NextEra Energy Partners, LP announced that it has entered into a definitive agreement with Canada Pension Plan Investment Board (CPPIB) for the sale of its portfolio of wind and solar generation assets in Ontario, Canada, for a total consideration of about $582.3 million. This includes the net present value of the O&M origination fee, subject to customary working capital and other adjustments, plus the assumption by the purchaser of approximately $689 million USD in existing debt.
The transaction includes the sale of six fully contracted wind and solar assets with an average contract life of about 16 years.
“We are pleased to reach this agreement with CPPIB for the sale of our Canadian portfolio, which we expect will be accretive to NextEra Energy Partners’ long-term growth,” said Jim Robo, chairman and chief executive officer. “The sale of these assets, at a very attractive 10-year average CAFD yield of 6.6%, including the present value of the O&M origination fee, highlights the underlying strength of the partnership’s renewable portfolio.”
An affiliate of NextEra Energy Resources will continue to operate all of the facilities included in the transaction under a 10-year services agreement with CPPIB.
“As discussed during our earnings call in January, we expect the sale of the Canadian portfolio to enable us to recycle capital back into U.S. assets, which benefit from a longer federal income tax shield and a lower effective corporate tax rate, allowing NextEra Energy Partners to retain more CAFD in the future for every $1 invested. We expect to accretively redeploy the proceeds from this transaction to acquire higher-yielding U.S. assets from either third parties or NextEra Energy Resources,” added Robo.
The transaction includes the sale of six fully contracted wind and solar assets, with an average contract life of approximately 16 years and 10-year average CAFD of $38.4 million. Located in Ontario, the portfolio has a combined total generating capacity of approximately 396 MW and consists of:
◾Bluewater, a 59.9-MW wind generating facility;
◾Conestogo, a 22.9-MW wind generating facility;
◾Jericho, a 149-MW wind generating facility;
◾Summerhaven, a 124.4-MW wind generating facility;
◾Moore, a 20-MW solar energy generating facility; and
◾Sombra, a 20-MW solar energy generating facility.
NextEra Energy Partners expects the sale to close during the second quarter of 2018. The transaction is subject to receipt of regulatory approvals and satisfaction of customary closing conditions.
NextEra Energy Partners continues to expect a Dec. 31, 2018, run rate for adjusted EBITDA of $1.00 billion to $1.15 billionand CAFD of $360 million to $400 million, reflecting calendar year 2019 expectations for the forecasted portfolio at year-end 2018.
Citi and CIBC Capital Markets are serving as financial advisors to NextEra Energy, and McCarthy Tétrault LLP and Gowling WLG (Canada) LLP are legal counsel.
Reading an article recently about Greenpeace trying (apparently unsuccessfully) to create a solar-powered town in India several years ago reminded me of a project in the GTA proposing to use “zoo poo” to create a 500-kW biogas plant.
The project is a co-op known as Zoo Share Biogas Co-operative and plans to use methane from animal waste to produce electricity in a biogas plant. The chatter about this project goes back to June 3, 2011 and those behind the project applied for a contract with the OPA (since merged with IESO).
So where is it now? A visit to the website shows the OPA advised them early July 2013 they were granted the contract. A PDF file titled “Construction Plan Report” on the site reveals “Construction of the facility is scheduled for summer 2014 with completion and grid connection expected in the fall of 2014.”
Needless to say, the plant is still not functioning but nevertheless has taxpayer support and some $4 million raised from individuals and others who purchased bonds that carry a 7% coupon on a project estimated originally to cost $4.8 million.
Curiosity further led me to look at the members of the Co-op’s Board of Directors and I noted Chris Benedetti was a Board member. Benedetti is a principal with the Sussex Strategy Group and the head of its Energy and Environment Practice. Some will recall Mr. Benedetti was involved in a major fundraising event for the Ontario Liberal Party as reported in an article in the Globe and Mail in March 2016 headlined: “For $6,000, donors get face time with Kathleen Wynne and Bob Chiarelli”.
