Developer Boralex and its partner Walpole Island First Nation have announced a CA$172 (US$119) million financing for the 80MW/320MWh Tilbury battery energy storage system (BESS).
The BESS is located in the municipality of Lakeshore, Ontario, CA. Boralex won the contract for the project in the Expedited Long-term resource (E-LT1) solicitation held by the Ontario Independent Electricity System Operator (IESO) in 2023, along with Canada’s largest BESS to date, the 300MW/1,200MWh Hagersville BESS.
Financing for the Tilbury project was obtained from a banking syndicate composed of Canadian Imperial Bank of Commerce (CIBC), Fédération des Caisses Desjardins du Québec and Royal Bank of Canada, all acting as Mandated Lead Arrangers and Joint BookRunners. CIBC also served as administrative agent and collateral agent. The financing is split into three main amounts.
First, CA$120 million as a construction loan, to be converted to a five-year term loan with an amortisation period of 20 years from the commercial operation date (COD), expected Q4 2025.
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Next, CA$45 million as a bridge loan, which allows for the financing of investment tax credits (ITC), reducing the amount of equity capital allocated to the project in the short term and optimising Boralex’s overall capital structure. This loan will be repaid when the ITCs are received. Finally, the deal also includes a CA$7 million letter of credit facility.
The financing structure for this project is also very similar to the financing structure for the Hagersville project, which was closed with the Six Nations of the Grand River Development Corporation (SNGRDC).
In May 2024, IESO made Canada’s largest energy storage procurement to date, selecting nearly 1.8GW of projects through the E-LT1’s successor, the Long-term 1 Request for Proposals (LT1 RFP). The procurement is aimed at helping Ontario meet electricity demand growth through the end of the decade. The province has a projected 60% increase in demand over the next 25 years.
IESO intends to launch another procurement, LT-2, in February. This will be bigger than E-LT1 and LT1, with 14TWh of new energy from sources including solar PV and wind alongside 1.6GW of dispatchable capacity from sources including battery storage and pumped hydro energy storage sought.
Ontario released the Powering Ontario’s Growth plan in 2023, which placed long-duration energy (LDES) resources such as pumped hydro energy storage as pivotal to ensuring grid efficiency.
Bruno Guilmette, executive vice president and CFO of Boralex said of the Tilbury project financing: “Today’s financing announcement is a milestone for the Tilbury Battery Storage project, reinforcing our commitment to offering sustainable and innovative energy solutions.”
“I would like to salute the exceptional work of our teams and financial partners. This financing testifies to the Company’s financial strength and the lenders’ confidence in a structured, promising project.”
