Innergex buys solar project in Ontario

Innergex Solar Acquisition marks portfolio diversification into renewable energy, adding Ontario's Stardale solar project with a 20-year PPA, fixed-rate revenues, and predictable cash flows, complementing hydro assets amid growing clean energy investment.

With oil soaring, renewable energy is feeling the love. Again.

The same thing happened leading up to mid-2008, but the market all but died out when the crisis hit. This time around the sector is gaining steam at what feels like a much more sustainable rate, as companies like TransAlta's renewables shift illustrate across the market, and the deals are starting to rack up.

Innergex Renewable Energy INE-T is behind the latest deal, buying the Stardale solar project in Ontario, as GE plugs into Ontario solar market and others follow in the space. It's the second deal for Innergex in the past few months, following the acquisition of Cloudworks Energy Inc. for $185-million. This one is much smaller, with total price tag of about $11-million.

But it's still interesting. Cloudworks' hydroelectric facilities were in line with Innergex's historical hydroelectric energy focus, whereas the new deal is the company's first foray into solar, and a recent Innergex wind deal with BC Hydro signals broader ambitions, diversifying its portfolio.

The project has some positive attributes, chiefly its pre-negotiated purchase agreement with the Ontario government that has set a fixed rate payable for the next 20 years, similar to other Ontario contracts announced by developers. Factoring in how much energy is expected to come from the panels, it should bring in about $15-million per year once the project is up in running in 2012. Total development costs are $140-million.

Innergex's deals come on the heels of Magma Energy's purchase of Plutonic Power. That deal was about diversifying assets across energy sources. Unlike Magma, which is currently focused on geothermal energy, the merged company will have assets in three of the four renewable energy sectors geothermal, wind and hydroelectric, missing only solar.

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