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.
FORWARD-LOOKING STATEMENTS
This press release contains certain
forward-looking statements including certain future oriented
financial information that are provided for the purpose of
presenting information about management’s current expectations and
plans. Readers are cautioned that such statements may not be
appropriate for other purposes. Forward-looking statements include
statements that are predictive in nature, depend upon or refer to
future events or conditions, or include words such as “expects,”
“anticipates,” “plans,” “predicts,” “believes,” “estimates,”
“intends,” “targets,” “projects,” “forecasts” or negative versions
thereof and other similar expressions or future or conditional
verbs such as “may,” “will,” “should,” “would” and “could.” These
statements may include, without limitation, statements regarding
Northland’s expectations for guidance, the completion of
construction, attainment of commercial operations which may differ
from expectations stated herein, the potential for future
production from project pipelines, cost and output of development
projects, litigation claims, plans for raising capital, the
potential impact of certain tax credits, and the future operations,
business, financial condition, financial results, priorities,
ongoing objectives, strategies and outlook of Northland and its
subsidiaries. These statements are based upon certain material
factors or assumptions that were applied in developing the
forward-looking statements, including the design specifications of
development the projects, the provisions of contracts to which
Northland or a subsidiary is a party, management’s current plans
and its perception of historical trends, current conditions and
expected future developments, as well as other factors that are
believed to be appropriate in the circumstances. Although these
forward-looking statements are based upon management’s current
reasonable expectations and assumptions, they are subject to
numerous risks and uncertainties. Some of the factors include, but
are not limited to, risks associated with sales contracts,
Northland’s reliance on the performance of its offshore wind
facilities at Gemini, Nordsee One and Deutsche Bucht for
approximately 50% of its Adjusted EBITDA and Free Cash Flow,
counterparty risks, contractual operating performance, variability
of sales from generating facilities powered by intermittent
renewable resources, offshore wind concentration, natural gas and
power market risks, operational risks, recovery of utility
operating costs, Northland’s ability to resolve issues/delays with
the relevant regulatory and/or government authorities, permitting,
construction risks, project development risks, acquisition risks,
financing risks, interest rate and refinancing risks, liquidity
risk, credit rating risk, currency fluctuation risk, variability of
cash flow and potential impact on dividends, taxation, natural
events, environmental risks, health and worker safety risks, market
compliance risk, government regulations and policy risks, utility
rate regulation risks, international activities, reliance on
information technology, labour relations, reputational risk,
insurance risk, risks relating to co-ownership, bribery and
corruption risk, legal contingencies, and the other factors
described in the “Risks Factors” section of Northland’s 2022 Annual
Information Form, which can be found at www.sedar.com under
Northland’s profile and on Northland’s website at
northlandpower.com.
The forward-looking statements contained in this
release are based on assumptions that were considered reasonable as
of the date hereof. Other than as specifically required by law,
Northland undertakes no obligation to update any forward-looking
statements to reflect events or circumstances after such date or to
reflect the occurrence of unanticipated events, whether as a result
of new information, future events or results, or otherwise.
For further information, please
contact:
Mr. Wassem Khalil, Senior Director, Investor
Relations647-288-1019investorrelations@northlandpower.com
Northland Power (TSX:NPI)
Historical Stock Chart
From Apr 2024 to May 2024
Northland Power (TSX:NPI)
Historical Stock Chart
From May 2023 to May 2024