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Newfoundland and Labrador Hydro (NLH) has selected Vector Wind Energy to supply it with electricity from the 24 MW Fermeuse Wind Project after the government-owned utility decided late last year to buy more wind power than originally planned (“uåX˜äŠÊ˜·³Ç, November 2006). Vector was one of six bidders responding to a request for proposals (RFP) issued in October, the same day the utility announced the winner of its first wind RFP. The project will be installed on the Avalon Peninsula, about 60 kilometres south of the capital city of St John's, and be operational by the end of 2008.

When the win was announced, Vector was in the process of being acquired by Calgary's Canadian Hydro Developers. The sale, for cash proceeds of C$5.3 million, was closed on December 21, making Vector a wholly owned subsidiary of the veteran developer. Canadian Hydro's CEO, John Keating, says his company is still getting up to speed on Fermeuse so he could not comment on project details. "The guys have done an awful lot of work in Newfoundland. The project has a high capacity factor and it is an incredible site not that far from St John's. It has got some really nice attributes," he says.

NLH has also finalised a power purchase agreement with NeWind Group, a subsidiary of the North American division of Italian utility ENEL, for its 27 MW St Lawrence project. The utility is not prepared to say what it is paying for the wind power, says CEO Ed Martin, at least not until the contract for the Fermeuse project is finalised. "To do so would compromise our negotiating position," explains Martin. "We expect to conclude those negotiations in February, at which time we will release the additional pertinent details."

He did say, however, that NLH retains ownership of all emissions credits from the project and "has the option to take over the operation at various points through the contract." The provision allows the utility to buy the project at the ten, 15 and 20-year points of the contract term. This detail was a stipulation of the original RFP and also applies to the Fermeuse project, which is one aspect of the deal Keating says he wants to understand better. It is designed, says the utility, to reduce risk to electricity customers.

"Clearly if the project fails, electricity customers do not bear the risk because NLH does not bear the risk. If the project succeeds, customers get cost-effective, clean energy and Hydro has the ability to purchase the operation," says Jim Keating, NLH's vice-president of business development and no relation to the Canadian Hydro CEO. "This approach allows private developers to bear the risk of development and, of course, get the commensurate payback from their investment." The purchase price is negotiated as part of the initial contract.

The two projects will be the first utility scale wind in Newfoundland and Labrador and are "an important first step" in the province's development of long term renewable energy supplies, says natural resources minister Kathy Dunderdale. "The province possesses a world-class wind resource and we are looking very closely at how wind can be a significant part of our energy future both on the island and in Labrador."

The two projects, she adds, will provide electricity to consumers "at a very reasonable cost and in a more environmentally responsible manner." Once operational, the projects will offset the burning of more than 300,000 barrels of oil a year at NLH's Holyrood Thermal Generating Station and are expected to beat the cost of oil-fired generation over the life of the contracts.