"Within Canada, if Quebec didn't exist for a second, the overall level of demand is always going to be trumped by the demand in the United States unless the US has another period of collapse of federal policy. In the minds of these global vendors, they are going to figure out what their US strategy is and then how they can service Canada based on that strategy," says analyst Joshua Magee with Emerging Energy Research.
Quebec is a special case because of deliberate efforts by the province to use large wind purchases to build an industrial base. Government-owned Hydro-Quebec awarded contracts for 990 MW of projects in October 2004 with the proviso that up to 60% of total project costs be spent in the Gaspé region. GE Energy was selected to provide the turbines and contracted with suppliers who opened factories in the region to assemble nacelles and to manufacture blades, towers and nacelle shells. For Quebec-based Composites VCI, the investment has led to a further contract with GE for 250 nacelle shells in 2007 for export markets.
Denmark's LM Glasfiber has also seen growth at its Quebec operations in the past year. Originally contracted to supply GE with rotor blades for 2400 MW of capacity over the next ten years, the company has since added another production line and increased its productivity to close to 400 MW a year, says LM Glasfiber's Steen Broust Nielsen. It also has the capability for further expansion. "The Canadian operation was the first LM factory to be built in a new modular setup that enables fast and cost-effective expansion. Expansion will depend on demand in general, and in particular the outcome of the second round of the Hydro-Quebec tender," he says.
The utility is currently seeking an additional 2000 MW of wind, with bids due in September. Regional and provincial content requirements are again stipulated, although how successful Hydro Quebec will be in attracting investment this time around is not clear. "We have heard very conflicting reports about exactly how many vendors are still interested in that second tender and how many of them have thrown up their hands and said we can't make this work so we are not going to bid," says Magee.
Still, there has been some activity. AAER Systems, has a licensing arrangement with German company Fuhrländer AG to produce it wind turbine and is opening a factory near Montreal this year where it will assemble nacelles and produce blades. The bulk of its 2007 production will go to filling its first order from British Columbia's Katabatic Power for 17 AAER 1.5 MW turbines. At full capacity, the plant is expected to produce an estimated 400 nacelles and 1200 blades a year. AAER recently announced a deal making Montreal's IEC Holden Inc its main supplier of generators. The activity is specifically with the Quebec tender in mind, according to CEO Dave Gagnon.
Sharing AAER's business model is Toronto's Americas Wind Energy, which owns the rights to Lagerwey wind turbine technology, once ubiquitous in its home country, the Netherlands. Following a recent deal between Americas Wind Energy and the Coopératives Regroupées en Energie Renouvelable du Québec (CRERQ), an umbrella group of Quebec wind power co-ops, CRERQ will not only sell the company's AWE 900 kW turbines in Quebec, but has also formed a cooperative of regional companies to supply components, including rotors, generators, blades and towers.
Component suppliers are also positioning themselves. Xantrex Technology, a power electronics company with headquarters in Vancouver, signed a letter of intent last year with two Quebec companies to establish wind converter manufacturing capability in Matane. Xantrex converters are installed in more than 3000 MW of turbines worldwide. Outside of Quebec and Xantrex's British Columbia operations, Canada's manufacturing capacity includes tower plants in Saskatchewan and Ontario.