Boralex has had tremendous growth in the past five years - what has been the recipe for success?
Over the past five years, we grew twice our size both through acquisitions and organically in the wind sector. If in 2017 our market cap was CAD 2 billion, nowadays we should be around CAD 4,8 billion and at times even more. France, Canada and the United States - where we acquired seven sites with an output of 200MW in three different states: Alabama, Indiana and California - were the main markets that prompted this significant evolution. On top of these, we diversified our portfolio both in terms of technologies and geographies as a means to mitigate risks and stay on top of our game. Storage is the fourth pillar of our diversification plan and we used pilot projects to test out ways to compensate the intermittency that is associated with solar and wind power production. Optimization plays an important role in our business model and as such we partnered with EIP (a Switzerland-based manager of collective assets focused renewables and energy infrastructure assets), to whom we sold 30% of our assets, in order to have more liquidity to continue financing our growth.
What role does storage play in the wider plan of the green transition?
Up to now storage has been used as a supporting technology for solar and wind sites and this paradigm will probably continue to exist in the following three years. In the North-East side of the United States and in Canada, hydro reservoirs act as natural storage solutions in all kinds of weather. Because it is cheaper to use big hydro power plants to balance our production, storage here is much more expensive and this is the reason why it does not play a major role (up to 10%) in our portfolio yet, but this will change in the coming years.
How did Boralex experience the policy support for renewable energy in Canada?
We are in a different space now than we were 20 years ago and the cost of technology for wind and solar sources is much more affordable than investing in new hydro or nuclear facilities. The government is moving towards putting in place a new environment and we have actually seen how big companies (L'Oreal, IBM, etc.) are signing corporate power purchase agreements (PPAs) to buy green electricity not just as a marketing objective but also out of conviction. Market transitions are created by solid policies that drive massive projects and a sense of future predictability - which is absolutely vital for our industry. Four years ago, we were in a surplus situation in Quebec but with the rise of EVs and strong GHG reduction targets, now Hydro-Québec is expecting a deficit of 100 terawatt hours of electricity by 2050. With this huge demand on the table, we need to act fast and invest in renewable technologies and especially solid grids because, otherwise, it is impossible to reach the targets of electrification.
You have demand from big players, cheaper energy and government policies to support you, what are the next steps to achieve a green transition?
At the moment funding is an important piece of the puzzle but is not yet so easily achievable because in order to contract a sustainable loan, small and medium players need to invest considerable sums into ESG reporting. When this financial obstacle will finally be surmounted, we will finally be able to see a real transition. Both investors and insurance companies need to see real reduction in terms of the cost of capital to invest in their sites. When we will be able to internalize the cost of carbon into our business plans, we will definitely see a major shift in perspective.
As it is universally known, the pandemic actually made us understand that we need to come back to a more balanced and diversified production chain in order to reach sustainability.
It is logical that if the distribution is closer to the market, we use less carbon to transport commodities. Moreover, there is a global massive labor shortage, which is felt especially harsh in Canada due to demographic imbalance. Social innovation and shaping our market differently are the handiest solutions to mitigate this challenge in the long term.
What plans of expansion do you have in the years to come?
We have a very targeted expansion plan in terms of geographies and as in 2021, we decided to remain in markets with strong policies for decarbonization, France will continue to be a strong point in our portfolio. One year ago, Canada was not at the top of our list, but the recent demand for electricity coming from Hydro-Québec and the hiatus of nuclear power plants in Ontario made us reconsider our position. Scotland offers great wind opportunities and the US has become much more interesting through the recent adoption of the Inflation Reduction Act and in the next couple of years we will probably shift our attention towards Northern Europe and Spain. Altogether, we plan on doubling our global installed capacity by 2025 and double it again by 2030.
Do you have a final message for our readers about the green transition?
There is no other way than to try to succeed and that 1,5 °C reduction can only be reached if we put in place the right economic frame. I have been in the energy industry for the past 20 years with the last six years focusing on the renewable sector and I can assure you that mentalities have changed massively all over the globe. Investors and bank entities are extremely devoted to the green transition goals and I am truly confident that by working together we can bring the much-needed change into the world.
