NaiKun Wind Energy Group Inc. (TSX VENTURE: NKW) distributed a
quarterly project update to shareholders yesterday. The content of
the update appears below.
NaiKun Wind Quarterly Shareholder Update
Welcome to the NaiKun Wind Quarterly Shareholder Update.
At the end of March, NaiKun Wind was advised by BC Hydro that
our 396MW offshore wind project was no longer under consideration
for a contract award in the Clean Power Call. This result is
extremely disappointing, but it has not changed our view that the
project can play a role in the Government of British Columbia
fulfilling its clean energy and electricity self-sufficiency
goals.
The wind resource in Hecate Strait is one of the strongest and
most consistent in the world and we will continue to work on
developing a facility that harnesses its power. While BC Hydro's
decision means that our timeline to begin construction in 2012 is
delayed, our development work will carry on. With this in mind, I
want to provide our shareholders with an update on our activities
and strategy going forward.
Before going any further, however, I would like to assure
everyone that the team you have supported through the process to
this point remains unified. Working with ENMAX, First Nations and
key suppliers such as Siemens Canada, NaiKun Wind looks forward to
near-term discussions with BC Hydro and the Provincial Government
on how the 396MW project and the Haida Energy Field can fit into
the Province's clean energy procurement plans. We continue to
believe that the Hecate Strait wind energy resource can play a very
important role in the Province's electricity portfolio.
Looking at things from a broader perspective for just a moment,
development of an offshore wind industry is an opportunity that
British Columbia should embrace, just as so many other
jurisdictions around the world have done. There is a world-class
renewable resource off the shores of this province that can bring
unique benefits to its people.
There are a number of things on the horizon that will be of
interest to our shareholders. In the next few months, I would
expect to be reporting on the following items:
- The final steps in securing environmental certificates from the Federal
Government and the Haida Nation
- The results of our de-brief with BC Hydro on why our project was not
selected
- The tabling of the Clean Energy Act in the Provincial Legislature
- The results of deliberations by the Haida Nation on their becoming an
equity partner in the generation project, and their efforts to secure
support from the Federal Government for their participation
- Updates on our acquisition strategy
Environmental Approvals
As you know, the Province of British Columbia has issued an
Environmental Assessment (EA) Certificate for the 396MW project and
related transmission infrastructure. Still outstanding is the
environmental go-ahead from the Federal Government and issuance of
an EA Certificate from the Haida Nation. Neither of these processes
has identified significant adverse effects and we expect them to be
finalized by mid-year.
On the federal front, all agencies have made their contributions
to a draft assessment report. The report now awaits a decision from
Fisheries and Oceans Canada regarding NaiKun Wind's proposed
Habitat Compensation Plan. We have put forth what we believe to be
a proposal which meets the required feasibility test and expect
their decision on this document in the coming weeks. Once
finalized, the federal report will be issued to participating First
Nations for their final review. Following that step, the Federal
Government will review the feedback and issue its approvals.
As for the Haida Nation, they have concluded their environmental
review and the next step is the issuing of an EA Certificate which
specifies the conditions of the approval and the commitments that
NaiKun Wind has made to ensure local benefits are maximized and any
negative influence on the environment is minimized.
Clean Power Call Follow-up with BC Hydro
Our communication with BC Hydro regarding their March 31
decision on our Clean Power Call proposal has thus far been very
limited. Given the significant effort put into the proposal and our
plan to continue advancing the project through future power
procurement processes, we believe it is important to work with BC
Hydro to more fully understand its decision and the evaluation
process that was followed.
We also believe it is important for BC Hydro to understand the
perspective of developers who have invested significant time and
resources in developing proposals, no matter the result of a given
contract award process. We further believe that it is important for
BC Hydro and the Province to encourage the development of a
provincial offshore wind industry. As such, we have approached BC
Hydro regarding a de-briefing session and been assured of a meeting
in the near future. This step will help to shape our approach to
obtaining a contract going forward.
Clean Energy Act and a New Approach to Procurement
With the pending conclusion of the Clean Power Call, the focus
for clean energy opportunities in British Columbia shifts to the
Clean Energy Act, which is expected to be introduced and passed in
the current sitting of the BC Legislature. The Clean Energy Act was
announced in the Throne Speech earlier this year and comes in
response to the limited progress realised in advancing the BC
Energy Plan, which was introduced early in 2007. The Clean Power
Call and its ability to deliver near-term generation from clean
energy projects have been cited by the government as a specific
concern.
The Clean Energy Act will play a central role in fulfilling the
government's announced "commitment to fair, predictable, clean
power calls that will feature simplified procurement protocols and
new measures to encourage investment ..." British Columbia Energy
Minister Blair Lekstrom recently highlighted the important role to
be played by the Clean Energy Act in developing a strong,
sustainable energy industry. The Haida Energy Field and the NaiKun
Wind project can be prominent in future procurement initiatives,
given the need to source electricity from utility-scale energy
solutions.
