With lithium-ion batteries raising ESG-related concerns, investors are increasingly seeing value in long-duration storage
$800m Northland storage project reaches financial close
Northland Power’s $800 million Oneida Energy Storage Project in Southern Ontario, Canada has reached financial close.
Northland currently owns 72 per cent of the 250 MW / 1,000 MWh 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 battery storage facility located in Haldimand County. The project is Northland’s first investment in energy storage - full commercial operation is expected to commence in 2025.
Northland will utilise 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 has also provided funding from the Smart Renewables and Electrification Pathways programme, recognising 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 per cent of 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”, a Northland Power statement said. 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-$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,” the statement added.