Coming at a time of headline-grabbing U.S. retrenchment in near-term oil and gas development, the announcement that Quebec pension fund giant CDPQ had created a $10 billion Canadian clean energy powerhouse through the takeover of renewables developer Innergex made a muted impression on North American financial market news.
Michel Letellier, Innergex's CEO, isn't bothered. "Yes, there was a lot of noise being made by our neighbour to the south when we made the announcement. But that's right now, not forever. And we are in it for the long-term."
By “it,” he means the energy transition. This is reflected in the 4,700 megawatts (MW) of wind, solar, hydro and energy storage plants his company already has in operation across Canada, the U.S., France and Chile.
It is also apparent in Innergex’s plans to spend another $5-6 billion in its Canadian home market to build 1,600 MW of new projects that will start generating to the grid between 2028-31 — whoever is in the White House.
Letellier, who joined Innergex almost 25 years ago and rose to the top job in 2007, is under no illusions that "life will ever be the same" following Donald Trump's return to the U.S. presidency.
But it doesn't negate what he sees as the "real value" revealed by longer-term forecasts and opportunities in the renewables market in Canada and around the world , which lie well beyond a four-year political term.
"A pension fund like CDPQ understands that the return on renewables projects developed today may not come for six or seven years. They believe in investing a dollar today that generates dividends in eight," he said.
"The U.S. market — and the Canadian market — is going to need more and more clean electrons. The investments we are making in both countries are certainly not in vain. The U.S. market will come back fully in four to six years; in the meantime, we have so much to do in Canada," Letellier told Canada's National Observer
'Canada needs to hurry'
Time is marching on for Canada to build out its national clean energy fleet, given that utilities have been slow to factor in power demand growth linked to decarbonization and datacentres. This has left an almost insurmountable gap to be made up in the coming round of provincial power procurement auctions, he said.
"Canada needs to hurry now. There is this great big opportunity here. We are only just waking up to what 'much more energy' means. And if a grid needs more energy by 2030, the contracts [to build clean power plants] need to be signed now," said Letellier.
The Canadian government projects 140,000-190,000 MW of additional renewable energy generating capacity will be needed nationwide to meet demand by 2050.
The CDPQ takeover frees up capital to get Innergex planning moving fast in its home market. The company added another gigawatt of wind development through new power-purchase agreements (PPAs) in Quebec and B.C. last year. These projects will benefit from its new parent's deeper pockets.
In Quebec, 30-year wind PPAs were inked with Hydro-Québec for the 300 MW Peshu Napeu and 100 MW Lotbinière Ndakina projects, while in B.C. it signed same time-frame deals with BC Hydro for the 200 MW Stewart Creek and Nithi Mountain developments and the 160 MW K2 project.
Hydro-Québec’s stated ambition is to bring online a number of 1,000 MW-plus megaprojects in the province as wind and solar grow in importance to offset hydropower production that is dipping due to climate change-impacted drought on dam reservoir levels, noted Letelllier. This shift will be especially key to Innergex, he said.
"This sounds very good to us. This helps in our long-term planning because we like to operate the plants we build," he said, adding: "We have never sold an asset we developed in Canada."
Brent Stadler, an analyst with Desjardins, said the CDPQ takeover gives Innergex financial firepower to move forward on its renewables expansion strategy at a difficult time for the sector.
"They have aligned interests in their focus on wind and solar and [energy] storage and this deal gives Innergex access to a lot of capital at a time when public equity markets in North America — because of the change in the U.S. administration — are suddenly somewhat closed off."
Quebec will be an anchor point for CDPQ and Innergex's shared vision of a post hydropower-dominated provincial energy transition strategy, he told Canada's National Observer.
"Hydro-Québec has come out with some big targets, with plans to add almost 10,000 MW [of wind and solar projects] to its portfolio. This lends greater clarity for developers looking ahead to future RFPs (requests for procurements, the auctions run by provinces to buy new power for the grid) and this creates longer-term market stability," said Stadler.
"The load growth we are seeing in all power markets needs to be met with sources that provide the best speed-to-market and cost-competitiveness — and that's renewables, hands down."
Future energy systems
The anti-renewables rhetoric coming from the Trump administration does not puncture the clean power demand growth in the U.S. that is underpinned massively by corporate America, said Letellier. Nor does it in Canada, where electrification in the Ontario, Quebec and B.C. industrial heartlands are creating a voracious appetite for renewables.
Clean power generation projects "is the focus of our investment," he said.
"However, the grid needs massive investment to transport all this power production and that means high-voltage lines need permitting, substations need to be ordered. Even meeting current forecasts for demand is going to be a near-impossible challenge."
Key to answering this demand will rely on a combination of new clean power production, expanded grids and, in the coming decade, "much, much more" energy storage, Letellier said. This will mean large-scale battery plants such as Ontario’s Oneida project, Canada's biggest so far. It will also involve long-duration energy storage, from pumped hydro to newer thermal, mechanical and chemical technologies, and "batteries on wheels," that is, EVs.
"All these are going to be a big part of managing the future energy systems," he said.
For Innergex, which with the CDPQ takeover will transition from being a publicly traded company to a privately held entity, this is all happening at the start of "an exciting new chapter in our journey," Letellier said.
CDPQ CEO Charles Emond said at the time of the acquisition announcement that current market volatility would not hobble Innergex's future development.
"While uncertainty is high, particularly due to ongoing tariff negotiations, discipline and the sound diversification of our portfolio will remain key to delivering the long-term returns our depositors need... despite the turbulence," he said, nodding to the relationship between CDPQ and Innergex that stretches back to 1995.
Letellier concluded: "In Canada, now is the time to accelerate. In the U.S., which in the long-term is ultimately one of the biggest renewables markets [in the world], we will still be careful in the short-term. Because with the Trump administration you just never know."
Darius Snieckus / Canada's National Observer / Local Journalism Initiative
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