Opinion: Canada Infrastructure Bank finds its groove with battery storage project

In a corner of Ontario best known for a tire fire and biker rallies, the $35 billion Canada Infrastructure Bank is finding its stride.

Last week, the owners of Oneida Energy Storage LP announced that two private sector players are buying the $800 million project, which the federally owned Canada Infrastructure Bank began backing there. two years old.

New partners, renewable energy producer Northland Power Inc. and construction company Aecon Group Inc., will install an industrial-sized Tesla TSLA-Q batteries on a site owned by the Six Nations of the Grand River Development Corp. (SNGRDC). The project is being built near the farming town of Hagersville, where 14 million tires went up in smoke in a blaze that burned for 17 days, and Port Dover, where thousands of bikers gather every Friday the 13th.

Canada and Ontario invest in Six Nations’ largest battery storage facility

When completed, Oneida will rank among the largest energy storage facilities in the world. By conserving electricity generated from hydroelectric, nuclear, solar or wind facilities during off-peak hours, then feeding it into the grid when demand increases, Oneida will reduce the need for natural gas-fired power plants. The owners of the project predict that it will reduce greenhouse gas emissions by an amount equivalent to taking 40,000 cars off the road.

Oneida is proof that the bank’s approach to infrastructure financing actually works; the federal Conservatives and the NDP said the concept would fail and pledged to shut down the agency during the last election campaign. CIB leaders now have a reputation for making upfront investments in projects that otherwise would not be built, and then selling those stakes to private companies.

In 2021, CIB has committed up to $170 million to Oneida to launch the project. The money allowed founders NRStor Inc. – led by former Home Depot Canada CEO Annette Verschuren – and the SNGRDC to negotiate with utilities and suppliers from a position of strength.

“The CIB views the Oneida Energy Storage project as important in proving the concept of battery storage in Ontario,” Ross Marowitz, a spokesperson for the agency, said in an email. “The CIB got involved very early in the project, before any other investor could. And that, in turn, allowed NRStor and SNGRDC to bring in additional partners.

Last week, Northland invested at least $100 million to take majority ownership of the project, which entered into a 20-year deal to sell power to the Ontario government. Oneida joins a Northland portfolio that includes massive wind farms in Germany and Taiwan. Aecon is also taking an equity stake in a $141 million construction contract.

Oneida is still two years away from completion and therefore it is too early for CIB to calculate the overall performance of the project. However, the joining of Northland and Aecon means that the CIB has started to take its money off the table. This project is already paying significant dividends to taxpayers. Additionally, First Nations leaders say Oneida is a case study for Indigenous ownership of infrastructure.

The evolution of Oneida from concept to reality shows that the federal infrastructure bank has overcome the start-up difficulties encountered after its launch. The five-year-old CIB caused a stir with an initial commitment, a $1.28 billion investment in Montreal’s light rail transit system, then fell silent.

Former Federal Minister of Finance Bill Morneau defended the CIB and its recently published book – entitled Where to go from here – describes how the government launched the agency with ambitious plans. For example, he said the CIB had considered supporting the sale of Toronto’s Pearson International Airport, only to later abandon privatization plans in the face of opposition from groups including taxi drivers. Mr Morneau said: “Unfortunately, we have not been able or willing to invest the political capital necessary to maximize its potential.”

CIB hired a new CEO in 2020 – former Infrastructure Ontario chief Ehren Cory – and started putting money to work. Along with the Oneida investment, Mr. Cory committed $970 million last year to Canada’s first small modular reactor – another project that must prove its merits before attracting private backers. CIB has also recently supported broadband networks for Aboriginal communities in rural Alberta and water treatment facilities for First Nations in British Columbia.

As this money is spent, taxpayers can take comfort in knowing that the largest renewable energy and construction companies in the country are buying what the CIB is selling.

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