NaiKun Wind Energy looking to build offshore wind farm in Hecate Strait
By Craig Wong
NaiKun Wind Energy Group Inc. is looking to build Canada's first offshore wind farm in Hecate Strait off B.C.’s north coast, cashing in on a growing appetite for green power.
“If you’re trying to address climate change and you’re trying to meet British Columbia’s long-term energy requirements and you’re trying to do it in a clean way on a large scale, that legacy opportunity of the north coast is very compelling,” NaiKun president Ray Castelli said.
NaiKun has a 550 square kilometre permit area within which they plan to build the first phase of the project, a 320 MW wind farm using 60 to 100 wind turbines spaced about a kilometre apart from each other in the shallow stormy strait.
“We think we can develop a very large wind resource with this first project with the potential for a lot more in Hecate Strait over the next 20 or 30 years to help address the climate change issue,” Castelli said.
The company signed a partnership deal earlier this year with Alberta utility Enmax Corp. And with construction hoped to start in 2009, the company has also signed a number of deals in recent weeks including one with Siemens regarding the development, construction and operation of the transmission system and another with Germanischer Lloyd Wind Energy as the project's certification engineers.
“The hope is that by the time we have a contract from B.C. Hydro later this year or sometime next year that before we need to start construction that we can get the environmental approval,” Castelli said.
With an increasing focus on green sources of energy, wind power has been a hot sector in recent months.
Toronto-based Ventus Energy Ltd. and Metis Energy Corp., a subsidiary of Metis Development Corp., formed a partnership earlier this year to build a $2.5-billion wind farm in the Labrador interior near Churchill Falls that would produce 1,000 megawatts.
And last week, NB Power released a request for proposal for the purchase of up to 300 megawatts of wind-powered generation by November 2010 in New Brunswick. The request accelerates the crown utility's plan to add 400 megawatts of wind energy by 2016.
Shares in NaiKun closed at $2.08 on the TSX Venture Exchange recently. The stock ended last year at 62 cents and was worth 13 cents a year ago.
The company raised $4 million earlier this year after setting out to raise $3 million.
“It has taken us a little bit by surprise. We thought we had a good story and we thought that there would be interest, but in addition to that there has been a lot of activity,” he said.
“We're happy, but we also appreciate that we haven’t built anything yet. We still have to get a power purchase agreement and we have to prove we can actually build the project ... We've got a long ways to go.”
Northern Securities analyst David Brill rated the stock a “speculative buy” with a $4.20 12-month price target.
Brill said the company faces challenges such as obtaining a power purchase agreement with B.C. Hydro and passing an environmental assessment, but he believed the company would accomplish those things.
“There is huge demand for this kind of renewable green power and there’s not enough supply and NaiKun is large scale,” Brill said.
Brill said a recent agreement with the Haida Nation that would eventually see the Queen Charlotte Islands, which currently gets its power from diesel generators, to the main power grid on the mainland and provide electricity from the wind farm also helps the company.
“The fact that NaiKun has a memo of understanding with the Haida to provide the direct link and to get power to the islands is going to provide great incentive for B.C. Hydro to go into direct negotiations with NaiKun for a power purchase agreement,” Brill said.