That article contained the following attributed to Mr Benedetti: “The evening is being promoted by Sussex Strategy Group, one of the country’s top lobbying firms. In an e-mail encouraging energy industry insiders to attend, Sussex principal Chris Benedetti wrote that the soirée will be a ‘small event with a limited number of tickets,’ giving all attendees face time with Ms. Wynne and Mr. Chiarelli.”
Previously, the Sussex Strategy Group’s name was connected with what the Toronto Star noted in a November 2010 headline as: “Group plans to ‘dupe’ public about green energy costs: Tories”. The article also noted: “The Oct. 18 document, drafted by consulting firm Sussex Strategy Group, lays out a plan — complete with a $300,000 initial budget — to change the channel on the current green energy debate, which is largely focused on cost.”
The Benedetti/Sussex connection led me to visit the Sussex website; the page titled “Our People” shows Kim Warren’s name and picture of Kim Warren under Sussex’s “Affiliates.”. Mr. Warren was, until January 1, 2017, the COO of IESO; if you check the “Sunshine List” for the 2015 year you will note he was paid $577,000.04 — not too shabby for a public servant! When he was employed at IESO he spoke about integrating renewable energy. Due to his positive tone the short video of his speech was posted on the CanWEA website; he was clearly supportive and claimed wind energy “was a big part” of shutting down coal. (Many grid operators around the world would dispute his claim.)
Searching on Google again using Mr. Warren’s name and his IESO affiliation turns up other relationships. One that pops up is NRStor: a press release dated June 20, 2017 announces he is the newest addition to NRStor’s Board as a Director and states: “The insights and experience Kim Warren brings to our board as previous COO of the IESO is significant,” said Annette Verschuren, NRStor’s Chair and CEO. “He is a world expert on power systems and his extensive understanding of the electricity market will help NRStor grow and develop our energy storage business.”
Coincidentially, NRStor has been awarded contracts by IESO with the first one on July 22, 2014 announced by then Energy Minister, Bob Chiarelli: “Today, the Minister of Energy, the Honourable Bob Chiarelli, announced the commencement of commercial operations for NRStor Incorporated’s (NRStor) 2 megawatt (MW) Temporal Power Limited (Temporal Power) flywheel energy storage facility in Harriston, Ontario.” Now assuming the 2MW of storage was called on to replace Ontario’s generated power it would be capable of supplying demand for half a second, or less.
The second contract awarded to NRStor by IESO noted: “NRStor will build a fuel-free compressed air energy storage facility that will provide 7 MWh of storage capacity to the IESO.”
For those who wonder who is NRStor, the following comes from their website: “NRStor is a market leader in understanding energy storage technologies, their costs, and the benefits they can provide customers across the energy supply chain. As a project developer, we develop, own and operate industry-leading energy storage projects in partnership with progressive stakeholders and leading technology providers.”
NRStor was founded by Ms. Annette Verschuren, former CEO of Home Depot. Ms. Verschuren spoke to the Standing Committee on Finance and Economic Affairs May 19, 2015 in respect to Bill 91, Building Ontario Up Act. One of the notable comments she made was,“We are a developer of energy storage technology, so we build projects. We are working on about 20 projects at the moment and we see the introduction of energy storage really making a big difference in terms of how we get electricity to market in a cheaper way. NRStor recently announced a partnership with the Tesla Powerwall, which is very exciting, to be introduced. We want to start in Ontario. We see that movement towards, again, using excess energy to improve costs and make it easier for customers.”
Ms. Verschuren also offered her “Congratulations to the Ontario government for its announcement on cap-and-trade policy.” and: “The privatization of Hydro One is also something that I’m very supportive of.”
While Ms. Verchuren is very accomplished and informed, from my perspective, she has missed the effects on hundreds of thousands of Ontario ratepayers/taxpayers from the Green Energy Act, and the “cap and trade” tax. Ontario’s “excess energy,” as she puts it, represent a huge cost to ratepayers, which seems to have escaped her thinking.
The conflict in Ms Verchuren’s testimony is exacerbated by adding Kim Warren as a Director of NRStor. The fact that NRStor has benefited from IESO’s contract awards should have triggered the question of how the media and public would view his appointment. As a director he would be required to be a shareholder in NRStor which seems to fly in the face of IESO’s “Post-Service Restrictions” contained in their Code of Conductwhich states: “It is expected that the restriction against purchasing or holding any Prohibited Financial Interests continues until 6 months following the end of your employment or association with the IESO.”
