"Today marks the beginning of a significant and innovative clean energy endeavour for rural Manitoba," said energy minister Dave Chomiak during the December ceremony for the 100 MW project. To be built on 65 square kilometres of farmland encircling the village of St Leon in the province's windy southwest, the project will use 63 Vestas NM 1.65 MW wind turbines, a sale the Danish manufacturer announced in November without revealing the buyer. The first 12 test turbines, which receive special tax treatment under Canadian law, will be completed by May, with the entire C$187 million wind farm scheduled to come online by the end of next year.
Land lease payments
Lease payments to local landowners, about 50 in all, will total C$9 million over 12 years. About 280 jobs will be created during construction, with another 25 direct and indirect operational jobs once the wind farm is complete. "Projects such as the wind farm will help rural communities harvest the positive winds of economic change by diversification that helps smooth the inevitable peaks and valleys of the traditional agricultural economy," says Manitoba Premier, Gary Doer.
The project's owner, AirSource Power Fund 1 LP, will sell its output to Manitoba Hydro, the province's government-owned monopoly utility, under a 25 year agreement. The utility, whose electricity rates are among the lowest in North America, will pay C$50.61/MWh, says the fund's prospectus, with average annual increases of 1.25% over the term of the purchase contract. AirSource also expects to receive C$36 million from the federal government's wind power production incentive program over the first ten years of the project's life.
Although the nameplate capacity of St Leon is 104 MW, it is officially referred to as a 99 MW facility, which is its net capacity after losses. The distinction is an important one, because it allows developers to avoid Manitoba's more complex environmental assessment process for power projects larger than 100 MW in size. "According to our environmental application, it had to be net under 100 MW," says Bob Spensley of Sequoia Energy, which teamed up with Global Renewable Energy Partners -- the American wind development company set up by NEG Micon before its merger with Vestas -- to develop St Leon.
Three 100 MW
With the St Leon project sold to AirSource, says Spensley, Sequoia is moving "full-speed ahead" on three more 100 MW projects in Manitoba. The government's recently announced target of 1000 MW of wind to be in place within a decade has generated a lot of industry interest, he says. "We know this was a common sense place to work a long time ago," he says. "We are expanding, we are reinvesting into the province. It is going to be a fascinating thing to watch as the industry develops."
After working three years to get the St Leon project off the drawing board, part of it spent convincing the utility of the feasibility of wind power, Spensley believes the 1000 MW target is a "great outcome" and a reflection of the province's potential. "Now it remains to be seen exactly how it is going to work, but we certainly have our ideas," he says.
Both the government and Manitoba Hydro see wind power as a natural complement to the province's hydro generation and its electricity export business, which normally accounts for about 35% of the utility's revenue from electricity sales. The province recently agreed with power-thirsty Ontario, by far Canada's largest electricity market, to conduct a detailed technical analysis of a proposal to bring 1500 MW of hydro power from northern Manitoba to its eastern neighbour. That power, however, will not be online until Manitoba Hydro's proposed 1250 MW Conawapa or 620 MW Keeyask hydro projects are built, which will take at least nine or ten years.
"But they need substantial power in three years," says former Manitoba energy minister Tim Sale. "Wind is scalable and it is fast, so the quicker we can put wind into our system, add that to our demand-side management that we're doing very aggressively and things we can do to improve our current system, then we can begin to help Ontario more quickly. And that's huge value."
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