RE Royalties: The Quiet Financier of the Energy Transition
RE Royalties is set to release its highly anticipated second-quarter results—a good opportunity to take a closer look at the business model of this Canadian specialty financier. After all, anyone hearing the name for the first time might rightly ask: What exactly are royalties? The term originates from the commodities sector. There, an investor who provides capital to a mining company to build a mine receives, in return, a fixed share of the extracted commodities. RE Royalties applies this principle to renewable energy. The company does not build solar parks, biogas plants, or wind turbines itself, but rather provides capital to external project developers and, in return, receives a share of the gross revenue from the completed facility—over terms ranging from 15 to 20 years, typically secured by long-term power purchase agreements. More than 80% of the projects are located in Canada and the US, and a good 41% of the pipeline comes from repeat customers.
This decouples the company from the cost risks faced by the operators. If construction, maintenance, or financing costs rise, this affects the project company but not RE Royalties’ licensing revenues. These are based solely on revenue, which ensures predictable and largely inflation-resistant cash flows. Since its founding, more than CAD 82 million has been invested in over 130 solar, wind, storage, hydro, and biogas projects, resulting in an average return of 16% since inception. The project pipeline is well-stocked at over CAD 200 million. A partnership with the US partner Solaris Energy was recently extended. The two companies have signed a non-binding letter of intent (LOI) for up to USD 67.5 million. Of this amount, USD 4.8 million has already been disbursed. USD 13.7 million is earmarked for 13 contractually committed solar projects. The remaining USD 49 million is reserved for 83 additional projects in the development phase.
This contrasts with a market capitalization of just CAD 17 million and a share price of around CAD 0.39 (EUR 0.23 in Germany). The management team, led by CEO Bernard Tan and COO Peter Leighton, is dissatisfied with both figures and has commissioned the consulting firm PwC to examine various options—ranging from partnerships and co-investments to the sale of the company. If the upcoming quarterly results do not mark a turnaround, the company’s days on the stock market could be numbered. For dividend hunters, the takeover premium that would then be due would likely be little consolation, as double-digit yields are usually found only in exceptional situations—not in the reliability with which RE Royalties pays out dividends. For 25 consecutive quarters, the Vancouver-based company has paid out CAD 0.01 per share—without a single cut. In December 2025, the board of directors switched to annual distributions, but the dividend need not suffer as a result. Analysts expect CAD 0.04 for the current year as well, which still corresponds to a yield of over 10%.
Nordex: Political and Technical Headwinds
Nordex is significantly better known in this country than RE Royalties—and, with a market capitalization of just over EUR 9 billion, many times larger. However, the Hamburg-based wind turbine manufacturer clearly demonstrates just how risky it can be to invest directly in a technology provider from the renewable energy sector. Fundamentally, the company, despite its turbulent stock market history, is now on solid footing. In the second quarter, revenue grew by 16.3% to just under EUR 2.2 billion, the EBIT margin improved from 3.5% to 8.1%, and the order backlog climbed to EUR 18.4 billion (previous year: EUR 14.3 billion). Nevertheless, analysts remain cautious: RBC recently lowered its price target from EUR 38 to 36, while Barclays significantly raised its fair value estimate from EUR 15.80 to 35—though this figure still remains below the current share price of EUR 39.40. The main drag is considered to be the grid package planned by Economics Minister Katharina Reiche, which could slow the expansion of wind energy in Germany. Bärbel Heidebroek, president of the German Wind Energy Association, is already sounding the alarm and warning of a de facto halt to investment.
On April 2, the Hamburg-based company celebrated its 25th anniversary on the stock market. At that time, the share price was trading at a 20-year high of EUR 45 and even briefly climbed above the EUR 50 mark by May. The all-time high shortly after the initial public offering on the Neuer Markt was even above EUR 90—before the price collapsed to just EUR 1.30 by 2005 in the wake of the dot-com bubble bursting. Since then, the stock has gone through three more bull markets, each of which ended in a crash.
