OTTAWA (Reuters) - Shares in Naikun Wind Energy Group Inc climbed 7.4 percent on Thursday after the renewable power developer said a native Indian group plans to buy a 40 percent stake of its Pacific offshore wind project.
Financial terms of the agreement with Haida Enterprise Corp, which is contingent on environmental approvals and financing, were not released. The Haida Enterprise is the corporate arm of the Haida Nation.
The Haida Nation is already partnered with Naikun in a subsidiary that will operate the wind farm, planned for the Hecate Straight off the Queen Charlotte Islands in British Columbia.
Both Naikun and Enmax Green Power Inc currently hold 50 percent of the project, which Naikun estimates will cost C$2 billion ($1.8 billion) to develop.
“We’ve always said we wanted to get a third equity partner to sell down our interest from 50 percent to 10 to 15 percent,” said Chief Executive Paul Taylor in an interview.
“We do not have the wherewithal to be a full owner of major power projects. Our business is development, we see a better return in the business of developing power projects.”
When complete, the 110-turbine project is expected to generate 396 megawatts, enough electricity to power about 130,000 homes.
Taylor said the agreement is significant because it demonstrates to provincial utility BC Hydro that there is strong native support for the project. By year-end, Naikun wants to secure an energy purchase agreement with BC Hydro.
The company then targets construction to start in 2012, with power coming on the grid by the end of 2013 and final turbine installation in 2014.
Taylor is unconcerned by a regulatory decision by the British Columbia Utilities Commission last month that rejected BC Hydro’s long-term business plan, which includes a proposal to buy clean power from small, independent producers.
“I look at that whole process as a procedural issue, and while they rejected the LTAP (long-term acquisition plan) they actually approved C$500 million-plus of spending,” Taylor said.
“The Utilities Commission did not say that BC Hydro couldn’t buy or source power through the clean power call, they just rejected the LTAP.”
Naikun shares added 4 Canadian cents to 58 Canadian cents on the TSX Venture Exchange. The stock has lost about 45 percent of its value over the past 12 months.
Reporting by Susan Taylor