General Market Commentary

The Bank of Canada cut its key interest rate for the first time in more than four years on June 5, 2024, marking a major turning point in its fight against inflation. The key rate now stands at 4.75. Governor Tiff Macklem says the Bank of Canada has more confidence inflation is moving closer to its two per cent target, citing various indicators that suggest price pressures have retreated, and that it is reasonable to expect further cuts.

In other news, the Government of Canada is providing $530 million through the Green Municipal Fund to help communities adapt to climate change by accelerating adaptation support for resilient municipal infrastructure. This $530-million initiative represents one of the largest ever investments in building liveable and resilient communities in preparation for climate change in Canadian history and is a key initiative under Canada’s National Adaptation Strategy. Applications can be accessed at this website. Municipalities that have completed climate adaptation plans and/or risk assessments are eligible to apply. The deadline for applications is August 14, 2024.

Hot Sector News

This month we’re putting the spotlight on is UGE International Ltd. (TSXV: UGE), a Toronto-based company that has built its business around bringing affordable clean energy to people and businesses around the world.  Since 2008, the company has worked to develop, own and operate community and commercial solar generation and storage projects.

UGE has been a subject of our Market Watch column once before, when it completed new financing via green bonds. Recently the company announced that NOVA Infrastructure has submitted an offer to purchase a majority stake in UGE and to take UGE private.

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“We are excited about this next chapter and all that we will be able to accomplish, which will continue to be a legacy of our investor community,” says UGE CEO Nick Blitterswyk.

UGE on LinkedIn: UGE International Ltd. Enters into Arrangement Agreement  for Going-Private…

What are his thoughts on the current state of the clean energy market in Canada and the potential for companies such as UGE? “Overall positive, as clean energy continues to follow a long-term trend of decreasing costs and increased competitiveness versus fossil fuels which is leading to an undeniable shift towards clean sources of energy,” says Blitterswyk. “That said, Canada can be far more decisive in providing support for our industry, both at the federal and provincial level.”

How is UGE taking advantage of financial vehicles such as incentives, green bonds and cleantech Investment Tax Credits (ITCs)? According to Blitterswyk, UGE is primarily focused on the U.S. market at this time, which is driven by the ITC that provides 30 per cent or more of a project’s value as an upfront incentive on new projects which significantly expands the size of the market in the U.S.

“We have also been a long-running participant in the green bond market, having nearly six years of experience issuing and servicing green bonds which help fund our projects,” he says, adding that the overall funding environment for this industry, including from traditional banks for project and portfolio debt, is very strong.”

Tuckahoe Housing Authority Partners with UGE to Lower Energy Bills for  Residents with Rooftop Community Solar System

The Tuckahoe Housing Authority solar project provides on-site affordable clean energy to housing residents in the apartment complex in Westchester County. UGE provided financing so that there is no upfront cost for housing authorities to make the switch to solar. (Credit: UGE)

There were some key influencing factors that went into the decision to enter into the next chapter with NOVA Infrastructure. “There was both a push and a pull. In NOVA we found a sponsor that we felt very aligned with in terms of what we are aiming to build here at UGE and in the long-term potential of our industry,” explains Blitterswyk. “Meanwhile, the public markets have not been kind to UGE or to the sector and seemed unwilling to invest in and fund opportunities in this space.”

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What is the plan for growing the business in Canada and beyond over the next few years? “As of now we remain primarily focused on the U.S. market, though we are interested in pockets of growth in Canada such as the community solar program in Nova Scotia and hope to take part in the energy transition in Canada in coming years as well.”

Blitterswyk is grateful for all who supported UGE over the past decade as a public company. “The road was often winding, but we’re proud of how we’ve been able to navigate turmoil in the industry, including the fall out in the Ontario market in 2018, to create the company that UGE is today. We hope your readers will continue to follow UGE as we continue to grow.”

The stock price of UGE on June 14 is $1.87.

Stocks to Watch

Here is a list of Canadian cleantech stocks that we are monitoring for this column. This list of public companies is by no means complete, and we are open to suggestions from our advisors and readers.

Name Symbol Price in $CDN
(May 15/24)
Price in $CDN
(June 15/24)
% Change
Algonquin Power & Utilities Corp. AQN $9.10 $7.84 -13.85%
Anaergia Inc. ANRG $0.27 $0.14 -48.15%
Ballard Power Systems Inc. BLDP $4.31 $3.48 -19.26%
*BIOREM Inc. BRM $1.96 $2.08 +6.12%
Boralex Inc. BLX $32.34 $33.59 +3.87%
*CHAR Technologies Limited YES $0.36 $0.33 -8.33%
Electrovaya Inc. ELVA $4.21 $3.92 -6.89%
Engine No 1 (Transform ETF) NETZ $83.71 $93.79 +12.04%
EverGen Infrastructure Corp. EVGN $2.00 $1.91 -4.90%
Greenlane Renewables Inc. GRN $0.10 $0.08 -20.00%
Li-Cycle Holdings Corp LICY $6.86 $6.28 -8.45%
Loop Energy LPEN $0.06 $0.04 -33.33%
Northland Power Inc. NPI $22.75 $23.29 +2.37%
*Thermal Energy International Inc. TMG $0.26 $0.24 -7.69%
TransAlta Renewables Inc. RNW $13.00 $12.48 -4.00%
UGE International Ltd. UGE $0.59 $1.87 +216.95%
Westport Fuel Systems Inc. WPRT $8.27 $8.20 -0.85%
Zinc8 Energy Solutions Inc. (Abound Energy) ZAIR $0.10 $0.08 -20.00%
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*The authors of this column own equity. It is not meant to be an endorsement, but simply a statement of this fact.

 

 

James Sbrolla is a veteran of the financial and environmental industries.

 

 

 

Connie Vitello is editor of Environment Journal.

To pitch an idea or stock for the Market Watch column, contact connie@actualmedia.ca.

 

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