Operating Portfolio

Operational Assets

The Company has ownership interests in and is currently managing ten operational sites with 73 turbines totalling approximately 143 MWs of operational wind capacity in Ontario and Nova Scotia. For the year ended December 31, 2012, these assets generated $16.7 million in revenue (Ontario – $7.0 million and Nova Scotia – $9.7 million). Between November 2012, when the Company acquired its interests in the Glen Dhu and the Fitzpatrick Mountain projects, and December 31, 2012, these projects generated $2.8 million in revenue. All electricity production from these operating assets is subject to long-term PPAs.

The table below summarizes the Company’s current Operational Projects:

Operational Assets
Locations Type Installed Gross Capacity (MWs) PPA Expiry
Nova Scotia Wind 121.6(1) 2020 to 2037
Ontario Wind 21.6 2026 to 2029
Sub-total 143.2

(1) Includes the following projects which are not wholly owned: the 31.5 MW Amherst I project, in which the Company owns a 51% interest; the 62.1 MW Glen Dhu project, in which the Company owns a 49% interest; and the 1.6 MW Fitzpatrick Mountain project, in which the Company owns a 50% interest. The Company has an option to purchase the remaining 49% of the Amherst I project before 2014.

The following chart summarizes the GWhs of gross production from these assets for the past three calendar years.

12 Months Ended December 31
Gross GWhs produced
2012(3) 2011(3) 2010(3)
Ontario(1) 57.9 55.6 59.1
Nova Scotia(2) 313.8 202.7 61.8
Total Generation
(GWhs)
371.7 258.3 120.9

(1) Ontario projects were previously owned by SkyGen prior to February 8, 2011.

(2) Certain Nova Scotia projects previously owned by Confederation Power Inc. prior to February 1, 2011 and by Shear Wind prior to November 23, 2012.

(3) GWhs shown represent annual production results prior to acquisition by the Company. The 2012 results includes only 8.5 months of actual production from Amherst and two months of actual production from Glace Bay II as both these assets were constructed during the year.

Near-Term Development Projects

The Company’s portfolio of Near-Term Development Projects is expected to provide additional capacity of 59.8 MWs as well as an additional 77.5 MW of projects that the Company has rights to under secured loan agreements and LOIs. The owned portfolio is diversified with projects in Nova Scotia, Ontario, Québec, and Saskatchewan. The Company has been awarded a 10 MW project in Saskatchewan and is a 49% joint venture partner in a 0.8 MW award in Nova Scotia. The Company has been awarded and has executed PPAs for three of these projects and anticipates that it will execute the PPA for the final project in the second quarter of 2013. These projects are anticipated to have commercial operations dates in 2014 and 2015.

In Ontario, the Company is developing the 25.0 MW Goulais wind farm, north of Sault Ste. Marie. The project has executed a 25.0 MW feed-in-tariff (“FIT”) contract with the OPA. The project is progressing according to plan, with the renewable energy assessment application submitted to the Ontario Ministry of Environment in November 2012 with approvals expected in the summer of 2013. The capital cost to construct this project is currently estimated to be approximately $82 million. The financing of the project will be arranged and announced prior to starting construction. Management expects construction to commence in the fall of 2013 and is targeting a commercial operation date (“COD”) during the second or third quarter of 2014.

In Québec the Company is developing the 24.0 MW Saint-Philémon wind farm together with its community partners, the Municipalité de Saint-Philémon and the MRC de Bellechasse. The project has executed a 20 year PPA with Hydro-Québec Distribution. The Company has submitted its environmental impact assessment and signed a letter of intent for the turbine supply agreement and turbine warranty and maintenance agreement. The Quebec Ministère du Développement durable, de l’Environnement, de la Faune et des Parcs (MDDEP) has confirmed that the project will not be subject to a public hearing. The capital cost to construct this project is currently estimated to be approximately $51 million. The financing of the project will be arranged and announced prior to starting construction. Management expects to commence construction in late 2013 with a COD targeted for the fourth quarter of 2014.

