For how long has Capstone Infrastructure existed and what does your portfolio look like today?
Capstone has been around for nearly 20 years. We started in 2004 with the public listing of the Cardinal co-generation plant. Nowadays, we have over 30 operating facilities generating around 825MW of power—including two-thirds wind, a growing solar portfolio that has just exceeded 200MW, and some facilities operating with hydro, biomass, and one with natural gas—the latter making up 156MW.
A couple of years ago, we developed what back then was the biggest solar energy farm in Canada. But as the pace of that industry accelerates, we have already been surpassed on that. Titles do not last long in this business.
Do you believe in a holistic approach to the green transition, that is, in investing in a variety of renewable energy sources as well as in transitional ones, such as natural gas?
The reality is that we are going through a transition. So, we recognize there is a critical role that natural gas continues to play in many power markets, including our Cardinal facility, which operates as a compensator in Ontario during periods of low wind and high demand. However, as our business grows, we invest increasingly more in zero-carbon technologies. Accordingly, Capstone’s three core technology platforms are wind, solar, and battery storage.
Why is battery storage important for Capstone?
Wind and solar, when set up in the right places, are the least costly sources of energy on the planet—with $30 per MW/h in many jurisdictions. There is simply nothing that can compete with that.
However, these sources are not always available when you need them. We believe the intermittency of wind and solar needs to be addressed within the framework of the green transition. If we are going to reach net zero, we must find a way to make power available whenever society needs it, without being subject to the whims of nature. So, as wind and solar make up an increasingly larger portion of the grid, the question is to keep the reliability of the system. Currently, the leading technology for storage is lithium-ion—similar to what you find in phones, laptops, and electric cars. What is exciting now is the societal need to store excess renewable energy and make it available on a cost-effective basis.
Besides cost-effectiveness, are the geopolitics of the supply of the elements needed for these batteries also a potential issue?
Certainly. Batteries today are made almost entirely in China. As the security of supplies and core materials comes to support the energy transition, the question of diversification of supply chains becomes more and more pressing. Being a consumer of those technologies, I think a diverse, robust, and secure source of supply is always desirable. Equally, as the technology evolves, material needs will shift. What seems scarce today may not be tomorrow, given the transformations in technology and chemical compositions.
How would you evaluate the current state of grid infrastructure?
Our electricity grids were built over decades to handle a certain kind of system. Today, we experience the incredible necessity to change how we create and distribute power. We also see a growing demand for energy—which for the longest time we saw flattening, or even declining—which is, generally speaking, due to population and economic growth, and specifically because of onshoring and reshoring of certain key industries, factories starting up again, and the move to electrification. Even electric vehicles are being discussed, under the title of ‘the democratization of the power grid,’ as a potential source of energy storage.
Do you have any plans for expansion beyond Canada?
Our business in Canada is reflecting seeds that were sewn decades ago. In Canada, we operate from coast to coast, with wind farms facing the Atlantic Ocean and hydro plants draining into the Pacific Ocean—and everything in between. Three years ago, we started looking at expansion opportunities and became excited about California, especially given its strong commitment to decarbonization, its growing population base, an increasing demand for power, and its large and dynamic market.
What kind of support would you consider is necessary from policymakers to accelerate the green transition?
This transition is reshaping our economy in a way that we have not experienced in decades. I do not envy the job of any politician trying to chart this course. From an industry perspective, we are looking at solutions that are politically sustainable—meaning solutions that will stand the test of time through various election cycles. So, stability and certainty from a regulatory perspective are absolutely critical.
Incentivizing appropriate behaviors is also crucial. The carbon tax, for instance, was very welcome here in Canada, which involves investment tax credits that functioned as a carrot, so to speak, for energy producers. The challenge is not to issue a one-size-fits-all policy but to create the framework that allows the energy transition to occur over a period of decades and gives companies like ours the legal structure as well as the opportunity to invest over that timeframe.
What is your message to our audience?
The energy transition is critical and, as such, must involve society as a whole if it is to be successful and sustained. We must build support from the grassroots up—across governments, industry, indigenous groups, local communities—and let people understand and participate in the benefits of the transition. Only given that scenario will we have the long-term success that we so desperately require.
- Share on: