Innergex Renewable Energy Inc. and the Desjardins Group Pension Plan have completed their acquisition of the 30.5-MW Sainte-Marguerite 1 hydropower plant from the Hydromega Group.
Located near Sept-Iles, Quebec, the run-of-river plant was originally commissioned in 1993 with one 8.5 MW turbine unit. Two additional units were installed in 2002, raising the project's output capacity to its current level.
"The acquisition of the Sainte-Marguerite 1 facility provides us with both immediate contributions to cash flows and a quality hydro asset with a very high long-term value," Innergex CEO Michel Letellier said. "Furthermore, we are very pleased to have developed a transaction structure that allows us to compete in acquiring renewable energy infrastructure assets at prevailing market prices, while leveraging the low capital cost and long-term horizon of a pension fund, as well as our expertise as an operator, to achieve an attractive after-tax internal rate of return for our shareholders."
Energy generated by the plant is covered by two fixed-price, 25-year power purchase agreements with Hydro-Quebec: one for 8.5 MW maturing in 2018 that provices an annual increase in the selling price of 3% to 6%, and a second for 22 MW maturing in 2027 that provides for an annual increase in the selling price of 2%. Both agreements contain a renewable option for an additional 25-year term.
"The Desjardins Group Pension Plan is proud to partner with Innergex for an investment of this nature, here in Quebec," Desjardins vice president Sylvain Gareau said. "Our portfolio of infrastructure assets is nearing the billion dollar mark and is growing rapidly. Over the last five years, we have become an important actor in this asset class in Canada."
Innergex (TSE: INE) said it expects the plant to generate annualized revenues of about US$10.3 million, with an adjusted EBITDA of about $8.4 million.
HydroWorld.com reported that the company had expressed an interest in obtaining the project in July 2012.