Alterra develops new power projects in the U.S. and Canada

Alterra Power (TSX: AXY) said in a March 27 earnings report that it is working on a series of power projects, including a hydro project in western Canada and a wind project in the U.S.

Alterra said it executed a further limited notice to proceed with SNC Lavalin to provide pre-construction design work and other services in preparation to commence construction on the 62-MW Jimmie Creek hydro project in British Columbia in 2014. The company also completed an amendment to the power purchase agreement (PPA) for Jimmie Creek. Under the contract, the project will sell 100% of its power to BC Hydro for 40 years commencing in August 2016.

In 2010, the company and GE Energy Financial Services (GE EFS) signed a 40-year PPA with BC Hydro for the Upper Toba River project that included two run-of-river power plants (Jimmie Creek and Upper Toba River) in close proximity to the company’s Toba Montrose hydro facility. In 2013 the company made the decision not to proceed with the Upper Toba River project, and in November 2013 the PPA was amended to cover the Jimmie Creek project only at a nameplate capacity of 62 MW with projected annual firm energy of 114 GWh and a scheduled commercial operation date of Aug. 1, 2016. The company will examine the possibility of constructing the Upper Toba River portion of the project at a later date under a future call for power.

Alterra completed an agreement in November 2013 to purchase the 49% stake of the Jimmie Creek project then held by an affiliate of GE Energy Financial Services. On March 6, the transaction was completed, following which the company owns 100% of the project.

Shannon wind project in Texas is in early construction

Alterra in 2013 also acquired a 10% interest in the Shannon wind project, which is a 202-MW development-stage wind project in Clay County, Texas, and subsequent to year end acquired the remaining 90% for a small up-front payment and a developer’s fee to be paid at financial close.

In December, Alterra completed the construction of the initial phase of turbine foundations and project roads at Shannon and began construction of the project’s main power transformer. These activities are expected to qualify the project for the federal Production Tax Credit.

Subsequent to year end, Alterra placed a $4.5m cash deposit with the Shannon project’s transmission provider, Oncor Electric Delivery Co. LLC, to begin the design and equipment procurement for the project’s interconnection substation. The company is in the process of finalizing project contracts (turbine supply, O&M, etc.), documenting a power hedge for project output, and finalizing terms with tax equity investors. The company has also entered into an exclusivity agreement with a large energy infrastructure fund as a potential equity partner for the project.

In November 2013, the company sold its 10% interest in ABW Solar to an affiliate of Fiera Axium. Alterra had acquired the 10% interest in ABW Solar, a 50-MW project in Ontario, Canada, in August 2013. The company was the managing partner for the project, and held the ABW Solar interest together with its partner, GE EFS. ABW Solar was developed and sold by First Solar and commenced commercial operations in April 2013.

ABW Solar consists of five 10-MW solar farms which are expected to generate 82,000 megawatt hours of power annually. All electricity generated by ABW Solar is sold to the Ontario Power Authority under 20-year PPAs.

Alterra holds a 51% interest in a planned expansion of the Dokie 1 wind farm (called the Dokie 2 project) in northern British Columbia with projected additions to capacity of up to 156 MW. During 2013, Alterra continued to collect data, conduct engineering work and perform other studies to complete the assessment of the project.

In December 2013, the company sold half of its 51% interest in the Dokie 1 wind farm to Fiera Axium. The company retains a 25.5% ownership of Dokie 1 and will continue to operate and manage the project. Dokie 1 consists of 48 Vestas V-90 wind turbines, and is expected to generate a combined long-term average of 330,000 MWh of electricity annually. This electricity is sold to BC Hydro under a 25-year PPA that expires in February 2036.

The company holds a 51% interest in Dokie 2, while GE EFS holds the remaining 49% interest. The Dokie 2 wind project holds a BC Provincial Environmental Assessment Certificate. Amendments to the certificate may be required depending on the final project layout. The company has Memoranda of Understanding (MOUs) for the Dokie 2 wind project with the Halfway River and West Moberly First Nations and the McLeod Lake Indian Band. The company plans to negotiate an MOU with the Saulteau First Nations for the project.

Major British Columbia hydro project put on hold for now

During 2013, Alterra continued to perform hydrology studies on the Bute Inlet and other hydro projects and has maintained all existing permits and licenses in good standing. The company will continue to collect hydrology data and maintain all projects in good standing despite writing down these projects to nil for accounting purposes in the year, and will look to develop these projects in the future when market outlook improves.

The company has rights to 37 run-of-river hydroelectric projects in British Columbia, primarily in the southwestern region of the province. In 2008, the company submitted its Bute Inlet project proposal to the BC Environmental Assessment Office, the Canadian Environmental Assessment Agency and the Major Projects Management Office. The proposal organized 17 run-of-river projects into three interconnected groups with an estimated potential average annual generation of 2.8 million MWh. The company subsequently decided to place this application on hold to allow for further analysis and data collection.

During 2013 the company continued to perform hydrology studies on the Bute Inlet project and has maintained all existing permits and licenses in good standing. The company recorded a full write-down of the Bute Inlet project in the current year due to a decline in the market outlook surrounding renewable energy as a result of the new Integrated Resource Plan (IRP) from the BC Government.

The company also, besides these run-of-river projects, holds a Crown Land Tenure and an accepted water license application for the Fir Point 1,000-MW pumped storage development project in British Columbia.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.