Great Bay Renewables - Niche Royalty with Billions Backing Them

Great Bay Renewables is an energy royalties company based in Portsmouth, New Hampshire. The company provides capital to renewable energy projects in exchange for royalties on the generation facilities. The company is jointly owned by Altius Renewable Royalties Corp and Apollo Global Management, Inc.

Great Bay Resources believes that the deciding factor when it comes to the success of a company is the people tasked to manage it. Developing a project is never a straight line and there are many tangents and bumps on the road to successful development. The company looks for management teams that have a track record of successfully developing projects, from which Great Bay Renewables gives the company in question the opportunity to access flexible capital that previously was not available.

Great Bay Renewables announced on the 4th of October 2022, that it had concluded with a USD$ 52.5 million investment in three Texas-based operating-stage solar and wind renewable energy projects, which are part of the Northleaf Capital Partners portfolio.

The three projects are the 151 MW Old Settler wind project, the 50 MW Cotton Plains wind project, and the 15 MW Phantom Solar project. The Cotton Plains and Phantom Solar projects hold fixed-price, long-term contracts with the US department of defence which will continue until 2045, whilst the Old Settler project will sell its produced energy into the Electric Reliability Council of Texas (ERCOT) market. The three projects are the 151 MW Old Settler wind project, the 50 MW Cotton Plains wind project, and the 15 MW Phantom Solar project. The Cotton Plains and Phantom Solar projects hold fixed-price, long-term contracts with the US department of defence which will continue until 2045, whilst the Old Settler project will sell its produced energy into the Electric Reliability Council of Texas (ERCOT) market.

The company also invested USD$ 35 million with Longroad Energy in August 2022. The investment is related to the Prospero 2 solar project, which can produce approximately 250 MWac. Great Bay Renewables further announced that it would invest USD$ 40 million into Hodson Energy over the next three years. The investment will be subject to the advancement of certain projects and predetermined milestones.

The company currently has 6 operating royalties, with 3 projects in construction and 22 in the pipeline, with it financed to grow its royalty portfolio in the future. The company also expects an income of approximately USD$ 7 million in 2022.

Management

Great Bay Renewables is led by Frank Getman, who serves as the company’s CEO. Getman has more than 25 years of experience in the energy industry and founded the company in 2017. He previously served as the President and CEO of BayCorp Holdings Ltd. a merchant energy company, which developed, owned and operated various energy companies and assets including oil and natural gas reserves, power generation facilities and various other energy companies and assets.

Raymond Faust is the Chief Financial Officer (CFO) of the company and brings with him more than 20 years of experience in the energy industry. Faust previously served as the Chief Operations Officer at BayCorp Holdings Ltd. as well as formed a key part of the team that completed the development and financing for a renewable energy-from-waste facility in the U.K.

Josh Levine is the Managing Director of the company and has been involved in the energy industry for more than 20 years. He has extensive experience in project development, project finance, economic analysis and environmental permitting, having worked on projects including the Gainesville Renewable Energy Center and the Cape Wind project.

William Rodgers rounds out the team as Director of the company and has more than 20 years of experience in the electric utility and merchant energy industries. He previously served as the Power Trader, Director of Marketing, and Director of Operations for BayCorp Holdings Ltd. Rodgers, before BayCorp Holdings Ltd., was involved with power trading and supply portfolio management for Green Mountain Power Corporation.

Getman explains that the team tasked to advance Great Bay Renewables have worked together for years and can identify feasible projects through years of development experience.

“…each of us we've been together for years, and we were developers before we started this renewable royalty business. We were renewable energy project developers. I mean, greenfield, dirt on our fingernails, out there, getting the land, identifying the opportunities. So we understand the development process very well, which I think gives us a real leg up. When we look at these opportunities, we can identify who are the good teams, and who are the good projects. And it's not something that I think necessarily a good pure financial Wall Street investor would be able to really fully evaluate.”

Evaluating projects

Great Bay Resources believes that the deciding factor when it comes to the ultimate success of a company is the people tasked to manage it. Getman explains that developing a project is never a straight line and there are many tangents and bumps on the road to successful development. The company looks for management teams that have a track record of successfully developing projects, from which Great Bay Renewables gives the company in question the opportunity to access flexible capital that previously was not available.

“…we have a little different approach in that we look for good teams and we found that the teams who have a great track record, there's a reason that people are in the development world, it's a little bit like making sausage. Things don't go in a straight line. And sometimes it's a little scary, but good teams are able to get enough projects across the line that you can earn a good return. So we look for those teams that are serially successful. And we look to provide them with flexible capital that they haven't had access to in the past, to really accelerate their business and allow them to keep more of what they create, which is the compelling reason for them to work with us.”

