Merchant plant ready to run -- Southern Alberta lead

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North America's largest merchant wind facility is on schedule for completion by the end of this month. Power generated by the 15 Nordex 1.3 MW units that Canadian Hydro Developers of Calgary is adding to its existing Cowley Ridge wind plant will be sold on the Alberta spot market. The 19.5 MW Cowley North expansion will boost the size of the wind farm to just over 40 MW.

The new turbines dwarf the 375 kW Kenetech machines used in the original installation. The Nordex blades alone, measuring 30 metres, are longer than the towers on which the Kenetech units sit. Canadian Hydro will also use the 1.3 MW Nordex wind turbines in its planned 6.5 MW Sinnott wind plant in southern Alberta, a project scheduled for completion by the end of October.

While most of the power produced at the existing Cowley Ridge plant is contracted for sale to TransAlta Utilities, the output of both the Cowley North and Sinnott projects will be sold into Alberta's spot market. Canadian Hydro's John Keating says his company hopes to eventually contract the power from both projects to buyers. "Our theory is that if we build, they will come. And they are coming. We are having inquiries and having discussions," says Keating.

When Canadian Hydro made the decision to proceed with the Cowley North expansion, power prices in Alberta averaged well over C$100/MWh. Over the past few months they have steadily dropped, settling at an average C$53.47/MWh in July. Keating believes that despite the drop, the market fundamentals that prompted the investment have not changed. "The decision we made last winter to proceed with nearly C$40 million worth of new merchant wind construction was founded on the basis of a longer vision that the price of power is not going to return to 1998 and 1999 levels. We still hold that view," he says.

The biggest risk Canadian Hydro faces as a merchant developer, says Keating, is political. "It's something we can't predict," he says. Power producers in Alberta have complained that the government is playing too large a role in the market. As part of its restructuring process, the province auctioned the output of its existing regulated generation to marketers. About 2200 MW failed to sell and is being managed by a quasi-governmental body.

Last winter, too, when power prices and consumer complaints were at their highest levels, the government changed the Power Pool's price setting rules to try put a lid on increases. It also capped rates for small consumers.

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