The current fourth phase looks impressive at first glance: an 85% gain in 12 months, more than double over a two-year period. However, since early May, the stock has been in a persistent correction. If the price slips below the key level of EUR 35, chart analysts warn of further declines down to the EUR 30 range—a potential drop of around 25%. The fundamental valuation, on the other hand, appears moderate given the strong quarterly report. The estimated price-to-earnings (P/E) ratio for 2027 is between 15 and 16. In the short term, political and technical headwinds could prevail, but sooner or later the excellent long-term prospects documented in order intake should prevail.
Enapter: The Path Back on Track Leads to China
At Enapter, the recent share price history runs in the opposite direction to Nordex. While the stock was still trading above EUR 25 in 2021, it now trades at only around EUR 1. The market capitalization has fallen accordingly to just under EUR 33 million; a P/E ratio cannot be calculated due to expected losses. Now, a radical restructuring is intended to usher in a turnaround—including, among other things, the comprehensive relocation of production to China. Enapter manufactures electrolysers that use electricity from renewable energy sources to produce green hydrogen for a wide variety of applications: from powering industrial plants and smelting furnaces to propelling vehicles, boats, or drones, and even providing CO₂-neutral heating for residential areas. At the heart of each of these systems are the so-called stacks. A stack of individual cells is where the actual chemical reaction takes place—comparable to an engine that converts electrical energy into hydrogen. Enapter’s patented AEM (anion-exchange membrane) technology does not require expensive and rare raw materials such as iridium, which other types of electrolysers need. Thanks to its rapid response time and operational flexibility, this technology is ideally suited for wind and solar energy. More than 12,000 AEM stacks in 55 countries are now producing green hydrogen.
The restructuring is based on the agreement that has since been reached with the bondholder Patrimonium. It is supported by bridge financing of EUR 3 million from the major shareholders. Following the annual shareholders meeting on September 22, a capital increase is planned, in which a strategic investor intends to participate with EUR 10 to 12 million. Operationally, Enapter is transitioning to a so-called “asset-light” model. The company’s headquarters and administration will remain in Germany, while the chemical production of the electrodes, the core technological know-how, will take place in Pisa, Italy. In the future, external partners in the US and China will handle the complex mass production of the stacks and the complete electrolysers. Enapter has already begun production there with Runqing Hydrogen Technology in Shenzhen. Additionally, the product portfolio will be expanded to include alkaline electrolysers. With this combination, the hydrogen specialist can build large-scale plants in the multimegawatt and gigawatt ranges. This opens up a completely new and fast-growing market for Enapter.
Although the management board has suspended its previous forecast for 2026 (revenue of EUR 30 to 40 million, EBITDA between minus EUR 3 and plus EUR 1 million) for the time being, analysts remain confident. First Berlin Equity Research recently reaffirmed its “Buy” rating but lowered the price target from EUR 1.90 to 1.40—representing 40% upside potential. mwb research goes further and reaffirms its “Speculative Buy” rating with a price target of EUR 3.00, which would correspond to a tripling of the share price. Enapter expects the restructuring to have a clearly noticeable positive impact on earnings starting in 2027. For risk-tolerant investors with a bit of patience, the stock could become an interesting turnaround play.
A Test of Nerves: Ride the Roller Coaster or Cash In?
These three stocks exemplify just how differently the risks of the energy transition are distributed. Enapter’s plunge and Nordex’s roller-coaster ride make it clear how volatile direct bets on individual technologies, whether hydrogen or wind power, can be. Both stocks have their appeal, but they are anything but safe bets. Those looking to avoid sharp price swings will find RE Royalties to be the ideal alternative: a business model that generates revenue through fixed, revenue-based licensing fees on virtually every technology in the industry, without bearing the development or construction cost risk itself. The 10% dividend yield compensates for the current sideways trend, which could quickly reverse upward in the event of takeover speculation.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as “Relevant Persons”) may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a “Transaction”). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
For this reason, there is a concrete conflict of interest.
The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.
Risk notice
Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.
The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.
The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.
Stockhouse does not provide investment advice or recommendations. All investment decisions should be made based on your own research and consultation with a registered investment professional. The issuer is solely responsible for the accuracy of the information contained herein. For full disclaimer information, please click here.