Energy | The price of wind power has bottomed out

The downward trend in the cost of wind energy has likely ended with rising interest rates, which are driving up the cost of financing wind farms, according to Innergex President and CEO Michel Letellier.

“We have probably reached a low point,” he said in an interview with The Press.

Thanks to very low interest rates and technological improvements, the cost of producing wind energy has been falling for many years. It currently stands at between 5 and 6 cents per kilowatt hour, which compares favorably with other forms of renewable energy.

It would be surprising if the price of wind turbines fell, because manufacturers are facing strong demand, according to the big boss of Innergex. The increase in project financing costs will therefore necessarily have repercussions on the price of the wind power kilowatt-hour.

“It’s still a very competitive price,” emphasizes Michel Letellier.

Federal support for renewable energy development expected in the next budget could offset the rising cost of borrowing, he hopes. Ottawa’s money could accelerate the development of renewable energy in the east of the country, particularly in New Brunswick and Nova Scotia, where coal is still burned to generate electricity.

For companies like Innergex, the next few years look good. After a few years of slowdown, the wheel of wind power development has started to turn again in Quebec. Hydro-Quebec has two calls for tenders in progress, in which Innergex is participating, and is planning another of 4,000 megawatts to meet the growing demand for electricity.

Wind turbine masts will therefore multiply over the next few years, which will transform the landscape and could provoke reactions of rejection among the population, especially since the machines are also bigger and noisier.

Aware of this risk, Michel Letellier believes that companies like his must be careful when planning their future sites.

Solar acquisition in Ontario

“The Ontario market will also wake up,” predicts Michel Letellier, who believes that no government can avoid the decarbonization of the economy.

Innergex announced Monday the acquisition of three solar facilities in Sault Ste. Marie, Ontario, at a cost of $50.2 million, plus the assumption of a debt of $169.5 million.

The electricity generated by these 60 megawatt facilities is sold entirely under contract to the Independent Power System of Ontario. There are on average nine years remaining on these contracts.

According to the President and CEO of Innergex, Michel Letellier, these are high quality assets that benefit from an advantageous sales contract and a stable operating profit.

Innergex expects this acquisition to generate profits upon closing of the transaction expected in the coming months.

The Longueuil-based company has been very active in the acquisition market recently, but this is its first acquisition in Canada since 2018. The seller is Fengate Asset Management, an Ontario-based investment fund that is also active in Texas.

Innergex shares ended the day at $16.28 on the Toronto Stock Exchange on Monday, up 33 cents. For a year, the title has oscillated between $14.23 and $20.45.

Before Monday’s acquisition, Innergex already operated eight solar farms, 40 hydroelectric plants and 35 wind farms in Canada, the United States and Chile. In total, the net installed capacity of these facilities is 3634 megawatts.

Projects under development and potential projects could add more than 8,000 megawatts to this capacity.