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Canada

Canada

International tender part of new policy

In Canada, Hydro Quebec announced it will buy electricity from 250 MW of new wind capacity to be installed between 2000 and 2010; the utility will issue a preliminary international request for proposals in 1997. A new Canadian led consortium with British and Danish partners announced its intention to take over two Kenetech wind projects committed for the Gaspe Peninsula and one wind-diesel project for the Magdalen Islands

Quebec recaptured its place at the centre of Canadian wind development with two major initiatives in late October. On October 30, Hydro Quebec announced it will buy electricity from 250 MW of new wind capacity, to be installed from 2000 to 2010. And on October 25, a new international consortium announced its intention to take over two 50 MW Kenetech wind projects committed for the Gaspe Peninsula and one 5 MW wind-diesel project for the Magdalen Islands.

The Gaspe wind farms are now to consist of about 150 Danish Micon 600-750 kW turbines in a C$140 million project called Le Nordais, named for the strong northern winds which traverse eastern Quebec. The rights to the Gaspe projects are apparently being transferred from the original owner, bankrupt California company Kenetech, to a new Canadian led consortium with British and Danish partners. But transferral of the Gaspe asset had apparently not been formally considered by US Bankruptcy Court as of November 22, according to court documents. Furthermore, the matter is apparently being explored by creditors to see whether it warrants further investigation.

Le Nordais was organised by 3C Inc, a firm of former Kenetech employees in Quebec led by Richard Legault, the original head of the Gaspe project. Kenetech's Gaspe assets, including the wind-disel project, are described as owned by Kenetech International Ltd -- and as having a sale price of $200,000 -- in at least one bankruptcy document filed by Kenetech Windpower Inc in Oakland, California. Kenetech International shares its address in San Francisco with Kenetech Windpower Ltd.

Details of the Micon takeover of Kenetech's role were broken at a news conference on October 25 in Mont-Joli on the Gaspe Peninsula during a two-day French-language Wind Turbine Conference in nearby Rimouski. The willingness of Hydro Quebec to proceed with power purchases from the revamped project was the second clear indication during the Rimouski event of Quebec's shifting priorities away from large scale hydroelectric development and towards wind energy. On the same day, Quebec natural resources minister Guy Chevrette announced there would be a significant wind power set-aside in a new Quebec energy policy, expected in late November.

Preliminary request

Plans to buy wind power under the set aside are apparently already advanced. Just days after Chevrette's Rimouski promise, Hydro Quebec announced it will begin to buy electricity from 25 MW of new nameplate wind capacity per year (10 MW contracted capacity), for each of the next ten years, for a cumulative total of 250 MW nameplate and 100 MW contracted capacity. The announcement -- which emphasised the employment benefits of creating a wind industry in Canada -- came at a government summit on employment and the economy, held in Montreal on October 30.

Hydro Quebec's Denis Gagnon said the utility would issue a preliminary international request for proposals in 1997 and expects the first tranche to begin operation in 2000. Total investment -- which is in addition to the Gaspe wind farms in the pipeline -- is said to be $360 million, with 2000 direct and indirect jobs. Le Nordais, says Legault, was "retained as a priority project as part of the economic summit."

The Nordais development consortium says it will build, finance, and operate the two 50 MW plants for 25 years, in a manner "consistent in every way" with the plans drawn up by Kenetech and Hydro Quebec. The project would be the largest Canadian wind plant.

As well as 3C Inc, the consortium has three other members: the Axor Group Inc, a Quebec energy and infrastructure group; Micon A/S of Denmark; and Ecowind Ltd, a UK subsidiary of Nichimen Corp, a Japanese general trading firm. Axor holds 50% of the equity, just as in the Kenetech project, and the other partners together own the remaining 50%. Hydro Quebec had asked for 50% Quebec equity in the enterprise. Morio Sato, president of Ecowind, says Nichimen will "assure the financial support" of project Nordais.

Micon and 3C plan to join forces in a separate company to supply and assemble wind turbine components. Hydro Quebec has stipulated a Quebec interest of not less than 40%. Gagnon says Quebec content could include manufacture of the tower, transformers, electrical equipment, engineering and construction services -- an aspect Le Nordais seems to be taking seriously. "The important role of the new soon-to-be Quebec wind turbine manufacturer enhances overall Quebec content and unquestionably confers added value upon the entire wind plant concept for the Gaspe," states the consortium.

Deadline challenge

Legault estimates Quebec job creation at 1000 person years during the construction phase. He adds that as well as creating new skills in Quebec, the project will "foster the emergence of a network of regional based suppliers well versed in this innovative technology." Le Nordais plans a skills transfer programme with higher education institutions in eastern Quebec, a region of high unemployment.

Hydro Quebec's Gagnon says the utility has agreed to a transfer of the Kenetech contracts to the new consortium, but the deal had not been signed in mid November. The project now faces a major deadline. Gagnon says the Kenetech contracts specified that foundations should be complete by March 31, 1997. The new developers can pay a penalty to gain a three months' extension to June 31, 1997, which Gagnon calls "the ultimate deadline."

Contract details

The contracts for the 100 MW of wind power, totalling 20 MW average production capacity, were originally won by Kenetech in a competitive tender for private power generation in April 1991. According to the 1991 tender document, Hydro Quebec will buy electricity from the projects at a price based on the utility's avoided cost in 1989 and escalating with inflation (roughly 3-6% annually). Hydro Quebec's purchase price is now $0.053/kWh. The 25 year contracts call for 142 GWh delivered annually over the contract life, and specify not only the energy purchase rate, but also demand a capacity credit for wind power in the December to March period, suggesting wind will replace electricity from other sources.

Legault says an environmental impact statement only slightly modified from the Kenetech document will be used, along with the existing land options, wind resource mapping, and wind turbine micrositing. The Bureau d'audiences publiques sur l'environnement (BAPE), the agency for public environmental hearings must approve the environmental impact statement. Hearings were scheduled to begin in early November in two towns on the Gaspe Peninsula and Legault expects them to last for four months.

The project has undergone successive increases in turbine size. Kenetech had originally planned to use 300 of its KVS-33 405 kW units, which were replaced by some 200 of Kenetech's new KVS-45 variable speed 520 kW wind turbines. These have now been superseded by the larger Micon model.

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