making the right wind power investment university of toronto wind workshop october 12th, 2005 mike...
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Making the RightMaking the RightWind Power InvestmentWind Power Investment
University of Toronto Wind WorkshopUniversity of Toronto Wind WorkshopOctober 12th, 2005October 12th, 2005
Mike Crawley, President/CEOMike Crawley, President/CEOAIM PowerGen CorporationAIM PowerGen Corporation
AIM OverviewAIM Overview Ontario based wind power development company
Over the past four years focused on: Establishing wind power market Developing wind projects Building strong wind power development team
Prominent in wind power & energy sector with AIM’s CEO appointed/elected to: Association of Power Producers of Ontario's Board of Directors Ontario Government's Electricity Conservation & Supply Task Force Renewable Energy Task Team (Co-Chair)
99MW Erie Shores Wind Farm successful in Ont. 300MW RFP
Developing several projects across Canada and abroad
Erie Shores Wind Farm StatusErie Shores Wind Farm Status
$186MM 99MW Phase One under construction 66 GE 1.5MW turbines along Lake Erie shoreline 60% foundations complete Tower delivery next month Turbines in December / January Commercial operation by late April 2005 Largest wind farm in Ontario Power for 30,000 – 40,000 homes
51MW Phase Two under development and planning
Why Invest in Wind Power?Why Invest in Wind Power? Many jurisdictions need significant amounts of new power supply
Ontario needs to replace or refurbish almost 75% of its power supply
Wind power is an increasingly attractive alternative Concerns regarding air quality and climate change Relatively rapid deployment Large hydro and nuclear permitting challenges and time to construction Good synergies with hydro power Dramatic increase in natural gas prices
Public policy strongly encouraging wind power Federal government very supportive Ontario, Quebec, Manitoba and Atlantic provinces at the forefront Tax incentives and government backed power purchase agreements
Significant opportunities in EU ascension countries and stable developing nations
Financing Stages Financing Stages
Seed Capital
Exploration,Site Secure
AndPermitting
Funding
ConstructionFinancing
Overall ChallengesOverall Challenges
Investor Risks Technology Market Regulatory Development Permitting Price
Competitiveness Construction Operation
Response Sell Wind Power Build Team Understand/Influence
Market & Regulatory Sell Project(s)
(1) Seed Capital (1) Seed Capital Use of Funds Research sector
and market Identify and
assess potential project sites
Develop corporate structure
Establish supplier relationships
Lobby (maybe)
Amount Required
$0 - $250,000
Source of Funds Principals Angel Investors Government
Programs (difficult)
Challenges Return? Valuation? High Risk
(2) (2) Exploration, Site Secure & Permitting FundingExploration, Site Secure & Permitting Funding Use of Funds Negotiate land
option agreements
Test towers Preliminary
engineering Grid connect
studies Municipal zoning EA
Amount Required
Small Project
$50K - $250K
Large Project
$500K - $2MM
Source of Funds Institutional Flow
Through Funds High Income
Individuals (Can. Renewable & Conservation Expense – CRCE)
Industrial Research Assistance Program
Fed. Of Can. Mun. ‘Ethical’ investors Risk tolerant
investors (hard dollars)
Challenges Permitting risk PPA risk Liquidity Restrictions/
timelines on gov’t programs
(3) Construction Financing(3) Construction Financing Use of Funds Turbine
procurement Balance of plant Engineering EPC contractor Grid connect
Amount Required
$1.6MM - $2.1MM
per MW installed
Source of FundsEquity Flow Through Funds
(diversified and project specific)
High Income Individuals (CRCE)
Environmentally challenged corporations
Corporations with depreciation appetite (class 43.1)
Power generation corporations
Income Funds
Debt Wind-wise Banks Insurance Co’s Some Finance Co’s
Challenges
PPA terms Wind data WPPI IRR hurdles Capital cost
certainty
Construction Financing Options Construction Financing Options
CRCE/Test Turbine Model
CRCE Test Turbines Turbine Infill (Debt) Income FundConstruction
Traditional
Construction Bridge 70% Debt/ 30%Equity Income Fund?
Investor Options Investor Options (for discussion purposes only) (for discussion purposes only)
Risk
Return
Seed Capital(hard)
Seed Capital(Soft)
Site/Permitting
(Soft)
Site/Permitting
(Hard)
Construction(Soft)
Construction(Hard)
