Algonquin Power & Utilities Corp. (TSX: AQN) said in a March 16 financial report that its Generation Group has several power projects in development and in construction in the U.S. and Canada.
Projects in Construction
Morse Wind Project – This project is comprised of three contiguous projects with 25 MW of aggregate installed generating capacity. The project is to be constructed near Morse, Saskatchewan, approximately 180 km west of Regina. It is contemplated that the project will have additional land under lease or option in order to facilitate future expansion. Based on the award of 25 MW under Saskatchewan’s Green Options Partner Program, SaskPower has offered the Generation Group a 20-year contract for the procurement of 23 MW of wind generation to match the nameplate capacity of the proposed turbines. The Generation Group executed an asset purchase agreement with a local developer, Kineticor, to acquire assets related to two adjacent 10-MW wind projects in Saskatchewan and a further 5 MW was developed by the Generation Group independently. The turbine supply agreements have been executed with Siemens and the Balance of Plant Engineering, Procurement and Construction agreement has been signed. Installation of access roads and foundations are completed, and turbine delivery commenced in January 2015. Seven of ten turbine have been erected, and the project is expected to be operational by March 31, 2015.
Bakersfield I Solar Project – The Generation Group has entered into an agreement for the continuing development of a 20-MW (ac) solar station located in Kern County, California. Following commissioning, the Bakersfield Solar Project is expected to generate 53.3 GW-hrs of energy per year. All energy from the project will be sold to Pacific Gas & Electric pursuant to a 20-year agreement. Construction of the project commenced in the second quarter of 2014 and it was placed in service on Dec. 30, 2014. Testing to ensure the plant will be ready and available for commercial operations was conducted and confirmed by the Generation Group and independent engineers. Final construction efforts continue, with the project expected to reach full commercial operation in the first quarter of 2015.
Projects in Development
Odell Wind Project – This is a 200-MW wind development located in Cottonwood, Jackson, Martin, and Watonwan counties in Minnesota and is being constructed on approximately 23,000 acres of leased land. The project will utilize 100 Vestas V110-2.0 wind turbines. Pursuant to a 20-year PPA, all energy, capacity and renewable energy credits from the project will be sold to Northern States Power, a subsidiary of Xcel Energy (NYSE: XEL). Construction is expected to begin in the second quarter of 2015, with total costs estimated at US$322.8 million. It is anticipated that the Odell Project will qualify for U.S. federal production tax credits having satisfied the Internal Revenue Service 5% beginning of construction investment safe-harbor guidance. The Generation Group’s participation in the project will be via a 50% equity interest in a new joint venture with a third party developer. The Generation Group holds an option to acquire the other 50% interest on commencement of operations, which is expected in late 2015 or early 2016.
Val-Éo Wind Project – Phase one of the Val-Éo Wind Project is located in the local municipality of Saint-Gideon de Grandmont, which is within the regional municipality of Lac-Saint-Jean-Est. The project proponents include the Val-Éo Wind cooperative formed by community based landowners and the Generation Group. The first 24-MW phase of the project is expected to be comprised of eight wind turbines, producing approximately 66.0GW-hr annually. Construction of the first 24-MW phase of the project is expected to begin in 2015 with commercial operations commencing in 2016. The second phase of the project would entail the development 22 of an additional 101 MW. The permitting and the Environmental Impact Assessment are ongoing with a projected provincial minister’s decree in early 2015. The Generation Group’s equity interest in the project is subject to final negotiations with the Val-Éo community cooperative but, in any event, will not be less than 25%. It is believed that the first 24 MW phase of the Val-Éo Wind Project will qualify as Canadian Renewable Conservation Expense and therefore the project will be entitled to a refundable tax credit equal to approximately C$18.0 million. Commission de Protection du Territoire Agricole Quebec (CPTAQ) approval has been received for 8 turbine locations, roads, and the collection system. Land option agreements have all been secured, and the process of converting these options is currently underway. Proposals for the procurement of the substation and balance of plant have been received and evaluated. The final construction schedule is pending the signing of the turbine supply agreement.
