Why Capital Power (TSX:CPX) Is Up 5.8% After Launching Two Major Ontario Battery Storage Projects

• Capital Power announced that its 120-MW York and 50-MW Goreway Battery Energy Storage System projects in Ontario have successfully entered commercial operation, marking the addition of a combined 170 MW of storage capacity that is contracted with Ontario’s IESO until 2047.
• A unique aspect of these projects is their delivery under budget and ahead of schedule, reinforcing Capital Power’s leadership in utility-scale battery storage while securing approximately CA$35 million in contracted annual EBITDA for over 20 years.
• We’ll explore how the successful, long-term contracting of these battery storage projects could influence Capital Power’s growth and stability outlook.

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Capital Power Investment Narrative Recap

To own Capital Power, you likely need to believe in sustained, accelerating demand for flexible, lower-emitting power, and especially that long-term, contracted projects like York and Goreway will anchor stable cash flows and offset volatility in spot prices. The recent news meaningfully addresses the company’s need for predictable EBITDA generation, but the most important short-term catalyst, securing additional long-term contracts in high-growth U.S. markets, remains, while the principal risk continues to be cost of capital if interest rates stay higher for longer.

Among recent announcements, the new long-term deal with Consumers Energy for Midland Cogeneration Venture connects directly to the catalyst of expanding long-term contracted revenue. Like the Ontario storage projects, these contracts generate multi-year EBITDA visibility that could help reinforce balance sheet stability and finance further growth, especially with increasing competition for high-quality PPAs and asset allocations.

However, against these strengths, it’s important to weigh that Capital Power’s ability to consistently recontract at high rates may face margin pressures over time due to...

Read the full narrative on Capital Power (it's free!)

Capital Power's narrative projects CA$4.1 billion revenue and CA$521.7 million earnings by 2028. This requires 5.0% yearly revenue growth and a decrease in earnings of CA$92.3 million from the current CA$614.0 million.

Uncover how Capital Power's forecasts yield a CA$67.59 fair value, in line with its current price.

Exploring Other Perspectives

Simply Wall St Community members have estimated Capital Power's fair value between CA$67.59 and CA$156.32, reflecting two distinct perspectives. Amid this wide spread, the risk that rising interest rates could raise the company’s cost of capital continues to shape expectations for future dividend growth and project investment.

Explore 2 other fair value estimates on Capital Power - why the stock might be worth just CA$67.59!

Build Your Own Capital Power Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Capital Power research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.
• Our free Capital Power research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Capital Power's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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