Boralex Earnings: Growth Path Supported by Recent Ontario Battery Storage Project Wins

We trim our fair value estimate for Boralex BLX to CAD 38 from CAD 39 following the company’s second-quarter results. The slightly lower valuation is a result of tweaks to our cost of capital and project return assumptions. We view the shares as undervalued.

Boralex’s second-quarter results saw power generation 8% below anticipated levels with below-anticipated generation across all segments (wind, solar, hydro). We place little emphasis on quarterly variations in generation and expect these to even out over the long term. In terms of growth, Boralex continues its strategy to diversify its development activities into new technologies. The company was selected to supply 380 megawatts of battery storage projects via a recent competitive solicitation in Ontario.

We continue to expect a combination of organic growth and acquisitions to support Boralex’s 2025 ambitions. We see a solid organic growth runway in Boralex’s focus markets: France, U.K., Canada, and New York. While inflation in equipment costs and higher interest rates have impacted renewable energy projects, we see Boralex as less impacted than some peers given its relatively small project sizes. Boralex—like peers—emphasized a disciplined approach to development going forward.

Boralex will likely pursue further acquisitions to achieve its 2025 targets. We see its balance sheet as in sound condition to fund organic growth activities, with potential equity issuance likely tied to successful acquisition activity.