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GLOBE & MAIL: TransCanada Plugs in Ontario Solar Plant

07/03 08:15 AM

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(From Canada's Globe and Mail newspaper, Wednesday's edition.)

By Jeffrey Jones

Of THE GLOBE AND MAIL

TORONTO (Globe and Mail)--TransCanada Corp. (TRP:$43.84,00$0.30,000.69%) has taken possession of the first of nine Ontario solar power facilities, part of a C$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 (TRP:$43.84,00$0.30,000.69%) said it expects the remaining projects, which are being constructed by Canadian Solar Inc. (CSIQ) 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.

The facilities add to TransCanada's (TRP:$43.84,00$0.30,000.69%) 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 (TRP:$43.84,00$0.30,000.69%) seeks to further much higher-profile initiatives such as the Keystone XL and Energy East oil pipelines. The $5.3 billion Keystone XL project, which would move Alberta crude to U.S. Gulf of Mexico 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 enthusiastic support from the premiers of Alberta and New Brunswick.

TransCanada's (TRP:$43.84,00$0.30,000.69%) natural gas pipeline network in Canada and the United States remains its largest business in terms of both asset value, at C$23.2 billion at the end of last year, and 2012 revenues of C$4.3 billion. The energy business, which includes the renewables, ranked second with asset value of C$13.2 billion and revenue of C$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% 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.

TransAlta said it aims to sell up to 20% of the vehicle to generate up to C$ 250 million which it will use partly to cut debt.

Under TransCanada's (TRP:$43.84,00$0.30,000.69%) solar transaction, the company pays Canadian Solar for each project as it begins commercial operations and meets TransCanada's (TRP:$43.84,00$0.30,000.69%) acceptance testing.

www.theglobeandmail.com


(END) Dow Jones Newswires
07-03-130815ET