Canada Infrastructure Bank finds its groove with battery storage project

Open this photo in gallery:

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

Last week, the owners of Oneida Energy Storage LP announced two private-sector players are buying into the $800-million project, which the federal government-owned Canada Infrastructure Bank began backing two years ago.

The new partners, renewable energy producer Northland Power Inc. and construction company Aecon Group Inc., will install 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 farm town of Hagersville, where 14 million tires once 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, Ontario, investing in largest battery storage facility in Six Nations

When completed, Oneida will rank among the world’s largest energy-storage facilities. By holding power produced from hydro, nuclear, solar or wind facilities during off-peak hours, then feeding it into the grid when demand spikes, Oneida will reduce the need for natural gas-powered plants. The project’s owners forecast it will reduce greenhouse gas emissions by an amount equivalent to taking 40,000 cars off the roads.

Oneida is proof the bank’s approach to funding infrastructure actually works; the federal Conservatives and NDP said the concept would fail and pledged to shut down the agency in the last election campaign. CIB executives now have a track record for making initial investments in projects that wouldn’t otherwise get built, then selling those stakes to private companies.

In 2021, the CIB committed up to $170-million to Oneida to get the project rolling. The money allowed founders NRStor Inc. – headed by former Home Depot Canada chief executive officer Annette Verschuren – and the SNGRDC to negotiate with utilities and suppliers from a position of strength.

“The CIB sees the Oneida Energy Storage project as important for proving out the concept of battery storage in Ontario,” Ross Marowitz, a spokesperson for the agency, said in an e-mail. “The CIB committed to the project very early – before any other investors could. And that has, in turn, allowed NRStor and SNGRDC the opportunity to bring in additional partners.”

Last week, Northland invested at least $100-million to become majority owner of the project, which struck a 20-year agreement 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 as part of a $141-million construction contract.

Oneida is still two years away from completion and, as a result, it is too early for the CIB to calculate its overall return from the project. However, buy-in from Northland and Aecon means the CIB has begun to take its money off the table. This project is already paying significant dividends for taxpayers. In addition, First Nations leaders say Oneida is a case study for Indigenous ownership of infrastructure.

Oneida’s evolution from concept to reality shows the federal infrastructure bank has worked through teething pains encountered after its launch. The five-year-old CIB made a splash with one initial commitment, a $1.28-billion investment in Montreal’s light-rail transit network, then went quiet.

Former federal finance minister Bill Morneau championed the CIB and his recently published book – titled Where To From Here – describes how the government launched the agency with ambitious plans. For example, he said the CIB considered backing the sale of Toronto’s Pearson International Airport, only to abandon privatization plans in the face of opposition from groups that included taxi drivers. Mr. Morneau said: “Unfortunately, we were not able or willing to invest the political capital needed to maximize its potential.”

The CIB recruited a new CEO in 2020 – former Infrastructure Ontario head Ehren Cory – and began putting cash to work. Along with the Oneida investment, Mr. Cory committed $970-million last year toward Canada’s first small modular reactor – another project that needs to prove its merits before attracting private backers. The CIB also recently backed broadband networks for Indigenous communities in rural Alberta and water-treatment facilities for First Nations in British Columbia.

As this money goes out the door, taxpayers can take comfort from knowing the country’s largest renewable power and construction companies are buying what the CIB is selling.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.