The Caisse de dépôt et placement du Québec (CDPQ), together with the Fonds de solidarité FTQ (Fonds FTQ), have made a fresh capital injection of $575 million into Énergir, the province's leading gas distribution utility formerly known as Gaz Métro. 

The funds will allow Énergir to expand its ongoing decarbonization efforts through the development of renewable energy projects and renewable gas production plants.

This investment aligns with CDPQ's commitment to increase its portfolio of renewable energy assets. The holdings currently stand at $22 billion, up from $9 billion in 2017, allowing the Caisse to decrease the carbon intensity of its portfolio by 59 per cent from a 2017 baseline.

The CDPQ has a controlling 80.9 per cent stake in Énergir (through Trencap, a holding company), while the Fonds FTQ maintains a 19.1 per cent stake in the utility.

The $575-million capital infusion will see Énergir accelerate its dual energy strategy in Québec as well as the Zero Outages Initiative of its subsidiary, Green Mountain Power, in Vermont.

Énergir is a diversified energy company with over $10 billion in assets that serves 535,000 customers. It also generates electricity from hydro, wind and solar sources in the U.S. and serves as the primary distributor of electricity and sole provider of natural gas in Vermont. 

Investment geared toward three new renewable initiatives

As the principal steward of much of Quebec's wealth, the CDPQ is a global investment fund responsible for generating a sustainable rate of return on a wide spectrum of asset classes. As the majority stakeholder in Énergir, the CDPQ actively promotes the transition to renewable and resilient energy.

"We believed that this was the right time to fund a next phase in the growth of Énergir. This investment will be directed towards three lines of business that we are pushing the company to expand," Emmanuel Jaclot, executive vice-president and head of infrastructure at CDPQ, said in an interview with Sustainable Biz Canada.

"The first one refers to Énergir's reinforcement of its electrical distribution network in Vermont, which is a regulated business, so it has to go through the regulatory approval process. That's the first leg . . . In Vermont, they call it a net-zero reinforcement strategy which is highly significant.

"It's about making their electrical network weather resistant, because Vermont has experienced way more weather events over the last five years than over the last 20 years combined."

Énergir will move forward with extensive plans to install new power lines underground as well as adding battery storage at the end of the electrical distribution line to make its network more resilient.

"The second leg of the expansion will be taking place in Quebec where we are developing a huge renewable 1,200-megawatt wind farm northeast of Quebec City in Seigneurie de Beaupré," Jaclot said.

"We're doing this in conjunction with Hydro Quebec and Boralex, which is a typical aspect of our investment strategy to fund the capex of projects like this."

Énergir increases share of renewable gas in its network

The third and final leg of Énergir's green development program the CDPQ is financing involves an ambitious plan to build five new plants which will collect the agricultural waste in adjacent regions in Quebec to convert into renewable natural gas.

"This is another very interesting element of the (strategy) . . . Right now we only have around two per cent of renewable energy going through the natural gas pipelines. The plan is to grow the share of renewable gas in Énergir's distribution system to 10 per cent by 2030," Jaclot explained.

CDPQ is committed to decarbonizing its portfolio 

CDPQ has set a goal of achieving a net-zero portfolio by 2050. Part of this strategy involves acquiring carbon emitting assets and putting in place programs intended to decarbonize their operations.

"First of all, we want to be net-zero and we are not backtracking on this commitment," Jaclot said. "We feel empowered with these vast sums we are managing and we are also trying to bring other investors alongside us in Quebec that will have a leveraging effect on what we're doing."

This is why CDPQ set aside $10 billion for acquiring carbon intensive assets that have a viable pathway to sustainability, as opposed to a blanket ban on investing in such companies.

"We believed it was important to create what we call a 'transition envelope' that allocates funds towards the purchase of carbon emitting assets where we can introduce plans to steer them towards decarbonization."

"We have two mandates at CDPQ. The first one is obviously to try and maximize the return for our depositors. The second one, which is quite unique, is to foster economic development in Quebec."

In December, the CDPQ announced funding to help Quebec's electric vehicle (EV) sector expand, including a $200 million convertible debt investment in Northvolt AB, the Swedish EV battery manufacturer building a lithium-ion battery gigafactory in suburban Montreal with an expected annual cell production capacity of 60 gigawatt-hours.

"The battery space is a promising sector . . . we hope to attract similar such investments to Quebec."