United Kingdom

United Kingdom

Going for growth and high returns -- New type players enter industry

In the belief that they have the commercial experience to crack open markets where wind industry members fear to tread eight businessmen well versed in energy and finance have got together to form Windforce Energy Development Ltd to create "a substantial portfolio of large scale wind projects." The aim is to develop wind stations that will attract investors looking for "the high returns achievable for early stage investment in high growth projects" and to become "one of the top two to three developers," within five years.

"It is a tremendous market and everybody underestimates it," says Windforce chairman Alexander Kulpecz, an American. He is leading the initiative with Irishman Shaun Kingsbury, Windforce managing director at the company's base in Wimbledon, west London. Both men are steeped in power industry and project development experience from senior posts at Shell and most recently at Enron. Other members of the team have similar backgrounds in the Independent Power Producer (IPP) industry.

Indeed, Kulpecz sees great similarities between the wind business now and the IPP business 15 years ago, where early investors have since reaped considerable returns. "We think it a great opportunity commercially and the time is right to bring our skills to wind energy," says Kulpecz. "This is a fun business. It is an innovative industry and it's maturing before our eyes. Those who are in at the beginning will have a great time."

Once a project is fully developed Windforce will hold onto 20-25% of the equity and sell off the rest to "co-investors." As Kingsbury puts it: "We'd sell 50% to Shell, Nuon or somebody who wants to operate it." He adds: "We think we have assembled the pure play strategy. It's pretty unique." The company will also launch an investment fund "across the whole portfolio of Windforce projects," enabling investors to spread the risk over several wind plant.

That risk might be hard to quantify. Windforce is seeking commercial opportunities outside wind's traditionally "safe" markets with premium wind tariffs fixed by government, such as Germany and Spain. The focus is currently on the Mediterranean, Baltic Sea area and the United States. The company is not interested in projects under 20 MW.

Windforce has identified sites for five projects totalling 790 MW in three European countries where it is working together with local agents. The company has bid into the Greek bonanza (story page 52), proposing 250 MW each for sites at Lakonia and Kilkis and 150 MW for Makronissos. Kilkis and Makronissos are shared with ABB, which has a 25% stake in each project. In the Baltic area Windforce is working on a 100 MW proposal in Latvia for military land on the coast at Ventspils, and in Sweden it has high hopes of a 60 MW offshore project at Petlandskar for which Vestas machines are being considered.

Of the three countries, the Greek projects will take the most time to develop and will not be up next year, Kingsbury says. Grid expansion will be needed and that will take time to organise in a country like Greece. "We have to make sure the initial portfolio is very successful," he says.

Initial capital of $6 million for Windforce has been provided by a South African fund, Gerrard Energy Ventures, which has the backing of several big companies, according to Windforce. The company has also set up Renewable Energy Investments in Jersey "an investment vehicle owned by a series of investment companies" which Kulpecz describes as "only a financial player set up to invest in Windforce."

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