CleanSpark, Inc, a microgrid and custom electrical equipment company featuring advanced, proprietary engineering, software and controls for innovative distributed energy resource management systems, today announced it has secured $20m in financing to support various microgrid initiatives for commercial customers. This committed financing will help accelerate the development and deployment of CleanSpark’s Distributed Energy Resource (DER) Solutions to commercial customers.
Matthew Schultz, CleanSpark’s Chief Executive Officer, said, “This transformative financing sets into motion a game-changing industry model for bringing customized energy solutions to a rapidly growing number of commercial customers providing low upfront costs and provable savings. Our Energy Savings Agreement (ESA) financing model provides a host of different financing options and structures for our clients and investment partners to jointly pursue. Nowhere are the benefits and savings from these solutions more relevant than in the rapidly growing cannabis industry where both energy needs and the need to be intensely competitive are elevated. Given the backlog we are witnessing and the level of interest we are confident in our ability to execute on a wide variety of projects and scale our industry leading software platform.”
How do Energy Savings Agreements (ESAs) Work?
- SPE (Special Purpose Entity) Formed to own the System asset.
- SPE funded by CleanSpark (CLSK) and a Tax Equity Partner (TEP).
- CLSK owns at least 51% of the SPE.
- TEP funds the SPE at a premium due to their ability to rapidly harvest the tax benefit in year one.
- Commercial customer spends $5,000 – $20,000 for a feasibility and engineering study.
DEPLOYMENT STAGE (OPTION 1)
- Commercial customer purchases the system outright and enjoys 100% of the energy savings.
DEPLOYMENT STAGE (OPTION 2)
- CLSK builds, owns, and operates the system/project.
- CLSK award the customers around 10% of the annual energy savings.
- CLSK offers a discounted buyout option (40-60% of original cost) at year 5 or 6.
- After buyout, customer enjoys 100% of the energy savings.
PROJECTS CREATE LONG TERM VALUE
- CLSK can also sell projects to third parties after 12 months of operation.
- Projects are valued on a simple value of discounted future cash flows.
- In most cases, after 12 months of operation, the value of a project will exceed the value that would have been realized had the project been sold to the customer on day one.
Benefits of the CleanSpark ESA
- Minimal upfront costs for commercial customers.
- Conserves capital expenditures for business expansion needs.
- Payments for the system are based on the energy savings that the customer can realize.
- Capital is readily available to fund large scale projects.
- Management and expertise of CleanSpark’s software and consulting services provide turn-key solution.
“Our solution is unique, revolutionary and tailor-made to relieve the economic and practical pressures facing today’s cannabis growers. We are energized by the backlog,” added Schultz. “Whether these projects are sold outright, operated, or held by CleanSpark until a future sale date, the result is the same, i.e. value is created for our stockholders by getting to scale in an industry that is projected to exceed $2b in the not too distant future.”
Focus on Cannabis
While the Company is garnering interest across multiple industries and sectors, the cannabis space is of keen interest to us. CleanSpark’s microgrid energy solution dramatically decreases the cost of energy associated with producing each pound of final product.
A cannabis business using $90,000 per year in energy has the potential to reduce its operating costs (flowering stage) from $270/lb. to $200/lb., producing a 15% ROI over 10 years.
For an illustration of how CleanSpark helps Cannabis growers optimize their competitive advantage, please visit this link: www.cleanspark.com/cannabis.
“The solar industry proved that long-term financing that generates real cost savings, an environmental benefit, and tangible ROI for both investors and customers can expect to grow to scale on an expedited timeline,” added Schultz. “With this recent capital infusion, CleanSpark intends to continue to blaze trails in the microgrid arena as we deliver strong returns to our customers, investment partners, and shareholders.”