Hut 8 has secured five-year capacity contracts with the Ontario Independent Electricity System Operator (IESO) for 310MW of power generation assets.
The awarded contracts follow successful bids by Far North Power, a joint venture between Hut 8 and Macquarie Equipment Finance (part of Macquarie Group), in the IESO Medium-Term 2 (MT2) capacity auction.
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The portfolio has a total nameplate capacity of 310MW across sites at Iroquois Falls, Kingston, Kapuskasing and North Bay.
These agreements include a weighted average capacity payment of C$530 ($388) per MW-business day for the first year with provisions for inflation indexation. This financial structure provides an avenue for potential increases over time while securing stable cash flows for Hut 8’s operations.
Hut 8 states that as these fixed five-year contracts replace short-term seasonal ones, there is notable cash flow stabilisation which diminishes earnings volatility – an essential factor for investors and stakeholders within the sector looking towards sustainable profitability.
Hut 8 CEO Asher Genoot stated: “Securing these contracts is a testament to the commercial and regulatory fluency of our power-native team.
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By GlobalData“It reflects our proactive approach to portfolio management and our focus on identifying value-accretive opportunities to maximise returns on our power assets.”
Upside potential exists through additional energy sales into the growing Ontario market. Projections indicate that electricity demand could surge by up to 75% by 2050, with anticipated capacity shortages as high as 5.8 GW by 2030 according to IESO forecasts. These conditions are expected to drive increased dependence on the current dispatchable assets.
Macquarie Group commodities and global markets business managing director Joshua Stevens stated: “This milestone for Far North is affirmation of the business and our relationship with Hut 8.
“These contracts position the Far North power plants in Ontario for long-term relevance in a capacity-constrained power market, demonstrating the value we strive to bring as a capital provider.”
