The Lake Erie Connector is a proposed 117km underwater transmission line connecting Ontario with the PJM Interconnection, the largest electricity market in North America.
CIB and ITC Investment Holdings have signed an agreement in principle to invest CA$1.7bn in the project. Under the terms of the agreement, the CIB will invest up to CA$655m or up to 40% of the project cost. ITC - a subsidiary of Fortis - and private sector lenders will invest up to CA$1.05bn, the balance of the project’s capital cost.
CIB said that the 1,000 megawatt, high-voltage direct current connection will help lower electricity costs for customers in Ontario and improve the reliability and security of Ontario’s energy grid. The Lake Erie Connector will reduce greenhouse gas emissions and be a source of low-carbon electricity in the Ontario and US electricity markets, it added.
During construction, the Lake Erie Connector is expected to create 383 jobs per year and drive more than CA$300m in economic activity. Over its life, the project is expected to provide 845 permanent jobs as well as economic benefits by boosting Ontario’s GDP by CA$8.8bn.
The CIB anticipates financial close late in 2021, pending final project transmission agreements, with construction starting soon after. ITC will own the transmission line and be responsible for all aspects of design, engineering, construction, operations and maintenance.
ITC acquired the Lake Erie Connector project in August 2014 and it has received all necessary regulatory and permitting approvals, including a US Presidential Permit and approval from the Canada Energy Regulator.
“This project will allow Ontario to export its clean, non-emitting power to one of the largest power markets in the world and, as a result, benefit Canadians economically while also significantly contributing to greenhouse gas emissions reductions in the PJM market,” said Canada Infrastructure Bank CEO Ehren Cory. “The project allows Ontario to better manage peak capacity and meet future reliability needs in a more sustainable way. This is a true win-win for both Canada and the U.S., both economically and environmentally.”
“The Lake Erie Connector has tremendous potential to generate customer savings, help achieve shared carbon reduction goals, and increase electricity system reliability and flexibility,” said Jon Jipping, EVP & COO of ITC Investment Holdings, a subsidiary of Canadian-based. “We look forward to working with the CIB, provincial and federal governments to support a more affordable, customer-focused system for Ontarians.”