Northland Power agrees financing for 100MW Quebec project

CANADA: The Toronto-based Northland Power Income Fund has completed financing for its 100.5MW Mont-Louis wind project in Quebec with a C$106 million loan from two Canadian life insurance companies.

Construction financing, supplied by The Manufacturers Life Insurance Company and The Canada Life Assurance Company, will convert to a 20-year amortizing term loan after the start of commercial operations.

It is a milestone for Mont-Louis, which is expected to start commercial operations in the third quarter of 2011, nearly a year behind its original schedule.

The project ran into turbine supply issues that were complicated by Quebec’s local content requirements after GE pulled out of a deal in 2007. The project’s contract with Hydro-Quebec that requires that 60% of the costs must be incurred in Quebec's Gaspésie region.

The global financial crisis also complicated the search for capital. Northland CEO John Brace said a commitment earlier this year from Invesstissment Quebec, a provincial government investment agency, to provide the project with C$15 million of debt financing was "instrumental in allowing this project to proceed".

The financing also comes at a time when Canadian renewable energy developers are facing a debt financing shortfall as demand for capital outstrips the ability of traditional lenders to the sector, like insurance companies, to invest.

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