Green Capital 2.0: How RE Royalties is closing the gap between Hannon Armstrong and Altius

Bank withdrawal and capital gap favor the royalty model

To fully grasp the potential of RE Royalties, one must first analyze the macroeconomic environment, which, according to recent reports by the International Energy Agency (IEA) and McKinsey, calls for a dramatic expansion of investment. Experts agree: to achieve global climate targets by 2050, annual investments in clean energy must triple. But it is precisely at this moment of greatest need that the traditional banking sector is falling short, as stricter capital requirements and rising risk aversion are severely limiting lending to projects in the development stage.

This creates an existential dilemma for project developers. Equity has become extremely expensive due to lower valuations in the sector, leading to painful dilution for existing shareholders. Debt capital is often simply unavailable or burdened with covenants that restrict operational flexibility. In this structural bottleneck, flexible royalty financing proves to be the decisive problem solver, as it provides liquidity without diluting shares or dictating rigid repayment plans. This is the ideal breeding ground in which companies like RE Royalties can thrive, as they exchange capital for a percentage share of the gross revenue of projects by relying on the royalty model.

Altius and Apollo: The accolade for the business model

A look at Altius Renewable Royalties proves that this model is no longer just a niche phenomenon, but has arrived at the center of professional investors' attention. The Company has made a mark through its strategic partnership with private equity giant Apollo Global Management. The establishment of the Great Bay Renewables joint venture impressively demonstrates that the royalty model is fully accepted and validated by institutions in the renewable energy sector.

Apollo, one of the world's best-known asset managers, does not invest in experiments, but in calculable returns. The royalty model offers exactly that: direct access to revenue from electricity production before operating costs or debt must be serviced. Large investors are desperately seeking these stable, inflation-protected cash flows, such as those generated by Altius through royalties on clean electricity, as they have a low correlation with volatile stock markets. Altius has shown that this approach can mobilize a lot of capital. For RE Royalties, the success of its "big brother" is the best advertisement, as it validates the business model for the broader market.

Hannon Armstrong: Proof of scalability

While Altius proves the quality of the model, Hannon Armstrong Sustainable Infrastructure in the US shows how enormously scalable specialized "climate financiers" are. Hannon operates more like a mortgage REIT for green energy, but the underlying logic is identical: it finances the gap left by banks. According to current data from Investing.com, the Company reported record earnings per share in the third quarter of 2025. The impressive 15% year-on-year growth in assets under management proves that the market for specialized energy financing is deep enough to allocate billions of dollars efficiently.

Hannon Armstrong is valued at around USD 4.2 billion on the stock market because the Company has proven that it can act as the financier of choice for the largest developers in the US. Recurring revenues enable an attractive dividend policy and steady organic growth. Investors reward this dominance with a premium multiple, making Hannon Armstrong the blueprint for any aspiring financier in this sector. But it is precisely this high valuation that makes entry expensive for new investors – and draws attention to cheaper alternatives.

RE Royalties: The sweet spot for investors

RE Royalties is positioned precisely in the lucrative gap between the billion-dollar players and the capital-hungry project developers. The Canadian company operates in an area that is often too small and granular for Hannon Armstrong, but too complex for traditional banks. With a growing portfolio, the Company offers investors the opportunity to invest early in a business model that combines the proven scalability of Hannon Armstrong with the attractive margins of Altius. Just at the beginning of January, RE Royalties announced further investments in solar energy in California.

RE Royalties buys royalties from small to medium-sized developers who often have excellent projects but do not have good access to the capital market. This strategy allows RE Royalties to negotiate terms that promise above-average returns. The portfolio is already remarkably diversified, ranging from solar projects in North America to wind farms in Europe, which minimizes cluster risk and ensures a steady stream of income from different jurisdictions and currency areas. Unlike a project developer, RE Royalties does not bear the risk of cost overruns during construction or technical defects during operation – the royalty flows as soon as the electricity flows. These are also good conditions for RE Royalties shareholders – thanks to the quarterly dividend of CAD 0.01, the stock offers attractive distributions in addition to price potential.