Worth noting is Ms. Verchuren is registered as a lobbyist with the Office of the Integrity Commissioner as is Chris Benedetti (lobbyist for NRStor and 55 other companies), but Kim Warren is not.
The Ontario Ministry of Energy seems to have created a tangled web that benefits select companies and individuals.
Rex Murphy: Cherish your suffering, Ontario; Premier Wynne’s green gods know of your sacrifice
Those outside the faith, and mere loitering agnostics, see nothing here but a catalogue of burdens. Shackles of an alien god. But to those within the covenant, they are the way stations on the hard and stony path to delicious rewards reserved for the elect.
It cannot have escaped the attention of many that Ontario is most unsettled these days. That its industries are anxious, its debt colossal, its citizens not in a pleasant mood. Ontario is in a lot of pain. But let me assure readers outside Ontario that it has not all been for nothing. There are rewards. They are subtle, intangible, but they are real. Let me explain.
Those who share the faith and endorse the morality of global warming derive very much the same satisfactions that attended fidelity to the less demanding dogmas of earlier and less ambitious creeds. The carbon regime, tax hikes on gasoline, failed or failing long-term contracts, fear and trembling in the manufacturing sector, the gnashing of teeth in poorer (and now colder) households, Ontario Hydro’s ever-swelling levies, the despoliation of rural vistas by towers of whirling, bird-bashing windmills: These, each in itself, and all in combination are the acknowledged costs of the Great Greening.
Those outside the faith, and mere loitering agnostics, see nothing here but a catalogue of burdens. Shackles of an alien god. But to those within the covenant, they are the way stations on the hard and stony path to delicious rewards reserved for the elect. This is the true chemistry of belief. What appear as obstacles to heretics, appear to believers as smooth escalators to a higher state. Accepting, embracing what must be done supplies them with a sense of inner sanction, endows them with that peace of mind which a lesser scripture records, rather churlishly, as passing all understanding……
We recently drove from London to St. Louis, Mo. On our drive to Windsor we saw many wind turbines. After crossing the border and driving through Michigan, Illinois, Indiana and Missouri, we saw no wind turbines.
I guess they do not need any, since we sell our electricity to them cheaper than it costs us to produce it.
The blowout of wind and solar in the Ontario Electricity System is revealed by production levels that are well below the rated installed capacity.
Ontario can produce power from nuclear, natural gas, hydro, wind, solar and biofuel energy generators. The results are recorded in many ways but the three used here are (A) the total installed capacity of each generator type (what was installed), (B) the forecast capability at outlook peak (what can be produced) and finally the (C) generator output by fuel type for 2017 (production).
It is neither possible nor desirable to run the electricity system flat out and some redundancy needs to be built into the system for maintenance and emergencies. The total installed capacity of all fuel types reported is 36,853 MW, but at peak demand the system is capable of producing 26,704 MW of power each hour. The total production that IESO counts on at peak demand is 26,704 / 36,853 = 72% of the energy system potential.
The second column provides the Forecast Capability at Outlook Peak and takes into account deratings, planned outages and “allowances for capability levels below rated installed capacity”. When you compare the installed nameplate capacity for wind and solar with the actual production there is an 80 to 90 % drop in production over nameplate capacity!
The total output for all fuel types (column C) for Jan – Aug 31, 2017 is available on the IESO website – ‘Generator Output by Fuel Type Monthly Report 2017’. The total output from Jan – Aug was 12,023 MW of power produced each hour. According to the IESO the forecast capability of the existing generator stations at outlook peak is 26,704 MW of power each hour. The production from the electricity system was 12,023/26,704 = 45% of the capability. So why did we agree to purchase power from Quebec?
