Cascade Power Project with First Nations’ multi-million-dollar equity stake wins Deal of the Year award

An energy project in which six Alberta First Nations have an equity stake has won an international award for innovation in First Nations partnership and long-term contracting strategy.

Project Finance International (PFI), a source of global project finance intelligence, has awarded Cascade Power Project with its Canadian Power Deal of the Year for 2020.

The $1.5 billion 900-megawatt combined-cycle natural gas-fired power generation facility was chosen by PFI because of its innovation in a number of areas, including how it “handled Indigenous involvement.”

Six First Nations—the Alexis Nakota Sioux Nation, Enoch Cree Nation, Kehewin Cree Nation, O’Chiese First Nation, Paul First Nation and Whitefish Lake First Nation—formed the Indigenous Communities Syndicate LP (ICS) to invest in the project, now under construction southwest of Edson.

ICS has agreed to invest $93 million in the project. Their investment is backstopped by the Alberta Indigenous Opportunities Corporation. AIOC was formed as a Crown corporation in November 2019 by the province to help Indigenous groups invest in natural resource projects in Alberta.

“It is remarkable to see good policy pay off,” said Indigenous Relations Minister Rick Wilson in an email statement to Windspeaker.com about the award.

“It is exciting to see (AIOC) be internationally recognized for creating a path of shared prosperity with Indigenous communities in Alberta. The participation of six First Nations in the Cascade Power Project is a prime example of what is possible when Alberta’s government and local communities work together,” Wilson’s statement continued.

In September, ISC and the Cascade Power Project became AIOC’s first commitment.to Indigenous investment in a natural resource project.

At that time AIOC CEO Alicia Dubois said the Cascade Power Project received AIOC approval because it ticked a number of boxes: it was a deal brought to the AIOC by the Enoch Cree Nation and Alexis Nakota Sioux Nation; both First Nations wanted to bring a number of other First Nations on board; and it was a commercially viable deal.

“The investment into this important piece of provincial infrastructure will be transformative to the six First Nations involved,” said Chief Tony Alexis of the Alexis Nakota Sioux Nation at the official announcement. “The economic benefits will provide critical and tangible income for future generations.”

Six hundred jobs will be created during construction followed by 25 long-term operational jobs for skilled Indigenous workers employed by Indigenous contractors.

Over the next 30 years the plant will provide hundreds of millions of dollars to the First Nations.

PFI also stated in its 2021 International Yearbook, an annual publication which highlights the top “energy and infrastructure schemes” around the world, that Cascade is “an important part of the province’s transition to a lower carbon power grid, a major shift from a reliance on coal-fired power.”

PFI also singled out the project for its “innovation in structuring without a power purchase agreement.” Instead, the project will provide “protection from revenue uncertainty with gas netbacks. The project has a 10-year gas hedge that links the gas price to the project’s day-ahead power price.”

A netback is a benchmark used in the oil and gas industry to assess the profitability and efficiency of a company based on the price, production, transportation, and selling of their products.

The state-of-the-art power facility will meet eight per cent of Alberta’s electricity needs. Once operational it is expected to reduce Alberta’s carbon emissions by five per cent. Construction is to be completed in the fall of 2023.

The First Nations consortium is part of the McLeod River Power Group, which includes pension fund manager OPTrust, Axiom Infrastructure, and DIF Capital Partners. Kineticor Resource Corp. is responsible for management of the development, construction and operations of Cascade Power Project on behalf of project partners.

“The participation of six First Nations in the Cascade Power Project is a prime example of what is possible when investors, the government and local communities work together,” said Gavin Ingram, OPTrust’s Global Head of Infrastructure.

“The project’s development included meaningful local engagement with the aim of building long-term relationships, which will play a key role in its success and ultimately benefit OPTrust members and retirees, our First Nations partners, and the environment alike.”

Wilson said AIOC will have “more good news … in the near future.” He said announcements will be made early in 2021 for the backing of two more projects.

As well, the federal government has launched a request for proposals to purchase clean electricity in Alberta. These procurements, says the announcement made on Jan. 7, will support economic opportunities for Indigenous businesses by encouraging participation in the move towards clean energy. Each request for proposals will incorporate mandatory requirements for Indigenous participation through equity holdings or set-asides under the Procurement Strategy for Aboriginal Business.

Local Journalism Initiative Reporters are supported by a financial contribution made by the Government of Canada.