Spara Capital Partners Inc., an Oakville, Ontario-based investment and merchant banking firm, has arranged and negotiated a $41.375 million Project Financing Facility with Farm Credit Canada on behalf of AGRIS Solar Co-operative (“AGRIS Solar”), an Ontario-based renewable energy co-operative.
AGRIS Solar is a professionally managed renewable energy-based agricultural co-operative that is 100% owned by Ontario farmers and rural landowners. Operating within the parameters of the province’s Green Energy and Green Economy Act, the Co-operative leveraged the Act’s microFiT program that allows individuals to generate renewable electricity and sell it back to the grid at a guaranteed rate for a period of at least 20 years.
Following significant consultation with its membership, AGRIS Co-operative (“AGRIS”), a 1200 member agricultural co-operative in southwestern Ontario, helped establish AGRIS Solar. AGRIS saw an opportunity to adapt the traditional agricultural co-operative model as a vehicle for leadership, professional service and participation by farmers as members/owners and apply it to the renewable energy sector.
Spara Capital Partners Inc. advised and assisted AGRIS Solar in arranging and negotiating a Project Financing Facility with Farm Credit Canada to support the co-operative’s growth plans and requisite capital for procuring and constructing their solar arrays. Spara will also assume an on-going advisory role with respect to operations and growth through its sister company, Spark Solar, which assists individuals and organizations with the development, financing, construction and operations of solar power plants for the FiT and microFiT programs in Ontario.
“Although the renewable energy industry is experiencing tremendous growth, that excitement hasn’t translated to real lending activity,” stated Jason Sparaga, Spara Capital’s President. “Many institutions were apprehensive given the uncertainty of the political landscape, the simple form of the microFiT contract as well as the generalized risk of lending in a relatively new industry. Nonetheless, Spara prevailed and was able to demonstrate AGRIS Solar’s sound business model with risk managed appropriately.”
“Agriculture matters to Canada. It’s complex, dynamic and a major contributor to the nation’s economy. That’s why FCC continues to demonstrate its commitment to advancing the business of agriculture by supporting projects like this. Canadian farmers operate modern businesses and lead the way in agricultural innovation. This solar project is a good example. It will help to diversify farm income by capitalizing on green, renewable energy, which makes perfect sense since farmers have long seen themselves as stewards of the environment,” says John Geurtjens, Director, Agribusiness and Agri-food at FCC in Guelph.
With over 700 installations, AGRIS Solar provides participants with a logical alternative to either leasing their property to a third-party solar developer or bearing the full cost of purchasing a PV solar generator exclusively. Co-operative Members were asked to contribute $20,000 of equity capital each towards the capital cost of installing a solar module that is capable of generating up to 10 kilowatts of nameplate power. Members will sell the electrical power generated to Ontario Power Authority who is contractually obligated to purchase the power for a period of 20 years at a rate of $0.802 per kWh.
“Farmers are the original environmental stewards,” says Dave Malott, board president of AGRIS Solar. “Our co-operative approach to the development of solar energy within the MicroFiT program in rural Ontario has created great interest and overwhelming support from the farming community. The success of this project is a testament to Spara’s foresight and resourcefulness. Despite the odds they persevered and have contributed to a truly revolutionary movement that is, as we say, empowering the community” added Malott.