The company is primarily involved in utility-scale wind and utility-scale solar operations, with it aiming to enter the energy storage market in the future. The company also looks for tested technology which has shown to be reliable.  

“The way to think about this is that our capital is for the deployment of true and trusted technology. We're not a VC seeking to determine which is going to be the next winning hydrogen technology. But even hydrogen at some point when it becomes proven and they're looking for capital to deploy and roll out that proven technology, and you can see good visibility into the cash flows from that technology, our capital would be useful in that case, too.”

Great Bay Renewables is involved with the financing of both development assets as well as operating assets, with the company believing that in order to meet the projected renewable energy capacity, capital is needed in the industry, Getman explains:

“If we're ever going to meet all the goals that everybody has and everyone has very high aspirations about the clean tech revolution and in the transition, we're going to need new sources of capital coming to bear and we're one of those, I'm not saying we're going to be the only one. But I think there's an opportunity for us to grab a very nice piece of the business and the need for new forms of capital to help build out these pipelines in these projects.”

Great Bay Renewables aims to be a fundamental part of the renewable energy sector, with the company explaining that the sector will grow proportionally to the implementation of electric vehicles.

“We all drive electric vehicles, we don't have renewable energy to go along with and we're burning coal to power our electric vehicles, that doesn't get us where we want to go. So the two really do go hand in hand. And, the size is trillions of dollars over the next coming decades.”

Recent investment

Great Bay Renewables announced on the 4th of October 2022, that it had concluded with a USD$ 52.5 million investment in three Texas-based operating-stage solar and wind renewable energy projects, which are part of the Northleaf Capital Partners portfolio.

The three projects are the 151 MW Old Settler wind project, the 50 MW Cotton Plains wind project, and the 15 MW Phantom Solar project. The Cotton Plains and Phantom Solar projects hold fixed-price, long-term contracts with the US department of defence which will continue until 2045, whilst the Old Settler project will sell its produced energy into the Electric Reliability Council of Texas (ERCOT) market.

The company also invested USD$ 35 million with Longroad Energy in August 2022. The investment is related to the Prospero 2 solar project, which can produce approximately 250 MWac. Great Bay Renewables also announced that it would invest USD$ 40 million into Hodson Energy over the next three years. The investment will be subject to the advancement of certain projects and predetermined milestones.

Getman explains the company’s recent investments as being with trusted and large-scale companies. The demand from the market has also been astounding according to him, with the market readily and eagerly adapting the form of financing.

“We did Royalty financing with Apex Clean Energy which was acquired by Ares Capital, another large private equity group. We've done deals with Longroad, a recognised leader in the industry. Northleaf Capital, up in your neck of the woods, is a very established private equity group and the counterparties on our Royalties, because ultimately if we give a developer capital, our counterparty isn't that developer, it's whom they sell the project to. Who the ultimate owner is? Well, in our case, that's been NextEra, Leeward, and CIP. It really, truly has been the bluest of the blue-chip player. So, the question of whether the market would accept and adopt this type of financing has been answered, and the answer is a resounding yes which is really exciting for us because that was a big unknown.”

Future

Great Bay Renewables believes that as with a royalty held on a mining operation, the longer the lifetime of an operation, the larger the return on investment. Getman explains that there is no resource with a longer operational lifetime than that wind and solar, impressing the value of the royalties held. 

“The best predictor of the future value of a Royalty is the size and length and duration of the resource and so you think of mining a resource that can grow with time, will that Royalty will have more value? There is no underlying resource, which is longer in duration than solar and wind. We are high grading these opportunities. So once we have a Royalty on a particular project, it's highly, highly likely that there will be a renewable project there for the foreseeable future”

The company currently has 6 operating royalties, with 3 projects in construction and 22 in the pipeline, according to Getman. The company is well financed to grow its royalty portfolio in the near future, with it expecting an income of approximately USD$ 7 million in 2022.

“We have 6 operating Royalties. We have 3 in construction and we have 22 I think it is in our development pipeline. But based on what we knew was operating this year, initial guidance of USD$ 4.5 million to USD$ 5.5 million for Great Bay Renewables for 100% portion. We just based upon this summer period where prices were much higher, in large part because of the heatwave through Texas, we were able to increase that guidance to USD$ 6.5 million to USD$ 7 million, so a significant increase in our guidance. We also are well situated to continue to grow that revenue stream. If we didn't make a single other investment right now, based on what's already in our pipeline, we're going to see exponential growth in our revenue over the coming years.”

To find out more, go to the Great Bay Renewables website