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Toronto firm buys projects in Germany
1 June 2006
Northland Power Income Fund, based in Toronto, Canada, has bought two operating wind farms in Germany for C$23 million, including retirement of all project debt. The purchase of the projects, which include the six-year-old 14.3 MW Eckolstädt plant and five-year-old 7.2 MW Kavelstorf plant in the north, was financed with cash and C$5 million from the fund's acquisition line of credit. Canadian income funds are investment vehicles designed to hold assets that generate cash for distribution to unit holders. The two projects receive a fixed tariff of about EUR 0.09/kWh for a term of 20 years under the provisions of Germany's renewable energy legislation. That policy, combined with the world's largest operating base of wind power, makes the German market attractive for acquisitions, says John Brace, CEO of the fund's manager. "Nonetheless, management is mindful that this is a modest first foray outside North America, and we intend to move slowly and carefully in this new arena," says Brace. "Our primary efforts continue to be focused in Canada, particularly Quebec and Ontario." Northland owns the 54 MW Mount Miller wind power project in Quebec, two cogeneration plants in Ontario, and an interest in a third cogeneration facility in Washington DC. The fund and Toronto-based Northland Power Inc also won two power purchase contracts totalling 250 MW in Hydro-Quebec's November 2004 wind power request for proposals. They are scheduled to come on line in 2007 and 2010. The two German wind farms are expected to represent about 4% of the fund's distributable cash from its current portfolio.
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