On Friday, Ontario Power Generation (OPG) closed a $450 million green bond issuance. Proceeds from the bond will be used to finance hydroelectric projects.
“Today’s bond offering is the first in the Canadian energy sector where a utility has issued green bonds to finance renewable and clean power projects that produce electricity free of carbon emissions,” said Ken Hartwick, OPG’s chief financial officer, at the time of issuance. “OPG is Ontario’s low-cost generator, producing power 99 per cent of free of smog and carbon and priced 40 per cent lower than other generators.”
OPG operates 66 hydroelectric stations on 24 river systems throughout Ontario. The smallest station has a generating capacity of 800 kilowatts, the largest more than 1,500 megawatts.
Specific potential projects identified by OPG for green financing include:
- Peter Sutherland Sr. Generating Station, a 28 MW hydroelectric station on New Post Creek in Northeastern Ontario. Completed in March 2017 and a partnership between OPG and Taykwa Tagamou Nation.
- Ranney Falls Generating Station refurbishment, which would add an additional 10 MW unit at Ranney Falls on the Trent River. This project is expected to be complete in Q4 of 2019.
OPG will update investors annually on the use of proceeds and developments with respect to OPG’s green bond program. The reports will include a complete list of eligible projects to which green bond proceeds have been allocated, a brief description of the projects, amounts allocated and the remaining balance of funds.
OPG has established a green bond framework that allows for the use of proceeds to finance projects that offer environmental benefits, and this is the second green bond issuance for the organization. In October 2017, OPG raised $500 million off of its first green bond issuance.
Sustainalytics, a provider of corporate environmental, social, and governance research, ratings, and analysis, completed a second-party opinion stating that OPG’s green bond framework is “credible and impactful, and it aligns with the four core components of the Green Bond Principles 2017.”
The details for this green bond transaction include a total amount of $450 million, a rating of DBRS A (low), S&P BBB+ over a term of 30 years with a coupon of 3.838 per cent.