Business in Vancouver August 19-25, 2008; issue 982
GE to sink millions into B.C. energy
Plutonic deal includes major stake in $4b West Coast power projects
Krisendra Bisetty
General Electric (NYSE:GE) has been drawn into what could be the largest single private sector investment in hydroelectric generation in Canada.
The investment arm of the U.S.-based conglomerate has inked a deal with Vancouver-based Plutonic Power Corp. (TSX:PCC) to jointly fund the development of approximately 1,000 megawatts of run-of-river hydroelectric capacity along the southwest coast of B.C.
The projects, located in the Toba and Bute inlets, have an estimated $4 billion price tag, and the plan is to jointly bid them into BC Hydro’s clean power request for proposals in November.
If the bid is accepted, GE Energy Financial Services intends to make an equity contribution of $70 million for a 50% interest in the 120-megawatt Upper Toba Valley project and either by itself, or with other partners, an equity contribution of $650 million for a 60% interest in the Bute Inlet project. The latter consists of 18 sites with an approximate capacity of 900 megawatts.
Donald McInnes, Plutonic vice-chairman and CEO, said the projects have the potential to generate enough energy to meet the needs of more than 300,000 homes and would position both partners as leaders in clean energy development. The bid, if successful, would significantly expand GE’s renewable energy base in B.C., which includes involvement with Plutonic’s flagship $660 million, 196-megawatt East Toba River/Montrose Creek run-of-river project, which is under construction.
The deal comes amid a flurry of activity on the B.C. energy front.
Vancouver-based NaiKun Wind Energy Group Inc. (TSX-V:NKW) said it had registered the first phase of its 320-megawatt offshore wind project in the BC Hydro call process.
The first phase, which the company is doing in partnership with Calgary-based energy developer ENMAX Energy Corp., would supply 120,000 B.C. homes with electricity. ENMAX is also registering three run-of-river hydro projects and one waste-to-energy facility as part of the Hydro process, and it is indirectly supporting four other project registrations through a joint venture involving its ENMAX Green Power Inc. subsidiary and Pristine Power Inc.
Meantime, AltaGas Ltd. is boosting its B.C. presence, buying up a suite of development-stage run-of-river hydroelectric projects in the province’s northwest.
The Calgary-based energy infrastructure company spent $40 million on its acquisition of NovaGreenPower, a subsidiary of NovaGold Resources Inc. (TSX, AMEX:NG).
Steve Davis, president of the Independent Power Producers Association of B.C., said BC Hydro has projected that the province will require up to 45% more electricity within the next two decades. He said that in Hydro’s last power call in 2006, the value of awarded contracts was $3.6 billion.
But Davis cautioned that not only would all submitted projects not make it through the fiercely competitive bid process, but some would fall by the wayside even after contracts are awarded.
“A good part of it is the escalation of construction costs. There’s an escalation risk when they put in a bid and when the contracts are awarded,” said Davis.
“Lots of excitement at the front end and the reality comes in at the end.”•
kbisetty@telus.net
