United States

United States

Alaskan first - Developer goes but Fire Island wind farm continues

US: Wind developer Enxco has backed down from being an equity partner in the development of what is likely to be Alaska's first large-scale commercial wind project. But, in advanced planning stages, it is expected to continue.

Fire Island: a rendering of the project
Fire Island: a rendering of the project

The Fire Island project is a 54MW development that would see a wind plant built on a small island next to Alaska's biggest city, Anchorage. It is spearheaded by native Alaska corporation CIRI, which may continue alone.

"We haven't had a falling out, it's just a mutual understanding that our interests are not well aligned, so I think we'll have a very comfortable and friendly parting on the contract," says CIRI's spokesman Jim Jager. The time it will take to develop the project and other challenges of developing a project in Alaska are partly to blame for the split. As a major developer across North America, Enxco, owned by EDF Energies Nouvelles, has limited capital to invest in projects and is likely to steer cash towards near-term projects.

"Being up here in Alaska with different logistics issues and construction limitations, we have to proceed on a little different schedule than they're used to dealing with," says Jager. "As a result, for the size of the project, it's just a little outside their normal comfort zone. I mean how much energy do you want to put into a 54MW project when you can build a project three or four times as big for the same developer energy. We completely understand the situation."

Despite the departure of the major equity partner, the project is on track and Enxco may remain a consultant. "We're actually still in negotiations with Enxco," Jager says, adding: "While it's never convenient to change partners in the middle of a project, if I were to pick a time, this is pretty ideal."

Jager explains that geological studies are continuing on cleared turbine sites to establish exact costs on road tower-footing construction and other infrastructure, and a power purchase agreement has yet to be secured, something that Jager does not see as a problem. Initial discussions with local utilities are well under way and a signed contract is only pending final construction numbers from hired consultants and geotechnical specialists.

CIRI is also in a better position to continue as the sole equity project owner because it would be eligible for the federal government's cash grants. Under Section 1603 of the American Recovery and Reinvestment Act of 2009, cash grants for 30% the installed cost are available for eligible wind plants on completion of the project. CIRI has the balance sheet and creditworthiness to fund initial construction of the project and recoup the cash grant once it is finished.

CIRI plans to begin construction before the year-end, a prerequisite for the grant, and expects the project to complete at the end of 2011 or into early 2012. Turbines have not yet been secured but negotiations are under way, which is one reason CIRI is keeping Enxco as an advisor because the developer has ready access to turbine inventory and could act as an additional vendor secondary to the primary manufacturers. Enxco may no longer be keen to own part of Alaska's first commercial wind plant but CIRI is determined to deliver the project nevertheless. "It's in our backyard so we're very motivated to get it built," says Jager.

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