Cowley Ridge wind plant undervalued

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Southern Alberta's Cowley Ridge wind plant has had its "best production year ever," says Calgary-based Canadian Hydro Developers, which took over the 18.9 MW farm last June. Total power generated during 1999, the wind farm's fifth year of operation, was 63,380 MWh, almost 15% over the budgeted amount. The performance of the wind plant was a key factor in what the company calls an "exceptional year" in 1999, with gross revenues increasing 56% to C$9.5 million. Despite Canadian Hydro's performance, says president John Keating, the publicly-traded renewable energy developer is waiting to see the company's "true value" reflected in its share price. While Canadian Hydro shares currently trade in the $1 range on the Toronto Stock Exchange, an independent analysis commissioned by the firm valued its generation assets at C$106 million, or C$2.25 per share. Keating believes the "unique nature" of the assets, which include Cowley Ridge, nine run-of-river small hydro facilities and a 6 MW natural-gas fired plant, make its stock difficult for investors to value. "I think the roadblock we're facing stems from the fact that we're an industry in its infancy," he says. Canadians still haven't made a "mind shift" to renewables, says Keating, and the country's federal and provincial governments have done little to encourage the transition. "We've had, literally, nothing but lip service from government." The undervaluing of its stock makes Canadian Hydro reluctant to issue new equity to finance growth, he says. "We've got more projects than we have access to capital. That's the scarce resource." Even so, the company has "enough cash flow and gumption" to expand its wind power capacity. While not ready to discuss details, Keating says Canadian Hydro plans to install "a few machines" in southern Alberta this year.

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