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Investing.com -- Spruce Power Holding Corporation (NYSE:SPRU) stock surged 20% after the company announced a multi-year agreement to sell its Solar Renewable Energy Credits (SRECs) in New Jersey to a Fortune Global 50 energy sector counterparty.
The transaction is expected to generate approximately $10 million in fully-hedged revenue for Spruce through 2029. The company, which owns and operates distributed solar energy assets across the United States, described the deal as part of a broader initiative to capture benefits from its SRECs.
"We view scaling SREC registration as a low cost, low risk opportunity to generate capital-light high margin, cash flow for the Company," said Chris Hayes, Chief Executive Officer of Spruce. "This transaction is another example of Spruce’s expertise in maximizing value from our assets while hedging against future price movements."
The forward contract provides Spruce with a hedged revenue stream that reinforces the company’s cash flow generation. Hayes noted that the counterparty is likely using Spruce’s SRECs as a compliance instrument to hedge electricity supply positions in New Jersey.
Spruce is actively pursuing similar opportunities in certain northeastern states and California through its Environmental Commodities Markets desk. The company also offers Spruce PRO, a suite of services for third-party owners of distributed generation assets.
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