May 06, 2010 | 2 Comments
Ontario, Canada -- Algonquin Power & Utilities Corp. has started construction on the 26.4-megawatt (MW) Red Lily I wind project in southeastern Saskatchewan, Canada. The turbines for the project are being supplied by Vestas through its Vestas Canadian Wind Technology Inc. subsidiary and the project is owned by Concord Pacific Group, which will make an equity investment of approximately CAN $19 million in the development of the project.
Total capital investment for the project is expected to be CAN $67.5 million. In addition to the $19 million of equity investment, the project costs will be financed with $31 million of senior debt provided by Integrated Private Debt Fund II LP and $17.5 million of senior and subordinated debt provided by Algonquin Power Co. (APCo).
Red Lily I, initially developed by Gaia Power Inc., will include 16 Vestas V82 wind turbine generators, which have been procured and are awaiting shipment from a Canadian storage location. Vestas is responsible for all balance of plant design and construction under Turbine Supply Agreement and will provide long term operations and warranty services under a 10 year Extended Operations, Maintenance and Warranty agreement.
The project is expected to generate annual gross revenues of $7.5 million expected in the first year of production and $8 million expected in the second year. The power purchase agreement with SaskPower is for 25 years and includes a 2% annual increase throughout the term of the agreement. Commissioning of the project is expected to occur in early 2011.
“The construction of Red Lily I demonstrates APUC’s continuing contribution to the clean, renewable energy business and reinforces APUC’s strategic focus on increasing earnings per share which will contribute to growing dividends and capital appreciation for our shareholders”, commented Ian Robertson, CEO of APUC. “We are very pleased to be extending our renewable power investment into Saskatchewan. The local support for the project is overwhelming and both APCo and Concord Pacific look forward to continuing to work within the Regional Municipalities of both Martin and Moosomin on this and future projects”.
Total capital investment for the project is expected to be $67.5 million. In addition to the $19 million of equity investment made by Concord, the project costs will be financed with $31 million of senior debt provided by Integrated Private Debt Fund II LP and $17.5 million of senior and subordinated debt provided by Algonquin Power Co. (APCo).
APCo will provide services to and will receive fees for the development, construction, operation and supervision of the project. In addition, APCo has been granted an option to subscribe for a 75% equity interest in the project in exchange for its subordinated debt commitment, exercisable five years following commissioning of the project.
In addition to the effort focused on completing Red Lily I, APCo, together with the owner, has secured additional land rights for a second phase of the project, which, should it proceed, would provide an additional 106 MW of generating capacity.