Oneida Energy Storage Project, the largest in Canada employing lithium-ion batteries with 250MW/1GWh nameplate capacity, has reached financial close, according to Northland Power, 72% owner of the $800m grid-connected project.
“Oneida provides Northland with size and scale in Ontario from which we can grow,” said CEO Mike Crowley, who said the clean energy developer based in Toronto remains in the hunt for global utility battery storage investment opportunities.
The project, which is scheduled to begin full commercial operation in 2025, will draw and store existing surplus baseload and renewable energy during off-peak periods and release that back to the grid during high energy demand.
In addition, the energy storage facility will help stabilize Ontario’s electricity sector by providing important grid balancing services.
Ontario’s energy demands are increasing due to a phasing out of older infrastructure, electrification of all sectors, and population growth.
Northland will utilise $600m non-recourse project-level financing to fund 75% of the construction costs. Its equity component will be funded from existing cash on hand and available liquidity under its revolving credit facility.
Total required project debt has been fully committed by an unnamed external lender as a non-recourse construction and term loan, matching the 20-year tenor of a capacity revenue contract with Ontario’s Independent Electricity System Operator.
Natural Resources Canada, a federal government department, also provided $50m in funding from its Smart Renewables and Electrification Pathways programme, launched in June 2021 to promote renewable energy and grid modernisation projects.
Northland said Oneida’s contracted revenue constitutes 60% of total revenues, and the remainder will be earned from operating the battery in the province’s bulk electricity 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 of the batteries at yearend.
Once fully operational, Northland anticipates its share of the project will contribute $40-45m of annual adjusted EBITDA over the first five years to the company’s financial results.
Partnering on Oneida are construction giant Aecon Group and NRStor, a Canadian energy storage developer, both based in Toronto, and Six Nations of the Grand River Development Corporation. Six Nations is among the largest indigenous peoples in Canada.