Market Commentary / Company Spotlights

Evergen, the Next Great Energy Investment?

  • Declan O’Flaherty

    Declan holds a Bachelor of Commerce from the University of Alberta and has over 4 years of experience investing in financial markets. As a fundamental investor, Declan embraces the investment principles of Warren Buffett and his disciples. This puts a focus on finding businesses with healthy financials, competent and accountable leader, enduring competitive advantages, and those that are selling at discount to what they are worth.

    View all posts

When we think of renewable energy, we tend to think of solar panels, wind turbines, nuclear, and damns.

But did you know there is another solution that reduces emissions and limits the effects of harmful greenhouse gasses?

Renewable natural gas (RNG) is the product of decomposing, capturing, and recycling energy from organic waste, and converting it into a valuable energy source capable of fueling our world.

With the threats of climate change growing more prevalent every day, and drastic shifts in the global energy supply due to the ongoing conflict in Ukraine, the key to building clean and more reliable energy sources is by maximizing the use of all these environmentally friendly products.

That being said, the RNG market is largely untapped at this time.

As a younger industry, RNG has been chiefly underestimated due to the unique infrastructure required to produce this alternative energy source.

But with improved technology and better incentives for businesses to use renewable energy, huge investments are flowing in and it is paying off massively for those willing to take the leap.

An example of this is Archaea Energy ($LFG) which achieved a gross profit (TTM) of $33.98 million and is now being acquired by British Petroleum ($BP) for $4.1 billion as of this week; Archaea is up 45.88% YoY upon the announcement.

While that is very exciting for $LFG investors, wouldn’t it be more valuable for you to build a stake in the next great RNG business?

Fortunately, there is one such company seizing this lucrative opportunity, and it is already well-established as the leader in RNG within Canada.

With a first-mover advantage and many of its RNG facilities already in place, you do not want to miss out on this incredible company.

Continue reading to learn more.

How does RNG work?

Source: EverGen Infrastructure

Renewable natural gas (RNG) is a combination of various organic resources that are digested and then converted into pipeline-quality gas.

The “feedstock”, or organic waste, comes from multiple sources including municipal waste management facilities, sewage treatment plants, agricultural hubs, and more.

After that, it is then transported and placed in an Anaerobic Digester, which essentially acts like a human stomach, and accelerates the decomposing process of biochemical materials.

From there, the biogases released from these organic sources are collected and upgraded to produce renewable natural gas that is fully interchangeable with conventional natural gas products.

As a bonus, any leftover materials, aka digestates, are gathered and used to create an additional revenue stream by selling them back to the community as fertilizers, soil amendments, and animal bedding.

These natural energy sources are very valuable in this way because they provide multiple avenues for generating capital without having to sacrifice the core business of RNG production.

Reasons to Invest in RNG in Canada

Source: Deloitte Insights

With pressures mounting over how to develop sustainable energy sources, RNG is an excellent alternative to conventional natural gas since it is available around the globe and offers additional benefits as well.

Here are just a few:

Major Cash Inflows

Investing in ESG projects is expanding rapidly with 24% of all institutional investment managers holding at least one ESG-aligned fund; this has grown 300% since 2016 and is expected to make up half of the professionally managed assets by 2024. (Deloitte)

In total, global investment in renewable energy set a new record totaling $226 billion in the first half of 2022, up 11% from last year.

Environmentally Proactive

Traditional landfills are a key contributor to producing methane gas, which is 25 times more potent than carbon dioxide and has 80 times the heating power; by capturing and harnessing this gas and converting it into RNG, methane’s effect on the environment is limited. (EPA)(EDF)

Furthermore, according to the California Air Resources Board, RNG sourced from landfill-diverted food can provide a 125 percent reduction in greenhouse gas emissions, and RNG from dairy manure can result in a 400 percent reduction in greenhouse gas emissions.

Strong Business Models

Unlike most businesses, some RNG companies are paid a tipping fee to collect organic waste meaning that they actually turn a profit on their desired supplies; for example, EverGen Infrastructure earned $2.88 million in tip fees in the first half of 2022 alone.

More Dependable

RNG is more reliable and efficient compared to other renewable energy sources like wind and solar because its production isn’t intermittent and is available 24 hours a daywind turbines on average harness only 60% of the energy that passes through while solar panels capture only 18% to 22%.

