BC first offshore farm edges closer to start

CANADA: Canada's most advanced offshore wind energy proposal has passed a major regulatory hurdle, but Vancouver-based NaiKun Wind Energy Group still needs to line up a buyer for the output of its flagship 396MW project before it can progress much further.

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The project received federal environmental approval in March, clearing the way for relevant federal agencies to issue the final permits necessary for construction and operation. The federal green light comes on top of an environmental assessment certificate issued by the province of British Columbia (BC) in December 2009, and ends a formal review process that has taken close to four years to complete.

The proposed wind farm is located in the Hecate Strait between BC's northern Pacific coastline and Haida Gwaii, an island archipelago formerly known as the Queen Charlotte Islands. It still has to undergo an environmental review by the Haida Nation, in whose traditional waters NaiKun's turbines will be installed

"But they're our partners on the project so I really don't think there is any issue there," says CEO Michael O'Connor. "We're basically 'shovel ready'."

O'Connor estimates that it will take two years from the signing of a power-purchase agreement to finalise the detailed design work, permitting and supply agreements that will allow construction to proceed. Getting that contract, though, is the next major challenge NaiKun faces.

The project failed to make the cut in BC Hydro's most recent call for clean power, which wrapped up last spring, but O'Connor expects growing electricity demand and the province's new clean-energy strategy will help open opportunities to bring NaiKun online. The government-owned utility is in the process of developing a 30-year integrated resource plan that will outline how it will meet the province's goals of opening up export markets for British Columbia's renewable energy projects, supplying 93% of domestic electricity demand from clean, non-nuclear sources, and reaching electricity self-sufficiency by 2016. The plan is due to be submitted to the provincial cabinet for approval in November.

In the meantime, NaiKun has scaled back operations to preserve cash and allow time to secure a power deal. After spending $46 million to develop the project to this point, the company's estimated cash requirement for the current fiscal year is $1.5 million.

"On this basis, the company has sufficient financial resources to sustain operations into 2014 and beyond," says a statement in NaiKun's recently released first-quarter financial results.

The 396MW offshore project is the first of five phases of an eventual 1,750MW facility at the project site.

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