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With or without the tax credit -- Navitas rides the wave

When the US development division of Spanish turbine manufacturer Gamesa begins construction work next year on the 200 MW White Wind Farm in South Dakota it will signal a long awaited breakthrough for a state that ranks fourth in US wind potential but has only 44 MW of operating wind plant. Navitas Energy, owned 77% by Gamesa and based in Minneapolis, will place 100 Gamesa turbines on the west side of Buffalo Ridge, already home to hundreds of wind turbines in nearby Minnesota. The $300 million development is expected online in 2009 -- with or without wind's federal production tax credit (PTC), which is currently set to expire at the end of 2008.

"This is such a good project that it's going to get built," says Chris Moore of Navitas. "The PTC would make it easier, but we don't think that if it goes away it'll kill the project. South Dakota is a marvellous place to develop but, unfortunately, they don't have enough load. So the key to South Dakota is getting the resource out of South Dakota and into Chicago." That is where the power from White Wind is headed.

The South Dakota Public Utilities Commission approved the project in June and Moore feels that further projects cannot happen soon enough in the windy Midwestern state. "The other thing I emphasize to the folks in South Dakota is that they can't wait ten years to get this done," Moore says. "You look at the queue in Illinois and there are 4000-5000 MW of projects that are waiting to be built. In ten years a big chunk of that is going to get done. At that point, the big draw to get South Dakota energy out of there will have been reduced."

Illinois permits

Moore believes a recently passed law in Illinois calling for 10% renewables in the electricity supply by 2015 and 25% by 2025 will open the floodgates in the fifth-most populous state. Navitas has permits for two Illinois projects -- Baileyville at 80 MW and Lancaster at 70 MW -- and nearly 200 MW that have entered the permitting process.

But Navitas is certainly not limiting itself to neighbouring states. It plans to build in Texas and elsewhere before the end of the decade. "Our portfolio consists of projects in 11 states," Moore says. "The US marketplace is just getting bigger and bigger."

Although Gamesa owns 77% of Navitas, and Iberdrola owns 22% of Gamesa, Navitas operates autonomously, says Moore. It owns no wind farms and remains content to build and sell as it pleases. "The majority shares of Navitas are owned by Gamesa but we still operate as Navitas Energy," says Moore. "Obviously there's an ownership connection. But is there a connection where Iberdrola is suggesting areas of interest where we should be working? No. We operate independently. We have sold some projects to Iberdrola, but we've also sold some projects to other investor groups."

Nevertheless, in a time of tight equipment supplies, the right connections, particularly to Gamesa's Pennsylvania wind turbine manufacturing facilities, can make a difference. "We go where life is easiest -- and easiest is to use Gamesa machinery," Moore says. "So we do have a certain amount of turbines that are essentially allotted to us for our projects. But we still fight for them, kind of like everybody else," he explains.

"More players are needed," Moore says. "And from a development standpoint I wish there were turbines coming out of everybody's ears. But from a manufacturing standpoint you've got to wonder if this isn't just about perfect as far as they're concerned. It's not my $200 million going into a manufacturing facility, though, so I suppose it's a little easier for me to say."

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