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Who will reap the wind? Hydro-Québec's plan to buy 2,000 megawatts of wind power has sparked gold-rush fervour among potential suppliers 

“Think big, ‘sti!” The motto of Elvis Gratton, one of Quebec’s most beloved film characters, might also sum up Hydro-Québec’s stance on wind power.

When the utility first experimented with wind turbines decades ago, it built them so large – more than twice the size of the current industry average – that the wind blew one away.

In 10 days, Hydro is to mark another mammoth-sized milestone. Sept. 18 is the deadline for the utility’s second and largest call for tenders for wind power. It wants to purchase 2,000 megawatts of wind power from private developers with selected wind-farm projects that are to be put into operation between 2010 and 2015.

“That’s huge,” said Jean-Thomas Bernard, a Université Laval economist specializing in energy analysis. “Last year, in the entire United States, less than 2,600 MW of wind power was developed and here there is a (single) request for 2,000 MW.”

Almost all the numbers associated with the tender are substantial, if not staggering. Hydro-Québec says supply contracts for the new wind farms will generate about $4 billion in investments.

About 1,500 full-time jobs in the wind industry in Quebec will be created between now and 2015, and there will be 43,000 person-years of employment during the construction phase, according to a study commissioned by the Canadian Wind Energy Association.

Back-of-the-envelope calculations by Quebec economist Gabriel Saint-Marie and U.S. energy analyst Joshua Magee point to the potential for handsome revenues for the firms that will operate those new wind farms.

Should Hydro-Québec end up paying an average of 9 cents per kw/hour for the new power, each turbine would generate about $414,000 or, cumulatively, about $538 million a year in gross annual revenues over a span of up to 25 years.

Little wonder then, that about 200 interested parties attended Hydro-Québec’s pre-bid technical conferences, ready to parlay the cost of preparing into a chance at the bonanza.

Magee, a senior analyst with Massachusetts-based Emerging Energy Research, shares the consensus view that competition will be fierce, particularly among would-be wind-farm developers. Most observers expect Hydro-Québec will receive proposals for 8,000 MW of wind-power.

Unlike U.S. utilities, which generally sign one project at a time, Quebec has distinguished itself by offering to procure several projects over a multi-year time frame, in this case to 2015.

“If a company is not awarded a contract through this process, they may have very little opportunity in the future to get that project to market,” Magee said.

Wind-farm developers and potential wind-turbine suppliers are tight-lipped about their participation in the bidding.

With a global shortage of wind turbines and Hydro-Québec requirements that at least 30 per cent of each turbine be built in the Gaspé region, securing a wind-turbine supplier is seen as the major hurdle for wind-farm developers.

Bids will be assessed according to a complicated grid that merges technical requirements with sustainable development objectives.

Points will be awarded when money is paid to private landowners, or if municipalities or aboriginal communities participate in the projects.

That grid, local-content obligations and the wind-turbine shortage create “uncertainty about who the ultimate winners and losers will be in this process,” Magee said.

Here are some companies and potential projects to watch for as Hydro-Québec opens the wind-power bids and makes them public, as early as Sept. 19.

AAER Inc. – The Montreal-based company wants to break into wind turbine production, using licensed German technology (Fuhrlander-Pfeiderer GmbH &Co.). While AAER has yet to produce one commercial turbine, it has a Bromont plant and figures its location will give it “a definite advantage” with regard to the Quebec tender. The company, headed by Dave Gagnon, has a diverse management team. Ted Moses, former Cree grand chief, is on its board; among its executives are Gérard Prévost, a former associate deputy minister of Quebec’s energy department, and Jacques Gauthier, the former Boralex Inc. president and current chief operating officer of Kruger Energy Group.

Boralex Inc. – A Quebec-based producer of green energy whose holdings and projects include wind farms in France and Ontario, Boralex teamed up with Gaz Métro, the province’s natural gas utility, on plans for a wind farm in one of Canada’s largest single privately owned forests. About two years ago, the corporate partners signed a deal with the Seigneurie de Beaupré to “assess, develop and exploit” the wind-power potential of its land. The undeveloped land is a 16,000-square-kilometre tract of forest on the north shore of the St. Lawrence River between Quebec City and La Malbaie.

Enercon GmbH – The leading German wind turbine manufacturer is, according to several sources, actively negotiating with various developers who are to bid on the Quebec project. Quebec Economic Development Minister Raymond Bachand said this year that Enercon had pitched its case to him.

Gale Force Energy Ltd. – The Toronto-based subsidiary of Airtricity Holdings Ltd., of Ireland, is considered a serious contender in the Canadian market.

It expects to tender four projects for a total of 450 MW to Hydro-Québec, a spokesman said this week. It will not proceed with a controversial project near St. Sébastien, southeast of Montreal in the Montérégie region.

GE Energy and GE Wind Energy – All of the wind turbines for Hydro-Québec’s first tendered contract of almost 1,000 MW wind power were supplied by GE to developers Cartier Wind Energy – co-owned by TransCanada Energy Ltd., and Innergex – and Northland Power Inc. Most observers expect that the giant U.S.-based firm will not get a clean sweep in this round of tenders.

Groupe S.M. International Inc. – The Quebec-based consulting group wants to break into the wind market. One project, led by David Cliche, a former Parti Québécois environment minister, has generated a maelstrom of controversy in the Montérégie region.

While the mayors of the Brome-Missisquoi regional council have approved the plan to install 31 wind turbines installed across a broad swatch of farmland, a vocal coalition of residents and farmers say they will fight to kill the project.

Siemens Canada – A subsidiary of German giant Siemens AG which is said to be aggressively pursuing projects in North America. Le Devoir reported earlier this year that Siemens had proposed to the provincial government a $4.5 billion project that would include building a wind-turbine plant for the Saguenay-Lac-Saint-Jean region with a view to supplying a mega wind farm in northern Quebec. Siemens was told that the government was sticking to the public call to tender for wind power.

Ventus Energy Inc. – The Toronto-based company, whose flagship wind projects are in PEI, has a development strategy that involves forging links with aboriginal peoples. News reports last year tied Ventus to a potential joint venture that would involve the Chisasibi Cree band for a wind farm on Cree land in the James Bay region. Former Ontario premier David Peterson is a board member of privately held Ventus.

By Lynn Moore

The Gazette

8 September 2007

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial educational effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments via e-mail.

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