Initiatives to develop its battery energy storage capacity and to expand further into the U.S. are guiding Toronto-based Capstone Infrastructure Corporation as it diversifies beyond Canada and electricity production.

The independent power producer, owner and operator made notable achievements in 2024, including:

• starting construction on its 192-megawatt (MW) Wild Rose 2 project in Alberta that will be its largest wind asset upon completion; and
• winning a third of the wind power procurement projects approved by the British Columbia government in December.

Those projects will be developed and then added to a Canada-wide portfolio of 35 operating facilities across wind, solar, hydroelectricity, biomass and natural gas totalling 886 MW of operating capacity. The majority is from wind and solar.

“It’s a great time to be (a) renewables developer from the perspective of ‘our product is in need,’” Patrick Leitch, COO of Capstone, told Sustainable Biz Canada in an interview.

On the U.S. front, California has become a key focus for Capstone. The company has set out to develop a significant portion of its projects in the state, most notably a large battery energy storage system which, if finished today, would be the largest in North America.

Capstone’s key projects

Capstone’s North American pipeline is over three gigawatts of renewable power generation and battery storage, with approximately two-thirds in Canada and the remainder in California

Wild Rose 2 is being built in Cypress County, east of Calgary, near Capstone’s operating 61 MW Buffalo Atlee wind farm. Construction is scheduled to be finished in 2025, and offtake agreements have been signed with the Pembina Pipeline and the City of Edmonton for its power.

In December, three of the company’s wind projects were chosen by provincial utility BC Hydro in a call for power, totalling 537 MW of capacity. The two 197 MW and one 143 MW projects will be held in a 51-49 equity ownership between First Nations and Capstone, respectively.

“This is continuing on a market that we’ve been in for a long time and really like,” Leitch said about the procurement.

California stands out to Capstone because the state's government has put “decarbonization goals front and centre” and it is “an established market for renewables”, Leitch explained.

Deemed an “exciting” but challenging market by the Capstone COO, the state has obstacles surrounding permitting and siting. But those barriers also deter competition, so California can be an ample source of solid returns for Capstone when projects do complete, he said.

A crown jewel to its California ambitions is the plan for a 3.8-gigawatt-hour battery facility with eight hours of energy storage. Capstone envisions having it come to market in the late 2020s, as the company quickly works its way up to larger projects.

“We see the need for batteries in every market that has a high renewables penetration,” Leitch said, as banking-up power from wind and solar can address concerns about intermittency which are often raised against renewable energy.

Views on the market

Capstone, like other Canadian renewable power producers with wind assets, is coming off of a challenging year, Leitch said. In Q3 2024 it reported a net income of $7.6 million for the first nine months ended Sept. 30, approximately a third of its income for the same period in 2023.

The story was similar for Canadian peers Innergex and Boralex which reported weaker results in the same nine-month period than during 2023. Northland Power Inc. also saw a decline in net income, operating at a loss of over $190 million in Q3 compared to a gain of approximately $43 million the year prior.

Capstone, like some other renewable power companies, has been hurt by adverse weather conditions that affected many markets, Leitch said. For example, Capstone experienced one-in-20- and one-in-100-year lows for wind speed in some markets. But there is no indication it will persist as a long-term trend, he added.

Leitch is optimistic the need for renewable energy will remain compelling, driven by electrification and high demand for clean energy that continues nudging most provincial governments forward.

Addressing its own sustainability

Capstone launched its first environmental, social, and governance report in late 2024 since becoming a renewables-focused independent power producer, detailing efforts to minimize its operational impact.

Its peaking natural gas facility, the 156 MW Cardinal Power site, remains its largest source of pollution. From 2022 to 2023 however, demand for generation dropped, resulting in the company’s direct emissions (Scope 1) falling from 55,028 tonnes of carbon dioxide equivalent to 23,594 tonnes.

Leitch said Capstone sees natural gas as critical to the energy transition, which he believes “has to be sustainable, affordable and reliable.” But the company does not plan to develop any more fossil fuel-powered projects.

Though the impact is not as large as reducing operations at the gas plant, Leitch said Capstone is also taking steps to switch more of its vehicle fleet to electric models such as the Ford F-150 Lighting pickup truck.

Capstone’s greenhouse gas reporting is “in pretty good shape” he said, and the company’s priority is to reduce its pollution using the data rather than adjusting its reporting methodology. Emissions from its supply chain would be something to address in the future, Leitch said.