Energy firm forfeits $500,000; wind farm behind schedule
Shear Wind Inc., a renewable energy company, must pay $500,000 to Nova Scotia Power for not producing green electricity on time.
"It’s a contractual obligation. Obviously, we really would have liked some relief from it," Bill Bartlett, Shear Wind’s chief financial officer, said in an interview Tuesday.
The Bedford company reported the writedown in its year-end financial statements filed with securities regulators before Christmas.
Under the contract signed in April 2008, Shear Wind promised to deliver 20 megawatts of wind-generated energy to NSP by the end of November 2009.
Shear Wind, a publicly traded company formed in 2004, provided a $500,000 performance security deposit held by NSP in case the company didn’t deliver.
The company had to forfeit the cash Nov. 30, it reported in documents.
This is tough news for a company that has incurred significant losses over the last three years, including a $628,182 loss last year, according to company documents.
"Obviously, we don’t have a lot of comfort giving someone $500,000, but a contract is a contract," said Mr. Bartlett.
NSP spokesman David Rodenhiser would not comment about the Shear Wind contract or any other wind contracts for confidentiality reasons.
Shear Wind was delayed in starting its proposed $150-million wind turbine park near New Glasgow, called Glen Dhu, because of the collapse in the world credit markets in the 2008.
The company, like many others, was unable to borrow the money to finance the project.
Mr. Bartlett said the utility was sticking to the contract and Shear Wind was unsuccessful in trying to negotiate not paying the penalty.
Last month, Shear Wind had an infusion of cash with a Spanish billionaire investing $27 million in the company and giving the Nova Scotia project a kick start.
The company expects the project to start producing electricity later this year.
Mr. Bartlett said financial statements for the period ending Aug. 31 included the $500,000 loss since the company knew it was not going to meet its fall commitment.
Shear Wind was one of six companies that signed contracts in 2008 with NSP to sell wind-generated electricity for delivery in late 2009.
NSP contracted for 247 megawatts of power, enough electricity for 87,000 homes.
The wind developments have been critical to moving Nova Scotia beyond its heavy reliance on dirty coal-fired electrical generation. The wind contracts are key for the utility to meet the government’s renewable energy targets of producing 25 per cent of electricity from green sources such as wind by 2015.
Of the six contracts, only RMS Energy, which has installed 34 wind turbines in the Cobequid Range 25 kilometres west of New Glasgow, is producing electricity to the power grid on schedule, according to NSP’s website.
Mr. Rodenhiser said RMS Energy has been producing electricity for over a month for the utility.
Currently, NSP has 75 wind turbines generating electricity for the privately owned utility across the province, he said.
The other wind developments that signed long-term purchase power agreements with NSP have either been delayed, purchased by other developers or remain uncertain.
In April 2009, NSP purchased the developmental rights of the proposed Nuttby Mountain 22-turbine wind farm from bankrupt EarthFirst Canada Inc. of Calgary. The $120-million wind farm, located about 20 kilometres north of Truro, is expected to be in operation later this year.
Last month, NSP parent company Emera Inc. took a stake in another financially troubled wind farm in Digby. Emera made an undisclosed offer to purchase a 50 per cent interest in the project held by troubled SkyPower Inc. of Toronto, which had partnered with Scotian WindFields.
Renewable Energy Services Ltd. proposed to build an 11-wind turbine farm at Statia Terminals in Point Tupper with a capacity of 24 megawatts, enough to produce electricity for 6,000 homes.
Company officials were unavailable for comment. NSP does not have the project listed on its website as operational.
Acciona Energy of Spain, with offices in Chicago, proposed to build a 20-turbine wind farm on the marsh outside Amherst.
NSP reported earlier this year to government regulators that it had been delayed.
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