In Saskatchewan the Company expects to enter a 10.0 MW PPA for Riverhurst I wind farm with Saskatchewan Power Corporation in the second quarter of 2013. Collection of onsite wind data was initiated in 2006 and the preliminary generation interconnection feasibility study was received from SaskPower in October 2010. The capital cost to construct this project is currently estimated to be approximately $30 million. The financing of the project will be arranged and announced prior to starting construction. Management expects SaskPower to commence construction of the transmission interconnection in 2014 and have a COD targeted for the third quarter of 2015.

In Nova Scotia, the Company is a 49% joint venture partner of a project that received a single turbine 0.8 MW contract award from the ComFIT program. The project is located on an environmentally permitted site owned by the Company and is expected to be completed in the next 12 months.

Near-Term Development Projects
Locations Type Installed Gross Capacity (MWs) Anticipated Commercial Operations Date
Nova Scotia Wind 8.8(1) 2014
Ontario Wind 25.0 2014/2015
Quebec Wind 24.0(2) 2014
Saskatchewan Wind 10.0 2015
Sub-total 59.8
Investments in Contracted Projects
Locations Type Installed Gross Capacity (MWs) Anticipated Commercial Operations Date
Ontario (LOI and Loan Agreements) Wind 77.5(4) 2014/2015
Total Investments in Contracted Projects 77.5

(1) Represents the Glace Bay III project, which is adjacent to the Company’s existing Glace Bay I facility where a community partner is expected to control 51% of the project entity.

(2) The Company currently owns 100% of the 24.0 MW Saint-Philémon project and has arranged for the Community Partners to invest equity to hold up to 49% of the project assets once development completes certain milestones.

(3) The Company has rights to 77.5 MW of projects under secured loans agreements and/or LOIs with third parties. The Company does not currently own these projects but expects to acquire and develop these projects with partners and retain at least a 50% ownership upon completion of the development.

Investments in Contracted Wind Power Projects

The Company also intends to develop two sets of projects in Ontario secured by loans and LOIs. The loans represent the initial investments for development in the projects and are secured by those projects. At that time of investment in the first set of projects, the Company advanced $4.3 million through a series of loans secured by the projects. The Company participated in continued development activities for these projects and incurred or advanced an additional $1.7 million for these projects as at December 31, 2012. Based on its due diligence of the projects, which are owned by entities related to Zero Emission People LLC, the Company identified four contracted projects with 50 MW of capacity, which it intends to acquire with its financial partner and co-develop in the near term. Upon the Company acquiring an interest in the assets, the advances will form part of the Company’s consideration. The capital cost to construct these projects is currently estimated to be approximately $220 million. The Company expects to develop these projects with partners and retain a minimum 50% ownership interest in the projects once they are completed. These projects have targeted COD dates in late 2014 and early 2015. The purchase of these projects by the Company and its financial partner is subject to conditions, including receipt of any consents and comfort required from the OPA, the Board and other third parties which the Company is actively pursuing.

With respect to the second set of Ontario projects, in December 2012, the Company entered into agreements with a third party to provide approximately $0.5 million in development funding by way of interest bearing secured loans for the development of the two additional Ontario projects with 27.5 MW of capacity that have PPAs. The loans represent the initial investment for development in the projects and are secured by the projects. In addition to the initial advance of $0.3 million, the Company is participating in continued development activities for these projects and has incurred an additional $0.1 million for these projects as at December 31, 2012. The Company and its financial partner are taking steps to purchase these projects in the near term, and the acquisitions are subject to customary terms and due diligence, including any required consent from the OPA and the Board. There can be no assurance that the Company and its financial partner will complete such acquisitions.

Advanced Stage Development Project

The Company has over 1,000 gross MWs of development opportunities across Canada for a number of wind projects. These development projects are non-contracted and represent potential growth opportunities. With the recent contract awards in Nova Scotia, the decreased market prices for electricity in Alberta and the lack of clarity for new provincial requests for proposal for renewable energy, the Company reviewed its investments in its advanced stage projects. While the Company’s management continues to believe that certain of these assets represent viable developments, the Company has decreased or eliminated its historical investment in these assets, which was recorded in its December 31, 2012 audited financial statements.

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