POLL QUESTION

First Wind to partner with two Canadian companies

Paul Gaynor, CEO of Massachusetts-based First Wind, signs one of the windmill blades at the Stetson II wind project expansion in Township 8 Range 4 near Danforth.
Paul Gaynor, CEO of Massachusetts-based First Wind, signs one of the windmill blades at the Stetson II wind project expansion in Township 8 Range 4 near Danforth.
Posted April 30, 2011, at 4:03 p.m.
Last modified May 01, 2011, at 5:21 p.m.

Poll Question

Paul Gaynor,  First Wind CEO
Paul Gaynor, First Wind CEO

The most aggressive developer of wind power in Maine has entered into a complicated partnership agreement with two Canadian power companies in order to build, own and operate wind projects in the Northeast United States.

The deal was reached late Friday night, according to a First Wind spokesman. In the most basic sense, it provides First Wind of Boston with seriously needed financing through Ontario-based Algonquin Power and Utilities Corp. and Halifax-based Emera Inc.

Both Canadian companies already have significant interests in Maine. Emera is the parent company of Bangor Hydro-Electric Co. and Maine Public Service Co. Algonquin owns hydroelectric generating facilities in northern Maine, including Caribou Hydro and Squa Pan Hydro, as well as some thermal power facilities in the region.

“This is an excellent strategic partnership that brings together the region’s leading wind company with some of the region’s leading power and utilities companies. This partnership will help bring further growth of well-sited and well-run wind energy projects in the region in the future,” said Paul Gaynor, CEO of First Wind, in a statement from the three companies. “This agreement will support First Wind’s plans to grow and develop and invest in new projects in the Northeast and across the country.”

In the deal, Ontario-based Algonquin Power and Utilities Corp. and Halifax-based Emera Inc. will form a joint venture, Northeast Wind.

First Wind, which has developed wind farms across Maine, and has several more in the development pipeline, will enter into an agreement with Northeast Wind. In that agreement, First Wind and Northeast Wind will create an unnamed operating company that will own First Wind’s wind farms on the East Coast, according to a statement from First Wind, Algonquin and Emera.

Those include Mars Hill Wind, Stetson Wind I and II in Danforth, and the under-construction Rollins Wind Project, as well as operations in Vermont and New York.

First Wind will own 51 percent of the operating company, and Northeast Wind will own 49 percent.

Northeast Wind will invest a total of $333 million to acquire that 49 percent. That includes a $150 million loan to the operating company, to be repaid within five years, or converted to equity in future projects. The remaining $183 million would go to First Wind, which is relinquishing sole ownership of those wind farms to the operating company.

In addition to its ownership interest in the operating company, First Wind will serve as its managing partner and will continue to operate the projects. First Wind will continue to develop Northeast projects, eventually to be transferred to the operating company — providing First Wind with additional revenues to put toward future developments.

According to First Wind spokesman John Lamontagne, the company has a number of potential projects in Maine that are in various stages of siting and permitting, including one near Rumford, one in Bingham, one on Bowers Mountain in Carroll Plantation, one in Oakfield, and one near Eastbrook on Bull Hill.

For Algonquin and Emera, the deal represents an investment in the American renewable energy sector — and its robust market of electricity users on the East Coast — that potentially would extend well into the future.

“This investment is an excellent means for Algonquin to partner with Emera and expand our reach into the New England renewable energy market with a strong portfolio of attractive wind projects,” said Algonquin CEO Ian Robertson in the release. “This transaction augments Algonquin’s growth strategy and affords us the opportunity to lever our expertise alongside the First Wind development team and expand our participation with Emera in the New England ISO electricity market.”

Emera is an investor in Algonquin. This deal also includes an opportunity for Emera to increase its ownership interest in Algonquin up to 25 percent, subject to Algonquin shareholder approval.

The deal with Emera and Algonquin follows First Wind’s decision last October to shelve its initial public offering, in which it had hoped to raise up to $240 million, which the company intended to use to pay off a $78 million loan and fund future project development and construction costs.

First Wind first indicated its intentions to go public in 2008 SEC filings. It backed away from those plans as the country’s economic troubles grew, waiting for the IPO market to improve.

After that IPO fell through, the company continued to seek ways to finance its operations. In December, KeyBank and Germany’s 10th-largest financial institution helped arrange $98 million in financing to allow First Wind to finish its $130 million Rollins Mountain industrial wind site in and near Lincoln.

And now there’s the deal announced this weekend, which still needs certain state, federal and other regulatory approvals, and is expected to close by the end of the year.

The development of wind projects in Maine has become controversial in recent years, marked by lawsuits and protests by groups unhappy with their impact on scenery, health and the environment.

To supporters, industrial wind farms create well-paying construction jobs, funnel much-needed tax dollars into host communities and help Maine move toward greater energy independence from fossil fuels. Wind power developers have spent an estimated $1 billion on projects in Maine in recent years.

Earlier this week in Augusta, the Legislature’s Energy, Utilities and Technology Committee began public hearings on more than a dozen bills targeting the wind power industry.

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