The Canada Infrastructure Bank (CIB) and ITC Investment Holdings (ITC) have signed an agreement in principle to invest $1.7 billion in the Lake Erie Connector project.
“With the US pledging to achieve a carbon-free electrical grid by 2035, Canada has an opportunity to export clean power, helping to reduce emissions, maximizing clean power use and making electricity more affordable for Canadians,” said Catherine McKenna, minister of infrastructure and communities. “The Lake Erie Connector is a perfect example of that. The Canada Infrastructure Bank’s investment will give Ontario direct access to North America’s largest electricity market—13 states and D.C. This is part of our infrastructure plan to create jobs across the country, tackle climate change, and increase Canada’s competitiveness in the clean economy.”
The Lake Erie Connector is a proposed 117-kilometre underwater transmission line connecting Ontario with the PJM Interconnection, the largest electricity market in North America. This is the CIB’s first investment commitment in a transmission project.
“This project will allow Ontario to export its clean, non-emitting power to one of the largest power markets in the world and, as a result, benefit Canadians economically while also significantly contributing to greenhouse gas emissions reductions in the PJM market,” said Ehren Cory, CEO of the Canada Infrastructure Bank. “The project allows Ontario to better manage peak capacity and meet future reliability needs in a more sustainable way. This is a true win-win for both Canada and the U.S., both economically and environmentally.”
Under the terms of the agreement, the CIB will invest up to $655 million or up to 40 per cent of the project cost. ITC, a subsidiary of Fortis Inc., and private sector lenders will invest up to $1.05 billion, the balance of the project’s capital cost.
According to the press release, the 1,000 megawatt, high-voltage direct current connection will help lower electricity costs for customers in Ontario and improve the reliability and security of Ontario’s energy grid. The Lake Erie Connector will reduce greenhouse gas emissions and be a source of low-carbon electricity in the Ontario and U.S. electricity markets.
“The Lake Erie Connector demonstrates the advantages of public-private partnerships to develop critical infrastructure that delivers greater value to Ontarians,” said Greg Rickford, minister of energy, northern development, and mines and minister of Indigenous affairs. “Connecting Ontario’s electricity grid to the PJM electricity market will bring significant, tangible benefits to our province. This new connection will create high-quality jobs, improve system flexibility, and allow Ontario to export more excess electricity to promote cost-savings for Ontario’s electricity consumers.”
During construction, the Lake Erie Connector is expected to create 383 jobs per year and drive more than $300 million in economic activity. Over its life, the project will provide 845 permanent jobs and economic benefits by boosting Ontario’s GDP by $8.8 billion.
The project will also help Ontario to optimize its current infrastructure, avoid costs associated with existing production curtailments or shutdowns. It can leverage existing generation capacity and transmission lines to support electricity demand.
“The Lake Erie Connector [project] is predicated on the fact that it has to deliver savings to Ontario rate payers,” said Jon Jipping from ITC. “It’s making the market more efficient and there are other benefits that come along with it environmentally and to build resilience.”
ITC continues its discussions with First Nations communities and is working towards meaningful participation in the near term and as the project moves forward to financial close.
“We are encouraged by this recent announcement by the Canada Infrastructure Bank,” said Chief Stacey Laforme, Mississaugas of the Credit First Nation. “Mississaugas of the Credit First Nation has an interest in projects within our historic treaty lands that have environmental benefits and that offer economic participation for our community.”
“While our evaluation of the project continues, we recognize this project can contribute to the economic resilience of our Shareholder, the Mississaugas of the Credit First Nation,” added Leonard Rickard, CEO of the Mississaugas of the Credit Business Corporation. “Subject to the successful conclusion of our collaborative efforts with ITC, we look forward to our involvement in building the necessary infrastructure that enable Ontario’s economic engine.”
The CIB anticipates financial close late in 2021, pending final project transmission agreements, with construction commencing soon after. ITC will own the transmission line and be responsible for all aspects of design, engineering, construction, operations and maintenance.
ITC acquired the Lake Erie Connector project in August 2014 and it has received all necessary regulatory and permitting approvals, including a U.S. Presidential Permit and approval from the Canada Energy Regulator.