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TransCanada takes possession of first Ontario solar power facility

TransCanada CEO Russ Girling at the company AGM in Calgary on April 26, 2013. TransCanada has taken possession of the first of nine Ontario solar power facilities, part of a $470-million transaction it signed in 2011.

Chris Bolin/The Globe and Mail

TransCanada Corp. has taken possession of the first of nine Ontario solar power facilities, part of a $470-million transaction it signed in 2011 that expands the company's renewable energy portfolio as it also seeks to ship oil sands-derived crude by pipeline.

TransCanada said it expects the remaining projects, which are being constructed by Canadian Solar Inc. in southern Ontario as well as the New Liskeard area, will start up over the next year and a half. The first is coming on line about six months after its initial target.

The total generating capacity of the nine photovoltaic projects is 86 megawatts, or enough to power up to roughly 17,000 homes. The energy is being sold to the Ontario Power Authority for a feed-in tariff rate of $443 per megawatt hour under 20-year power purchase agreements.

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The facilities add to TransCanada's slate of renewable energy projects, which also include such facilities as the Cartier wind farm in Quebec, Canada's largest, as well as wind and hydro in the U.S. Northeast.

That carbon-free portfolio is growing as TransCanada seeks to further much higher-profile initiatives such as the Keystone XL and Energy East oil pipelines. The $5.3-billion (U.S.) Keystone XL project, which would move Alberta crude to Texas refineries, is still awaiting a go-ahead decision from Washington nearly five years after the company first applied to build it.

Last week, U.S. President Barack Obama said the contentious pipeline will be approved only if it "does not significantly exacerbate the problem of carbon pollution." That left analysts wondering if the statement pointed to an eventual green light or rejection.

As that process drags on, the company has proposed shipping the Alberta oil to Quebec and Atlantic Canada via a converted natural gas pipeline. The Energy East proposal has enthuiastic support from the premiers of Alberta and New Brunswick.

TransCanada's natural gas pipeline network in Canada and the United States remains its largest business in terms of both asset value, at $23.2-billion at the end of last year, and 2012 revenues of $4.3-billion. The energy business, which includes the renewables, ranked second with asset value of $13.2-billion and revenue of $2.7-billion. A major part of that is the Bruce nuclear complex on the shore of Lake Huron.

Solar, hydro and wind alone account for about 10 per cent of the company's total energy generation capacity of 10,840 MW, FirstEnergy Capital Corp. analyst Steven Paget pointed out.

Despite that, Mr. Paget said, the portfolio is important to the company, when compared with the capacity to TransAlta Corp.'s recently announced spin-off vehicle, TransAlta Renewables, which will have 1,112 MW of wind and hydro facilities.

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TransAlta said it aims to sell up to 20 per cent of the vehicle to generate up to $250-million it will use partly to cut debt.

Under TransCanada's solar transaction, the company pays Canadian Solar for each project as it begins commercial operations and meets TransCanada's acceptance testing.

The company's shares were up 97 cents, or 2 per cent, at $46.25 on the Toronto Stock Exchange on Tuesday.

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About the Author
Mergers and Acquisitions Reporter

Jeffrey Jones is a veteran journalist specializing in energy, finance and environment for The Globe and Mail’s Report on Business, based in Calgary. Before joining The Globe and Mail in 2013, he was a senior reporter for Reuters, writing news, features and analysis on energy deals, pipelines, politics and general  topics. More

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