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CDPQ, a leading global investment group, has announced a significant agreement with Brookfield Asset Management and its institutional partners to acquire a 25% stake in First Hydro Company, a vital electricity generation and storage facility in the United Kingdom. This strategic move is particularly notable as First Hydro is a key player in the UK’s energy landscape, especially in supporting the transition to a more sustainable energy system. Engie, a prominent energy company, retains ownership of the remaining 75% stake in First Hydro.
First Hydro manages and operates two major power plants located in the picturesque Snowdonia region of Wales: Dinorwig and Ffestiniog. Together, these facilities boast a total capacity exceeding 2,000 megawatts (MW), accounting for an impressive 76% of the entire pumped hydro storage capacity in the UK. As the demand for grid flexibility and stability escalates in the face of growing renewable energy sources, First Hydro emerges as a critical asset in maintaining the reliability of the national electricity system.
Emmanuel Jaclot, CDPQ’s Executive Vice-President and Head of Infrastructure, emphasized the importance of this investment, stating, "First Hydro is playing a critical role in helping the United Kingdom manage its national electricity system and meet its net-zero commitment by providing renewable electricity and storage capabilities. This investment marks CDPQ's first foray into pumped hydro storage, and we are delighted to join forces with Engie, a longstanding partner for CDPQ and a world leader in the energy sector."
Pumped hydro storage is a well-established method for balancing supply and demand within electrical grids. By storing excess energy in the form of gravitational potential energy, these facilities can quickly release power when needed, effectively acting as a buffer during peak demand periods. With the increasing penetration of intermittent renewable sources such as wind and solar power, the role of pumped hydro is more critical than ever.
Ignacio Gomez-Acebo, Managing Director at Brookfield, expressed satisfaction with the partnership and the future of First Hydro. "We are pleased to have supported First Hydro throughout our ownership period, including securing its long-term future through active management of the business. First Hydro will continue to provide considerable renewable power to the U.K. long into the future," he remarked.
The financial close of this acquisition is anticipated by the end of 2024, pending customary closing conditions and necessary approvals. This timeline highlights the collaborative efforts required to navigate the complexities of energy infrastructure investments, especially those tied to critical national assets.
This partnership between CDPQ, Brookfield, and Engie marks a pivotal moment not just for the companies involved, but for the UK’s energy sector as a whole. As the country strives to meet ambitious climate goals and enhance energy security, investments in facilities like First Hydro will be essential. The integration of such assets into a more resilient grid promises to fortify the UK's position as a leader in renewable energy while supporting its transition towards a sustainable future.
In summary, this strategic investment reflects a growing recognition of the importance of energy storage solutions in the global shift towards renewable energy. By enhancing the operational capacity of First Hydro, CDPQ and its partners are poised to play a significant role in shaping the future of the UK’s energy landscape.
