The story of Northland’s growth from domestic energy stalwart to global financier of the world’s largest offshore wind farm, Project Gemini.
Borne on the winds of clean technology, Ontario’s Northland Power has grown from solving the waste problems of a small-town wood mill, to owning a majority stake in the largest offshore wind farm in the world by energy production – Project Gemini.
Spanning 64 square kilometres across the shallow waters of the North Sea about 80 km off of the coast of the Netherlands, Gemini’s wind turbines will provide enough clean energy to supply the needs of 1.5 million people annually, while reducing 1,250,000 tons of CO2 emissions per year. At a cost of € 2.8 billion, it is the largest ever project-financed offshore wind farm. Northland, a small Canadian energy producer from humble Ontario beginnings, now owns 60 per cent of the multi-national project.
“It is a huge accomplishment for us,” said Paul Bradley, Chief Financial Officer for Northland. “We started in 1987 with relatively small power projects in Ontario, later we expanded to Quebec and Saskatchewan. Now we are being recognized as having the skills to source project financing and provide project management and leadership expertise for world class projects like Gemini.”
“It speaks volumes about how far we’ve come as a company. But the sheer size and capacity of Gemini also demonstrates the growing demand for renewable energy. We look forward to more opportunities in the sector down the road,” added Bradley.
Before reaching the heights of Gemini, Northland chalked up a number of energy firsts in Canada, from being the first independent power producer in both Ontario and Saskatchewan, to solving an Ontario mill’s wood waste problem by using that waste to power the first thermal plant in Canada to use unprocessed wood chips as fuel. And in 27 years of business, every project Northland has taken on has been completed on time and on budget.
But an international project of Gemini’s proportions is a different animal, with financial and planning challenges far beyond what Northland has faced with domestic projects. This is where EDC was able to help, providing the company with advice as well as financing in the amount of € 125 million, the largest loan EDC has provided in the wind power sector.
“Canadian companies like Northland have the potential to become world leaders in the cleantech space, and these are the type of companies that EDC wants to invest in, to help them through every step of the way,” said Al Hamdani, EDC Vice-President, Structured and Project Finance.
“When Northland grows, the potential of the entire Canadian cleantech sector grows along with it, which is an important economic benefit. But the environmental benefit of these technologies is an investment that will pay meaningful global dividends for decades to come,” added Hamdani.
In 2012 Canadian cleantech revenues were estimated to be between $9 and $11 billion, and are expected to reach $60 billion in the next 10 years. Northland is well-positioned to benefit from this continued growth. Their strategy moving forward is to continue expanding internationally, particularly into Latin America and Northern Europe.
Though they might grow in size and scope, Northland will continue to follow the recipe that made them successful in the first place – clean and green, innovative and disciplined.
In addition to EDC, 10 international commercial banks were involved in securing the total €2.8 billion term loan for Project Gemini, including the Bank of Montreal and CIBC. Other project sponsors include Siemens, Van Oord Dredging and Marine Contractors BV and NV HVC, each contributing EUR 400 M in equity.
Northland was recently named 2013 North American Sponsor of the Year by energy industry publication Project Finance.