not wanting to be beholden to anyone, I think there is it, There's a huge risk for the utilities.

But what you're seeing is the Smart utilities are getting out ahead of it.

So, in the north-east of the US, what they're doing is they're now saying the utility is coming to the customer and saying, we'll put the storage in your house and we'll be able to claim, will pay for it. You've got storage battery setup in your house and will utilize that when we need to draw on it. And it's a way for them to further I think, ingratiate themselves into the home. It's kinda like the home, the hot water heater business, right? Some utilities make you buy their hot water heater and someone else will say, well, no, I'm happy with you going buying it at Home Depot.

But definitely the, the, I think the smarter utilities are trying to figure out how to extend that share of customer wallet in the event that self generation becomes much more possible, very well to build on your analogy, since so many of the cable companies have gone away and become the main target, so that the reference has gone away. They have to transform themselves and many of them are. And, as a matter of fact, next week, we're, we have, it's a focused on oil and gas, but there's some energy players will be discussing that on, on oil and gas conference live.

Peter, thank you so much for sharing the journey of R E royalties with us and the very interesting business model service to society, all building schwann, and very much grateful for your expertise and sharing that with us today.

Thank you, Jose. I really appreciate the opportunity, and thank you all for taking the time to listen today.

Thank you.

All right, ladies and gentlemen, this concludes financial services live. I hope that you gain insights from this top leaders across multiple industries related to financial services. We had banks or had insurance companies. We had renewable energy, royalties, organizations sharing their, their journey and and their impact on clients and society in general. So, next week, we're going to be back here with a great lineup of cross industry, global leaders in the oil and gas industry, and more broadly speaking in energy organizations.

So, we're going to have very great insights on how the whole sector is reacting to the effects of covert 19 most important, many other trans they have been going on in the world pre pre pandemic Like the electrification of society. And and, and the environmental challenges that we have, and, and how do we plan and execute strategist going forward in the energy space? The energy industry is a multi trillion dollar industry. And we're going to have some of its biggest players talking to you directly here, next week at oil and gas live conference. For those of you who participated throughout the sessions, thank you very much for your engagement. The questions are outstanding, or engagement is awesome.

I see real practitioners and leaders on the field who are asking this question is very pertinent questions to our speakers, and that enriches everybody's experience and the end on that note, you can continue to engage and discuss, leave commentary on our posts on LinkedIn.

So, search under our names on LinkedIn, and you'll see the posts for finance, financial services, life, And put your comments in there. Several of our speakers circle back to that, to those pages and provide answers, and certainly, we will provide you with our gratitude for being part of the show. So, thank you very much. Have a great rest of your, they have a wonderful weekend, and hope for you to see you back on Tuesday for oil and gas live. Thank you, everyone.

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About the Author

more-Aug-03-2020-05-06-15-30-PMPeter Leighton,
Chief Operating Officer and Co-Founder,
RE Royalties Ltd.

Peter Leighton is an experienced renewable energy executive with over 20 years of experience in project development and mergers and acquisitions in the energy sector. He is the Co-Founder and Chief Operating Officer of RE Royalties, an innovative finance company specializing in renewable energy.

With climate change a pressing issue globally, RE Royalties has become an important source of capital for renewable energy projects. In 2016, RE Royalties officially launched as the first company to take the royalty-financing model, well proven in other industries, and apply it to the renewable energy sector. RE Royalties is a publicly traded company on the TSX Venture Exchange under the symbol “RE”.

Peter is the former President and Chief Operating Officer of Finavera, where he delivered $750 million worth of wind energy projects from the embryonic stages of development through to the ready to build stage. He also worked as the Chief Operating Officer of Accenture’s Business Services for Utilities, the Director of Clean Energy B.C. from 2010 to 2016, and Health Shared Services B.C. from 2009 to 2018. This year Peter was named as an Honouree to Canada’s Clean50 for 2020. Peter holds a Bachelor of Science Degree (BSc) in Geography/ Geology from Queen’s University and a Master, Business Administration (MBA) from the University of British Columbia.

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