How EverGen Infrastructure is capitalizing on RNG

Source: EverGen Infrastructure

RNG has proven to be very lucrative in recent years and EverGen Infrastructure (TSXV: EVGN)(OTCQX: EVGIF) is well underway to being the leader in RNG production within Canada and eventually North America.

With ample funding for all of its projects, including over $17 million in cash and cash equivalents, and $6 million in debt financing, the RNG company is expanding quickly and is expected to produce over 420,000 GJ per year from its core projects.

As a first-mover in the Canadian market, EverGen already owns and operates four RNG and/or organic processing facilities, and additionally owns a 50% interest in Project Radius, an Ontario-based RNG firm with three high-quality, on-farm RNG projects, collectively capable of producing around 1.7 million GJ of RNG per year.

Its four core projects include:

As you can see from the projects above, it is clear that EverGen is well-positioned to succeed in the Canadian market given the variety of highly productive RNG assets in its portfolio.

While this is certainly impressive on its own, what is even more valuable is that most of its projects have yet to reach full production capacity, meaning that as an investor, you will gain partial ownership of this company before it maximizes its return potential.

Upon completion of its three current expansion projects, EverGen forecasts that it will triple its EBITDA to C$13 million in 2023.

That being said, we understand that results in the present are just as important as those in the future, and fortunately, EverGen is already well underway with its production objectives.

As of right now, the company has signed multiple long-term offtake agreements with FortisBC, providing stable, predictable cash flows for EverGen and underpinning the company’s growth well into the future.

With all of its expansion projects fully funded and a sustainable cash flow model, investors can have confidence knowing that their money is in good hands during this exciting growth phase of the company.

But it doesn’t stop there.

As RNG demand increases substantially over the next few years, other utility firms like Energir, SoCalGas, and NW Natural are setting RNG targets at 20% by 2030, 20% by 2030, and 5% by 2025 respectively, and EverGen is an excellent candidate to fulfill their needs.

It is important to note that this is only one example of its cash flow generating markets with others including high-volume energy-consuming companies, municipalities, agricultural facilities, and more.

By the time all of its projects are completed, EverGen anticipates that its facilities will generate over $30 million in EBITDA annually targeting projects with EBITDA margins in the range of 50% to 60%.

Since many of its production costs are limited to the facilities themselves and not the actual extraction of organic waste, the company is built to retain more of its earnings which makes it highly valuable for investors looking to grow their capital.

And that’s only their near-term plan.

Source: Deal Night Toronto
Before we let you go, a final consideration, and one of the most important aspects of Edge Investment’s investing strategy, is the quality of management in place within the company.

With just over 16% insider ownership, this is a promising indication that they are properly aligned with their investors and are focused on delivering the best possible results for the company.

Since most of us will not have an opportunity to meet with the management team ourselves, knowing that their money is invested alongside ours, reassures us that they too are in it for the long haul.

As a first-mover and leader in this invaluable renewable energy market, EverGen Infrastructure (TSXV: EVGN)(OTCQX: EVGIF) is an RNG company every investor should have on their watchlist.

Want more EverGen Infrastructure? Check out our recent interview with CEO Chase Edgelow.


We are not brokers, investment or financial advisers, and you should not rely on the information herein as investment advice. If you are seeking personalized investment advice, please contact a qualified and registered broker, investment adviser or financial adviser. You should not make any investment decisions based on our communications. Our stock profiles are intended to highlight certain companies for YOUR further investigation; they are NOT recommendations. The securities issued by the companies we profile should be considered high risk and, if you do invest, you may lose your entire investment. Please do your own research before investing, including reading the companies’ public filings, press releases, and risk disclosures. Information contained in this profile was provided by the company, and extracted from public filings, company websites, and other publicly available sources. We believe the sources and information are accurate and reliable but we cannot guarantee it. The commentary and opinions in this article are our own, so please do your own research.

Copyright © 2022 Edge Investments, All rights reserved.

  • Declan O’Flaherty

    Declan holds a Bachelor of Commerce from the University of Alberta and has over 4 years of experience investing in financial markets. As a fundamental investor, Declan embraces the investment principles of Warren Buffett and his disciples. This puts a focus on finding businesses with healthy financials, competent and accountable leader, enduring competitive advantages, and those that are selling at discount to what they are worth.

    View all posts

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