The renewables – wind and solar are intermittent power sources and require back-up power. Natural gas was the choice made for Ontario. Natural gas is a responsive base load fuel that can be ramped up or down quickly. Nineteen natural gas plants have been commissioned in Ontario since 2003. According to the IESO they are capable of producing 8,371 MW of power each hour, yet the natural gas plants only produced 416.7 MW of power each hour from Jan – Aug. We have gas plants operating at 4.9 % of their potential!! This means that they are being under utilized and sit idle the majority of the time. The private for profit corporate owners are not running a charity so the Ontario ratepayers are paying millions of dollars each month to gas plants paid not to produce power.
Wind and solar on the other hand blew out. They were only able to produce 13.2 to 18% of their nameplate capacity. The production from wind for Jan – Aug 31 was 764 MW per hour from a name plate capacity of 4,213 MW. A dismal performance with 18% production from the installed nameplate capacity. According to the IESO the forecast capability for wind at peak demand is 533 MW or 12.7% of the installed capacity. The difference is explained as an “allowance for capability levels below rated installed capacity.” No kidding – considerable distortion exists in the presentation of material when a product has an 80% drop in production over the stated manufacturer nameplate capacity. This is like telling me that my new car is capable of 1000 km on a tank of gasoline and instead it goes 200 km!
According to the IESO the monthly wind capacity contribution values range from 12.6% to 37.8% of the installed capacity (18 – Month Outlook p.19). So the nameplate capacity of an industrial wind turbine is somewhat arbitrary.
To understand the limits of wind power, Glen Schleede explains it best. “Wind turbines have little or no ‘capacity value’ because they are unlikely to be producing electricity at the time of peak electricity demand. Therefore, wind turbines cannot substitute for conventional generating capacity responsible for providing reliable electricity to customers.
Second, a kilowatt-hour (kWh) of electricity from wind has less value than a kWh of electricity from a reliable (dispatchable) generating unit providing base load power – nuclear, natural gas or hydro which can produce electricity whenever the electricity is needed.
These issues are important because “wind farm” developers and lobbyists have misled the public, media and government officials by making false claims and by using terms intended to confuse their listeners
The true capacity value of a wind turbine or ‘wind farm’ is generally less than 10% of nameplate capacity and often 0% or slightly above — simply because, at the time of peak electricity demand, the wind isn’t blowing at a speed that will permit the turbine to produce any or much electricity. Claims of wind turbine capacity value have been exaggerated by wind industry officials and lobbyists, by regulatory agencies”, and as we are finding out in Ontario industrial wind turbines generate a minimal amount of electricity.
The IESO hourly wind generator output 2006 – the present provides data on every industrial wind facility in Ontario. If we use the West Lincoln NRWF industrial wind facility as an example we find that the facility is rated at 230 MW nameplated capacities. On average the facility produced less than 27 MW per hour during July, Aug and Sept of 2017, when electricity is generally at its greatest demand. The production was 11.7% of the name plated capacity! It never once reached its nameplate capacity of 230 MW and it only went above 200 MW for 20 hours in the last three months.
Hydro – a baseload renewable energy source – produced 3242 MW of power per hour from Jan – July from a potential of 5,786 MW. So we are only using 56% of the potential production from our cleanest, greenest, cheapest energy source. The sad reality for the ratepayers of Ontario is that the hydro plants could easily have been ramped up an additional 850 MW per hour to cover the contribution of wind and solar. Instead we ran the water over the dam.
Using nameplate capacity creates a false sense of the ability of renewables – wind and solar – to provide power. Wind and solar are both intermittent so we can not ramp them up or even depend on them for power because they only produce power when the wind is blowing or the sun is shining.
Consumers know they want the lights kept on, the refrigerator running and the industry rolling. But it is difficult for consumers to make informed decisions about the success or failure of a program when information is presented in such a convoluted manner. The renewable energy initiative in Ontario was a political decision. According to several reports from the Auditor General the Ontario government did not conduct a cost benefit analysis. To continue installing a power system that can not provide power on demand to cover up a bad decision will eventually lead to failure of the total electricity system and will be considered an act of betrayal by the ratepayers that are responsible for the bill.
To accommodate the wind industry, we are paying for hydro power generators to run inefficiently; we are paying for power generators not to produce; we are entering into contracts to purchase power when we are awash with over production and with the “Fair Hydro Plan” we are downloading $20 to $40 billion of debt onto our children and grandchildren.