Alterra advances some power projects, shelves others

Alterra Power Corp. (TSX: AXY) said in a March 24 financial statement that it made progress in 2014 on hydro and wind projects that are currently in construction, with other projects waiting in the wings.

As for the in-construction projects:

  • Jimmie Creek hydro project (British Columbia) – The company acquired 100% of the project in March 2014, and subsequently entered into a partnership agreement with a fund managed by Fiera Axium Infrastructure Inc. The partnership became operative at financial closing in October, with Alterra and Fiera Axium now owning 51% and 49% of the project, respectively. The company closed a C$176.5 million non-recourse loan facility in October. Road, bridge, and camp construction is 100% complete, and work is well underway at the intake and powerhouse locations. Penstock installation is over 50% complete. Excavation is complete at most project sites, including the powerhouse and intake. In October, the temporary river diversion channel at the intake was completed. Commencement of commercial operations is targeted for July 1, 2016. The Jimmie Creek project will sell 100% of its power to BC Hydro under a 40-year power purchase agreement (PPA). The project will have a nameplate capacity of 62 MW. Jimmie Creek is being constructed under an Engineering, Procurement, Construction and Management contract with SNC Lavalin Inc.
  • Shannon wind farm (Texas) – In February 2014, Alterra acquired the remaining 90% of Shannon Wind LLC. Alterra is completing a partnership agreement with a large, infrastructure investment fund, and expects to own a 50% ownership stake upon financial closing. Alterra is currently working to finalize terms with several financing parties. A letter of intent with two tax equity partners was completed in February 2015 and all project agreements are either complete or in final stages of completion. The company expects construction financing for the project to close in the first half of 2015 and commercial operations to commence in the second half of 2015. In December 2014, the company completed additional on-site construction activities to further strengthen qualification for the U.S. Production Tax Credit, and an affiliate of M.A. Mortenson Co. is fully mobilized on-site for construction of the remainder of the project. In November 2013 the company acquired the initial 10% interest in Shannon Wind, a 204-MW project located in Clay County, Texas.

Other projects are being developed, including:

  • Dokie 2 wind project (British Columbia) – The company holds a 51% interest in this wind generation project adjacent to operating the Dokie 1 wind farm, with Dokie 2 having a projected capacity of up to 156 MW. At Dec. 31, 2014, GE Energy Financial Services (GE EFS) held a 49% interest in the project. Dokie 2 holds a BC Provincial Environmental Assessment Certificate. The company has memoranda of understanding for the project with the Halfway River and West Moberly First Nations and the McLeod Lake Indian Band. During 2014, the company wrote off the deferred costs and goodwill associated to the Dokie 2 project due to a decline in the economic outlook surrounding renewable energy as a result of the latest Integrated Resource Plan (IRP) produced by the BC Government. It has maintained all existing permits and licenses, and may look to further develop in the future when market outlook improves. In March 2015, GE EFS gave notice that it does not intend to proceed with advancement of Dokie 2, and following the completion of an agreement with GE EFS, the 49% ownership interest in Dokie 2 held by GE EFS reverts to Alterra for nominal consideration.

The company’s early-stage development assets in the U.S. included McCoy, Desert Queen, Granite Springs, and Hawthorne along with certain properties adjacent to the Soda Lake geothermal facility in Nevada as at Dec. 31, 2014. The company paid property lease payments to keep the projects in good standing but did not make any other material expenditures on these properties in 2014. On Jan. 30, 2015, the company sold these geothermal development projects to Cyrq Energy Inc. as part of the sale of the 15-MW Soda Lake facility. The company has formed a subsidiary (Soda Lake Solar LLC) that has retained the rights to develop a 40-MW solar project in the vicinity of the Soda Lake geothermal plant over the next six to eight years.

Alterra has rights to 37 run-of-river hydroelectric power projects in British Columbia, primarily in the southwestern region of the province.

The Bute Inlet development project in British Columbia consists of 17 run-of-river projects organized into three interconnected groups with an estimated potential average annual generation of 2.8 million MWh. The company recorded a write-off of the Bute Inlet project in 2013 due to a decline in the market outlook surrounding renewable energy as a result of the 2013 IRP. The company said it continues to collect hydrology data for this project, has maintained all existing permits and licenses in good standing and may look to further develop in the future when market outlook improves.

The company has water rights for other run-of-river hydroelectric power projects in British Columbia with a combined potential average annual generation of approximately 2.2 million MWh. The company also holds a Crown Land Tenure and an accepted water license application for the 1,000-MW Fir Point pumped storage project and performed several early stage development activities in 2014. The company wrote off the deferred costs associated with a number of the other hydro development projects in 2013 due to the decline in the economic outlook as a result of the IRP. The company did not write down the Fir Point pumped storage project or the Mill Creek and Woodfibre projects as they likely will fall outside the formal PPA process with BC Hydro.

The company is currently investigating development of certain smaller projects in the Toba Valley that could connect to the existing Toba Montrose transmission line. Power from the projects could potentially be purchased under BC Hydro’s standing offer program. The Company is currently maintaining all projects in good standing for future development opportunities.

Alterra holds exclusive investigative licenses for wind development projects at several coastal locations in British Columbia including Banks Island, Porcher Island, McCauley Island and Knob Hill. Meteorological towers are installed at four locations. Development activities in 2014 consisted of wind resource monitoring and further studies of the projects’ potential.

Due to the continued poor outlook for power offtake contracts in the near future the company allowed two geothermal concessions in the Upper Lillooet area of British Columbia to lapse in 2014.

 

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.