26 July 2007

Breaking wind news

While natural resources minister Kathy Dunderdale was turning sod on a much-delayed wind power project in St. Lawrence, Ventus Energy Inc today announced the sale of that company to French-owned Suez for $124 million.

The St. Lawrence wind project has yet to be finished. Meanwhile, Ventus announced in May that it had signed a deal to export power to the United States from its operation in Prince Edward Island, via New Brunswick.

In January 2006, Ventus and the Labrador Metis Nation proposed what was touted as the largest wind energy project in Canada with a stated capacity of 1,000 megawatts available for either domestic use or export.

The Ventus proposal was reportedly entirely financed from private sources, while the St. Lawrence project will see Newfoundland and Labrador Hydro purchase power from the 27 megawatt NeWind operation, with no export potential.

Then natural resources minister Ed Byrne and his colleagues in cabinet pushed off consideration of the proposal claiming that they needed to complete the province's energy plan first. That was 18 months ago, and was a condition not applied to the St. Lawrence project for unknown reasons.

At the end of January 2006, Byrne said:
"Wind is becoming an emerging resource and our responsibility as a government is to ensure that this resource is developed in a way that maximizes benefits for the people of the province. We are not going to give away 1,000 megawatts of power until we understand what opportunities there are for this province."
Byrne went further in the House of Assembly, dismissing the obviously successful Ventus. What was obvious from Byrne's comments was that the provincial government had still not developed a taxation (royalty) regime for private sector wind companies. That is, two successive administrations - Grimes and Williams - had failed to figure out a taxation regime for export wind power despite having pursued wind power as a means of electricity generation since 2001.
No details of the power purchase agreement have been released, but the Town of St. Lawrence will only receive about $125,000 per year in taxes from the project under a special tax deal signed earlier this year. The tax payments don't begin until 2009, the anticipated year of first power generation. in the meantime, NeWind will pay the town $45, 000 in the first year and $55,000 in the second year of a two year agreement largely to support municipal recreation infrastructure.

Hydro stated the project will replace 165,000 barrels of crude currently used by the Holyrood generating plant. Estimating cost of the oil at US$50 per barrel, that would mean electricity costing approximately $8.25 million per year.