Canadian investor Altius Minerals Corporation has negotiated a deal with Tri Global Energy (TGE) to invest $30m in the developer’s wind project pipeline in exchange for future royalty payments.
Altius Minerals Corporation has entered into the transaction through its recently formed subsidiary Altius Renewable Royalties.
Dallas-based TGE is committing its current portfolio of over 1.5GW of development projects to the new royalty investment structure with Altius, until a minimum total royalty portfolio valuation threshold is achieved.
The committed development portfolio includes projects in Texas, Nebraska and Illinois.
Altius’ $30m royalty investment will be made in tranches over the next three years as TGE achieves certain project milestones, with an initial investment upon closing of $7.5m.
As individual pipeline projects are developed, Altius will receive a 3% gross revenue royalty on each project that will continue until the threshold is hit, which is expected to be an undisclosed portion of the TGE’s committed development pipeline reaches operational status.
Individual royalties will apply during the full life of the respective projects.
Using current assumptions concerning development timeframes, output levels and realised power prices, Altius’ $30m investment is estimated to generate $3-4m in new annual royalty revenues once the target threshold is met.
This is without factoring in any potential longer-term project extensions, output expansions or power price changes, the company said.
TGE’s projects already sold and additional projects added in future are excluded from the deal.
Its wind energy projects are traditionally sold to various renewable energy operators, allowing TGE to focus on project development.