Boralex to buy Enercon out of 230-MW Niagara wind project in Ontario

Boralex Inc. (TSX: BLX) announced Dec. 8 that it has entered into binding agreements with Enercon Canada Inc. to acquire all of its economic interest in the 230-MW Niagara Region Wind Farm (NRWF) for a total cash consideration of C$238.5 million, subject to adjustments under the acquisition agreements.

Extending across the Regional Municipality of Niagara, the Township of West Lincoln, the Town of Wainfleet and Haldimand County in Ontario, NRWF was commissioned on Nov. 2, 2016, and is made up of 77 state-of-the-art Enercon E-101 turbines. Upon the closing of the Transaction, NRWF will benefit from a 20-year feed-in tariff (FIT) contract with the province-owned IESO under attractive terms, which provide a predictable and recurring revenue and cash flow stream.

“We are thrilled to announce today the acquisition of Enercon’s economic interest in NRWF, an asset that we know well having coordinated its development, construction and commissioning with Enercon over the past two years. This Transaction is a great opportunity to further expand and diversify Boralex’s asset portfolio with a high quality wind farm that will provide a stable and recurring cash flow stream,” said Patrick Lemaire, President and Chief Executive Officer of Boralex. 

Lemaire added: “Today, we remain ideally positioned to keep moving forward with our growth strategy focused on developing and acquiring assets associated with long term power purchase agreements and are pleased to announce the upward revision of our 2020 contracted capacity target from 1,650 to 2,000 MW.”

The acquisition of Enercon’s economic interest in NRWF will add 230 MW of clean energy to Boralex’s asset portfolio, increasing its net installed capacity by 21% to 1,338 MW. NRWF will become Boralex’s largest asset and will contribute to further extending its portfolio’s weighted average PPA term to 16 years.

This transaction replaces and supersedes the previous announcement on Nov. 2 under which Boralex announced its intention to exercise its option to acquire a 25% economic interest in NRWF.

NRWF has been developed by Enercon and Boralex in partnership with the Six Nations of the Grand River Band (the “Six Nations”). NRWF’s equity ownership has been structured to provide: each of the Six Nations and Enercon with a 50% equity stake in FWRN LP, which owns the intangible assets of the project including the FIT contract; and Enercon with a 100% equity stake in NR Capital General Partnership, which owns the infrastructure assets and leases them to FWRN LP pursuant to a 20-year lease. Six Nation’s equity investment in FWRN LP has been financed through a loan from Enercon which is non-recourse and will be repaid, with interest, from Six Nations’ share of FWRN LP’s distributions throughout the 20-year term of the FIT contract.

Enercon’s participation in the project, which will be transferred to Boralex upon transaction closing, gives rights to substantially all of the expected net cash flows from the project over the term of the FIT contract. Upon expiration of the 20-year lease among NR Capital General Partnership and FWRN LP, the infrastructure assets are expected to revert back to FWRN LP.

The transaction has been unanimously approved by the board of directors of Boralex and remains subject to customary regulatory approvals and closing conditions. Closing is expected to occur in January 2017.

Boralex develops, builds and operates renewable energy power facilities in Canada, France and the United States. Boralex’s shares and convertible debentures are listed on the Toronto Stock Exchange under the ticker symbols BLX and BLX.DB.A, respectively.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.