Bakersfield II Solar Project – This project is a 10-MW facility adjacent to the Generation Group’s 20-MW Bakersfield I Solar Project in Kern County, California, which is currently under construction. The 10-MW Bakersfield II Solar Project executed a 20-year PPA in 2014 with a large California-based electric utility. Construction of Bakersfield I Solar is nearing completion, with commercial operations expected to occur in the first quarter of 2015. The total project cost for Bakersfield II Solar of approximately US$27.0 million will be funded with a combination of senior debt, common equity, and contributions from tax equity investors. Construction of Bakersfield II Solar is anticipated to commence in mid-2015 following receipt of local permits and finalization of necessary construction contracts, subject to approval by the Algonquin board of directors. Commercial operation is targeted to occur in the first half of 2016.
Amherst Island Wind Project – This project is located on Amherst Island near the village of Stella, approximately 15 kilometers southwest of Kingston, Ontario. In February 2011, the 75-MW project was awarded a FIT contract by the Ontario Power Authority as part of the second round of the OPA’s FIT program. The Amherst Island Wind Project is currently contemplated to use Class III wind turbine generator technology. The available wind resource is forecast to produce approximately 235 GW-hrs of electrical energy annually, depending upon the final turbine selection for the project. Final negotiations on the turbine supply agreement is ongoing. Total capital costs for the facility are currently estimated to be C$260 million, and engineering, procurement and construction contractor selection is underway. The financing of the project will be arranged and announced when all required permitting and all other pre-construction conditions have been satisfied. The Renewable Energy Approval (REA) application was submitted in April 2013 and posted to the environmental registry in early January 2014 and has been undergoing technical review. Changes to the project design have been initiated to optimize construction and project performance, which will require a modification of the application documents. Once the REA is issued in final form, it may be appealed by interested parties within 15 days of its release. If the REA is appealed, the appeal process is expected to take up to sic months. Other permitting processes are progressing according to schedule. The project has a planned construction time frame of 12 to 18 months with most of the construction expected to occur in 2016.
Chaplin Wind Project – In the first quarter of 2012, the Generation Group entered into a 25-year PPA with SaskPower for development of a 177-MW wind power project in Chaplin, Saskatchewan, 150 km west of Regina, Saskatchewan. The project will be split into two phases where Phase I will approximate 35 MW of the total project and is currently planned to be operational in 2017. The first phase will involve installing test turbines to prove the project viability. The second phase, the infill construction phase, will only commence provided the results of the first phase are successful. The total facility will be constructed at an estimated capital cost of C$340.0 million and consist of approximately 77 multimegawatt wind turbines. The project will take advantage of its favorable location by interconnecting with a nearby 138-Kv line and will be compliant with SaskPower’s latest interconnection requirements. In March 2014, after review of the Project Proposal Environmental Assessment and Supplemental documentation (including the preliminary proposed layout), the project was deemed a development by the Environmental Assessment Branch. An additional detailed environmental review is currently being completed. It is anticipated that the Environmental Assessment documentation will be submitted to the government in the first quarter of 2015. The expected capital costs of the project are approximately C$340 million.
In Ontario, the Generation Group has qualified for participation in the anticipated 2015 Large Renewable Procurement I process with the Independent Electricity System Operator (IESO). The Generation Group may submit offers into the expected request for proposals for up to 100 MW of solar power and up to 100 MW of wind power. The IESO is expected to award up to 140 MW of solar projects and 300 MW of wind projects. RFP bids are due on Sept. 1, 2015, with successful bidders being announced in December 2015.
Algonquin Power & Utilities is a C$4.1 billion North American diversified generation, transmission and distribution utility. The distribution business group operates in the U.S. and provides rate regulated water, electricity and natural gas utility services to over 488,000 customers. The non-regulated generation group owns or has interests in a portfolio of North American based contracted wind, solar, hydroelectric and natural gas powered generating facilities representing more than 1,150 MW of installed capacity. The transmission business group invests in rate regulated electric transmission and natural gas pipeline systems in the United States and Canada.