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California veteran gets rich owner -- Japanese buy up in America

One of America's oldest wind development companies, Oak Creek Energy Systems, based in Tehachapi, California, will soon come under majority ownership of Japan's Marubeni Corporation, which manages nearly $48 billion of diversified assets including a smattering of wind projects in Japan and South Korea. The deal offers entry into the US wind market for Marubeni while giving Oak Creek the financial clout to deliver on big wind plans in California and expand outside its home state.

"This is our North American expansion," says Oak Creek's Hal Romanowitz. "We've been talking about developing beyond California and we have a pipeline outside, but this gives us the ability to move it forward." Romanowitz says Oak Creek has a couple thousand megawatt of potential wind projects in states that neighbour California, but that it plans to move beyond that and become a full-fledged North American developer. Marubeni will acquire a 55.4% controlling interest through a $16.6 million investment in Oak Creek Holdings.

Oak Creek has a power purchase agreement with Southern California Edison for up to 1550 MW of wind power, contingent on new transmission lines being built. That is not expected to begin until 2010 but it played a strong role in bringing Oak Creek and Marubeni together, says Romanowitz. He has been involved in trying to jump-start transmission upgrades in the Tehachapi Pass wind resource area, which would open the way to thousands of megawatt of development. The pass is relatively close to the load centres of the Los Angeles basin.

Cash heavy

Money for turbine procurement was also a key aspect of the deal. "It takes a lot of financial backing," says Romanowitz, who adds that Oak Creek's agreement early in the year with Allco Wind Energy, a division of Australia's Allco Finance Group, was a big first step leading up to the partnership with Marubeni. Oak Creek and Allco formed a joint venture called Alta Innovative Power Company LLC to pursue development of the 1550 MW project (Windpower Monthly, February 2007). "We got a lot of backing with Allco, but this gives us the rest of what we need in order to execute fully and take advantage of what we've done so far."

Japan's Marubeni, which has an equity holding in 89 MW of wind plant comprising 47 MW in Japan and 42 MW of a 140 MW portfolio in South Korea, joins the influx of exchange rate advantaged foreign firms scooping up wind assets in the US. The company says it "will aggressively pursue its plans for development of wind projects throughout North America by setting a wind energy resources footprint with this investment." Other recent investments by Marubeni in US renewables include three biomass facilities, one in California and two in New Hampshire, with a combined capacity of about 50 MW.

For its investment in Oak Creek, Marubeni is mostly acquiring the development team and future development rights. Oak Creek has stakes in only a small volume of wind megawatt, says Romanowitz. His company is currently building the 24 MW Alite wind project in southern California, wholly owned by Australia's Allco. The project, using Vestas 3 MW machines, will sell power directly to an end-use customer, a large concrete operation in nearby Tehachapi.

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