- Partner News
- Media Releases
- Mainstream News
TORONTO, May 17, 2023- Northland Power Inc. (“Northland” or the “Company”) (TSX: NPI) today announced that the Oneida Energy Storage Project (“Oneida” or the “project”) in Southern Ontario has reached financial close, signifying that the project has secured all necessary financing. Northland currently owns 72 per cent of the project, which is being developed in partnership with NRStor Inc., Six Nations of the Grand River Development Corporation and Aecon Group Inc.
Oneida is a 250 MW / 1,000 MWh battery storage facility located in Haldimand County. The project is Northland’s first investment in energy storage and offers immediate size and scale in a key target market, positioning the Company as a market leader. The Company will look at further opportunities within the Ontario market and other key markets to build out its battery energy storage portfolio. Full commercial operations for the project are expected to commence in 2025.
“Today’s announcement is a significant milestone for the Oneida project and a key step in Northland’s strategy of developing and operating battery storage facilities which will play a key role in providing stability and reliability to energy grids,” said Mike Crawley, President and Chief Executive Officer of Northland. “Oneida provides Northland with size and scale in Ontario from which we can grow. We will look at further development opportunities within energy storage as part of our overall ambition to help accelerate the global clean energy transition.”
The total cost for the project is approximately $0.8 billion. Consistent with Northland’s financing strategy, the Company will utilize non-recourse project-level financing to fund approximately 75 per cent of the construction costs. Northland’s equity component will be funded from existing cash on hand and available liquidity under its revolving credit facility. Total debt required for the project has been fully committed by an external lender in the form of a non-recourse construction and term loan, matching the tenor of the capacity contract. Natural Resources Canada (“NRCan”) has also provided funding from the Smart Renewables and Electrification Pathways program, recognizing that the project will reduce greenhouse gas emissions. The remaining costs will be funded by the contributed equity from the various partners.
Oneida will benefit from a 20-year capacity contract with the IESO in Ontario. Contracted revenue constitutes approximately 60% total revenues, and the remaining will be earned from operating the battery in the wholesale market. Both total capital costs and revenue are proportionally indexed to the price of lithium and are expected to be fixed at the time of manufacturing the batteries at year end. The revenue contract is partially indexed to CPI to cover increases in operating expenses. Once fully operational, Northland’s share in the project is expected to contribute approximately $40 to $45 million dollars of annual Adjusted EBITDA over the first five years to Northland’s financial results. Northland is currently exploring how the Investment Tax Credits announced in the 2023 Federal Budget will apply to the Oneida project.
|Project Overview (C$)|
|Total Project||Northland’s Interest|
|Capacity||250 MW||180 MW|
|Contracted Life||20 years||n/a|
|Total Capital Costs||$0.8 billion||n/a|
|Non-Recourse Project Financing||$0.6 billion||n/a|
|Total Equity (net of NRCan grant)||$0.15 billion||$0.1 billion|
|5-year Average Annual Adjusted EBITDA||n/a||$40 to $45 million|
|5-year Average Annual Free Cash Flow||n/a||$15 to $20 million|
|Non-Recourse Debt Term||20 Years||n/a|
S&P and Fitch Confirm Investment Grade Corporate Credit Rating
On May 15, 2023, Standard & Poor’s affirmed Northland’s corporate credit rating of BBB (Stable) and preferred share rating on Standard & Poor’s Canada scale of BB+. In addition, on May 16, 2023, Fitch Ratings affirmed Northland’s Long-Term Issuer Default Rating at BBB and its preferred share rating at BB+ with a Rating Outlook of Stable.
ABOUT NORTHLAND POWER
Northland Power is a global power producer dedicated to helping the clean energy transition by producing electricity from clean renewable resources. Founded in 1987, Northland has a long history of developing, building, owning and operating clean and green power infrastructure assets and is a global leader in offshore wind. In addition, Northland owns and manages a diversified generation mix including onshore renewables, efficient natural gas energy, as well as supplying energy through a regulated utility.
Headquartered in Toronto, Canada, with global offices in eight countries, Northland owns or has an economic interest in 3.0 GW (net 2.6 GW) of operating capacity. The Company also has a significant inventory of projects in construction and in various stages of development encompassing over 20 GW of potential capacity.
Publicly traded since 1997, Northland’s common shares, Series 1 and Series 2 preferred shares trade on the Toronto Stock Exchange under the symbols NPI, NPI.PR.A and NPI.PR.B, respectively.
For further information, please contact:
Mr. Wassem Khalil, Senior Director, Investor Relations