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Oneida LP, Aecon to begin building 250MW energy storage facility

IMAGE: Rendering of the Oneida Energy Storage Project
A rendering of the Oneida energy storage project. (Courtesy Aecon Group Inc.)

UPDATED: Construction on Canada’s largest energy storage facility, a 250-megawatt project near Nanticoke, Ont., is set to begin after the Oneida Energy Storage LP announced today it has executed an agreement with Ontario's Independent Electricity System Operator (IESO). 

It is equal to one gigawatt-hour of energy storage.

Aecon Concessions, a division of Aecon Group Inc. (ARE-T), was awarded the $141-million engineering, procurement and construction contract by Oneida LP as part of the agreement. 

In addition to Aecon Concessions, which is also an equity partner, the owners of Oneida LP are energy storage solution provider NRStor Inc., the Six Nations of the Grand River Development Corporation (SNGRDC) and green power producer Northland Power Inc.

“The developers NRStor, they've been working with the IESO for a number of years on this and there had been a few ministerial directives in the past,” Wendy Franks, Northland’s chief strategy officer and head of the hydrogen business unit, told SustainableBiz. “This is now the third one and it's just been a very complicated environment for negotiating these types of contracts because of inflation, and because of just general complications with the supply chain.”

However, after numerous delays, the project is set to proceed.

“The Ontario government and the IESO, they’ve been extremely constructive in this and great partners in negotiating this contract with us so that we could actually reach an agreement on a contract that would enable us to bring the project forward.”

In April 2022, the IESO had been directed by the Ontario government to enter into a procurement contract with Oneida LP.

The Oneida LP project

Construction is expected to start this spring or summer, with anticipated completion in 2025. In addition to being the largest project of its kind in Canada, it is among the largest in the world according to Friday’s announcement.

Comprised of banks of lithium-ion batteries, it will more than double the energy storage resources on Ontario’s electricity grid from approximately 225 MW today to 475 MW when completed.

The Oneida LP will provide electricity storage services to the IESO through a 20-year agreement. It will receive fixed availability payments from IESO for capacity services, as well as revenue from energy sold into the Ontario electricity grid and operating reserve.

The project is expected to reduce the province’s GHG emissions by 4.1 million tonnes annually – the equivalent of taking 40,000 cars off the road. 

Northland Power is a majority owner in the project and will lead its construction, financing and operation.

“The Oneida Energy Storage Project is a milestone for Ontario’s burgeoning energy storage sector. For Northland, this project marks our first storage investment. As trusted and experienced operators in Canada, the opportunity to construct and operate Canada’s largest battery energy storage project holds special significance,” said Mike Crawley, president and CEO of Northland (NPI-T) in a statement.

Tesla Inc. had previously executed an agreement with Oneida LP to supply batteries for the complex.

“I can't disclose exact numbers. But what I can say is that the batteries are the majority of the project costs,” Franks said. “My understanding is that this is a sizeable order for Tesla.”

When complete, the facility will help to stabilize Ontario’s electricity sector by drawing and storing surplus energy during off-peak periods, then releasing it into the grid when demand is at its peak.

Initially announced in January 2021, the project is the first the SNGRDC has co-developed as partner.

Oneida project’s next steps

The Canada Infrastructure Bank is collaborating with the Oneida project on an investment agreement. Its website lists the total costs of the project at about $500 million, but Franks explained that figure is out of date due to inflation.

She did not disclose the total project cost, “but what we've disclosed is that it's less than a billion (dollars). It's a very big number, but less than a billion.”

Natural Resources Canada has provided $50 million from its Smart Renewables and Electrification Pathways program. The Oneida LP is also working with commercial banks to complete funding.

“Northland Power has committed to fit to provide the equity financing, together with Aecon and there's a small piece that (is) going to the Six Nations,” Franks said. “But what we also need to get is our debt financing.”

Northland, which has been in the Ontario market for 30 years, previously had a small team dedicated to developing energy storage projects. After a competitive process, it was selected as an equity partner for the Oneida LP.

The company is looking to develop even further in the province.

“We hope this is the first of many projects that we would do in Ontario. For a long time, there weren't many procurement projects in Ontario,” Franks said. “Given we're headquartered in Toronto and it's our home market, and we know the market very well, we forecast a need for capacity as does the IESO.

“So, we hope to play a role in that of bringing forward other projects.”

Further Aecon developments

The announcement of Aecon's role incorporates another experienced player on Ontario's energy scene.

Along with GE Hitachi and SNC-Lavalin, Aecon recently announced the start of work on North America's first grid-scale small modular reactor (SMR) through the Darlington New Nuclear Project in Clarington, Ont. for Ontario Power Generation.

The new GE Hitachi BWRX-300 reactors provide up to 300 MW of electric power – enough to supply over 300,000 homes – at significantly reduced construction costs compared to traditional nuclear generating stations.

Construction is expected to be complete in Q4 2028.

Aecon is also working on the retube and feeder replacement project at the Darlington Nuclear Generating Station, and several maintenance projects at the Bruce Nuclear Generating Station.

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