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Canada

Canada

Oil company goes for merchant deal

GE Energy has announced its first sale of wind turbines in the Canadian market, supplying 20 of its 1.5 MW machines to the 30 MW Magrath Wind Power Project, a merchant plant under construction in southern Alberta. Calling the project "unique," the head of GE Energy's wind operations, Steve Zwolinski, says it is the largest wind farm in Canada being developed "solely on a merchant basis" without a long term power contract. It will sell its energy through Alberta's deregulated electricity spot market.

Magrath is being co-developed by oil company Suncor Energy and EHN Windpower Canada, a subsidiary of Corporacion EnergÌa Hidroeléctrica de Navarra (CEHN) of Spain. Suncor's Brad Bellows says installation of the turbines is expected to begin this month with commissioning in the fall.

Suncor, based in Alberta, is one of Canada's largest petroleum producers with more than 4000 employees. In 2000 it announced a plan to spend $100 million over five years to develop a viable alternative energy business.

"When we look at our sales of petroleum products, we don't go for longer term lockup prices for the full portfolio," says Bellows, referring to the structuring of Magrath as a merchant project. Financial returns from both long term contracts and the short term market is ideal, he adds.

"We don't want to be too heavily weighted on one side or the other," he continues. "Right now, the McGrath projected is a merchant project and we are comfortable with that. Ultimately, we are looking toward having a large balanced portfolio of sales channels."

The Magrath project is Suncor's second major investment in wind power. Its first was SunBridge, an 11.2 MW wind power project of Vestas turbines built in Saskatchewan in 2001 as a 50/50 partnership with Enbridge Inc. The two Suncor projects will make up about 15% of Canada's total installed wind power capacity.

The turbines for Magrath will be assembled at GE's facilities in Tehachapi, California, and it will provide start-up support and maintenance services through its Canadian division.

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