Northland Power closes funding for 250-MW Energy Storage plans in Ontario

May 22, 2023
The company is developing the 250 MW/1,000 MWh project in partnership with Aecon Group, NRStor, and Six Nations of the Grand River Development Corporation. The grid-connected lithium-ion battery storage project will be sited in Haldimand County

Canadian power producer Northland Power has achieved financial close for its Oneida Energy Storage Project in Southern Ontario, securing all required financing.

The company is developing the 250 MW/1,000 MWh project in partnership with Aecon Group, NRStor, and Six Nations of the Grand River Development Corporation. Northland currently holds a 72 percent stake in the project.

The advanced stage, grid-connected lithium-ion battery storage project is sited in Haldimand County and marks Northland’s first investment in energy storage. It is expected to enter full commercial operations in 2025. The company says it aims to explore additional opportunities for battery energy storage within Ontario and other key markets as part of its portfolio expansion strategy.

The total cost of the Oneida Energy Storage Project amounts to approximately $800 million. Northland plans to finance around 75 percent of the construction costs through non-recourse project-level financing. The equity component will be funded using existing cash reserves and available liquidity from the company’s revolving credit facility.

To fulfill the remaining financing requirements, the project has secured a non-recourse construction and term loan from an external lender, matching the duration of the capacity contract. It has also received funding from Natural Resources Canada’s Smart Renewables and Electrification Pathways program. The remaining costs will be covered by contributed equity from the project’s various partners.

The Oneida project benefits from a 20-year capacity contract with the Independent Electricity System Operator (IESO) in Ontario. The contracted revenue accounts for about 60 percent of the project’s total revenues, while the remaining revenue will be generated through participation in the wholesale market.

Both the capital costs and revenue are indexed to the price of lithium, with the values expected to be fixed during the battery manufacturing process at year-end. Lithium ion is the chemistry used in the majority of utility-scale battery storage projects, although developers are exploring possibilities for longer duration components such as lithium iron phosphate combinations and iron flow batteries.

The revenue contract includes partial indexing to the Consumer Price Index (CPI) to account for increases in operating expenses. Once fully operational, Northland’s 180 MW share in the project is projected to contribute approximately $40 to $45 million in annual adjusted EBITDA over the initial five years, significantly bolstering the company’s financial performance.

“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.”