The legislation will likely be introduced in late April or early
May and passed no later than June 3rd. Among its expected contents
are significant improvements to the contract procurement process as
well as measures to encourage new investment in the renewable
energy sector. Once the Act has been introduced, NaiKun Wind
intends to engage the government and BC Hydro to discuss how best
to advance the offshore wind project and the development of an
offshore wind industry.
We also expect the Clean Energy Act will deal with an export
policy that builds on British Columbia's tradition of using power
sales to drive economic development and pay for government
services. This is the legacy of late Premier W.A.C. Bennett that
has served the Province and economy so well. As a complement to the
export policy, we could see commitments to major transmission
upgrades and plans to go to the Environmental Assessment phase of
the Site C hydroelectric dam in northeast BC. While this would be
an important step forward for BC Hydro's Site C project and the
development of new transmission infrastructure, we should not
underestimate the time required and the hurdles that must be
overcome to finish these initiatives.
This speaks to the important role that the NaiKun Wind project
can play in addressing BC's future energy needs, since our
environmental approvals are largely in place, there is strong
community and First Nations support and there is significant
transmission capacity available where our project would connect to
the main grid.
Dealing with these changes in direction will be new leadership
at BC Hydro and BC Transmission Corporation. Both companies are
currently conducting executive searches to fill their vacant Chief
Executive Officer positions. Leadership searches by their nature
create a degree of uncertainty within organizations and we look
forward to this matter being settled soon. Strong leadership at
these Crown corporations will be crucial to implementing the policy
objectives and energy procurement framework laid out in the Clean
Energy Act.
Haida Equity Investment
The Haida Nation continues to view our project as a potential
cornerstone of their economic independence and is determined to
ensure that the opportunity is maintained as they work through
their process regarding participation as a direct equity owner in
the 396MW project.
Since September of last year, the Haida Nation, supported by
NaiKun Wind, has held a series of discussions with the Federal
Government aimed at procuring a loan guarantee so that they can
secure the funds necessary to make the investment. This effort is
reaching important milestones on two fronts.
First, the Haida Nation held the final two information sessions
for their people last week, on April 15 and 16. We anticipate the
Haida will soon conduct a vote regarding the decision to take the
direct ownership position, which could be up to 40% of the project.
This is a major decision for the Haida, and NaiKun Wind respects
and supports their decision-making process.
The status of the discussions with the Federal Government is
quite advanced. Ministries with direct authority over files
pertinent to the Haida Nation's request have expressed support for
the idea. In the next few weeks, representatives from the Haida
Nation and NaiKun Wind will be holding additional meetings with key
government officials to ensure this option is available to the
Haida Nation should they decide to exercise it.
Investigative Use Permit
NaiKun Wind is authorized to develop its wind project through
the issuance of Investigative Use Permits by the Province of
British Columbia and the Haida Nation. We recently renewed the
Haida Nation permit and will be renewing the provincial permit in
May 2010. These two important steps allow us to continue to advance
the project.
Potential Acquisitions
As mentioned in recent news releases, NaiKun Wind has since last
year been assessing potential acquisition opportunities in the
renewable energy sector. We have identified several projects of
interest that share the characteristic of being significantly
advanced (some operating or contracted and ready to build) and are
in varying stages of analysis on them. For assets, or portfolios of
assets, of a certain size, we have identified entities that are
interested in joining NaiKun Wind as a direct equity owner.
Discussions with the developers/owners of several projects are
ongoing.
Conclusion
In summary, NaiKun Wind continues to advance its offshore wind
project in anticipation of opportunity to be presented shortly by
the Clean Energy Act. While its content has yet to be made public,
we believe the Act will be an important part of a new framework
that will result in significant opportunities for renewable energy
companies like NaiKun Wind. We will keep shareholders updated on
developments as they occur.
Thank you for your ongoing support.
Paul Taylor, President and CEO
NaiKun Wind Energy Group Inc.
www.naikun.ca
Caution Regarding Forward-Looking Statements - This news release
contains certain forward-looking statements, including statements
regarding the business and anticipated financial performance of the
Company. These statements are subject to a number of risks and
uncertainties. Actual results may differ materially from results
contemplated by the forward-looking statements. When relying on
forward-looking statements to make decisions, investors and others
should carefully consider the foregoing factors and other
uncertainties and should not place undue reliance on such
forward-looking statements. The Company does not undertake to
update any forward-looking statements, oral or written, made by
itself or on its behalf.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.
Contacts: NaiKun Wind Energy Group Inc. - Investor Relations
Enquiries Peter Murray Manager, Investor Relations 604-631-4494
pmurray@naikun.ca NaiKun Wind Energy Group Inc. - Media Enquiries
Doug McClelland Director, Communications 604-631-4487
dmcclelland@naikun.ca www.naikun.ca
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