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Canada's renewables developers flex their muscles on global stage

Canada’s renewables operators are flexing their muscles as never before, and the effects are increasingly being felt around the world.

The latest example is Brookfield Asset Management’s surprising revelation that it spent nearly $100m acquiring a 12% stake in TerraForm Power, SunEdison’s troubled yieldco, and it may look to take control of the company through further investment. TerraForm owns 3GW of wind and solar assets in the Americas and western Europe.

But Brookfield’s announcement is only the latest in a flurry of big investments Canadian renewables players are making beyond their borders. And while many of them – like TransAlta Renewables and Alterra Power – are investing in the US market, that’s only a small part of the story.

Start with Northland Power, the Toronto-based independent power producer. Northland had scarcely ventured beyond eastern Canada several years ago when it decided to buy a majority stake in the 600MW Gemini offshore wind project off the Dutch coast. A year later it doubled down, buying RWE’s trio of Nordsee projects in German waters. 

Northland’s sudden blast into the European offshore wind market apparently inspired envy in Calgary-based Enbridge, which is Canada’s second largest owner of wind capacity alongside its massive oil and gas pipelines business.

Having stated its desire to triple its renewables capacity by 2020, Enbridge late last year bought a quarter-stake in the Rampion project off the UK coast, and then followed this year by investing C$282m ($217m) in a French offshore wind project company owned by EDF Energies Nouvelles.

Montréal-based Boralex, meanwhile, has quietly become France’s largest independent onshore wind generator. Boralex recently cemented its position in the French market by buying a 350MW pipeline of projects, much of it to be brought online over the next two years.

Innergex, too, has been on the hunt for projects in France, closing recently on a portfolio of seven operating wind farms from German developer wpd. Intriguingly, Innergex, which is also based in Montréal, has signaled its interest in investing in renewables projects in Mexico.

Guelph, Ontario-based Canadian Solar – already among the most active solar developers in North America, on top of its China-based manufacturing business – has expanded recently into project development in Brazil and Mexico. Even privately owned Canadian developers, like Calgary-based BluEarth, are known to be contemplating pushing into foreign markets.

There are a number of factors behind the overseas expansion of Canada’s renewables developers.

The relatively weak Canadian economy of recent years has meant that there have been scant opportunities to build new power plants of any kind in the country. Ontario’s most recent wind tender was massively oversubscribed, leaving many ambitious developers emptyhanded.

At the same time, most Canadian renewables companies have maintained robust balance sheets and stock prices compared to their US counterparts – and most especially compared to US yieldcos, with whom they compete for projects.

Canada’s renewables developers have money to spend and limited options for spending it at home. And with countries around the world embracing wind and solar, the opportunities for spending that money abroad have never looked more enticing.

It helps, too, that Canadian pension funds have demonstrated a fast-growing appetite for renewables, both at home and abroad. Some, like the Desjardins Group Pension Plan, are investing alongside Canadian developers like Innergex; others, like Caisse de dépôt et placement du Québec, are investing directly in renewables markets as farflung as India.

There’s plenty of precedent, of course, for renewables developers to build and buy projects in foreign countries – with Europe’s industry the most obvious example. Spain’s Iberdrola is the second largest owner of US wind capacity, and Italy’s Enel Green Power has emerged as a powerhouse in Latin America’s blossoming renewables market.

But Canada’s deeply experienced renewables operators are finally taking their place on the global stage. Their role will only grow in importance from here.

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