Financing details revealed by Nedpower / Shell WindEnergy

Over $185 million senior secured financing that will support construction and operation of NedPower Mount Storm LLC was arranged in November 2007. Dominion Power and Shell WindEnergy have joint 50/50 ownership of the project. Interestingly the original cost was estimated at $300M alone, but some of that missing funding is coming from the US government subsidies via the rate subsidies and tax incentives. However with the weakened dollar to the Euro and the purchase of Spanish turbines from Ganesa along with the jump in diesel prices effecting construction costs and transportation something would appear to not be all adding up. Public disclosure of the current project budget has not happened.

"Fortis and BBVA will structure, underwrite and syndicate the construction facility, which will be converted into a 15-year senior secured term loan at the onset of commercial operations scheduled to begin in the first quarter of 2008. The facilities launched in November 2007".

Nedpower have been trying to claim the Phase 1 of construction is now complete - however recent pictures from the site show that this is not the case. Clearly also commissioning and testing with the Mt Storm power plant to facilitate power switching has not yet started. They have also yet to comply with FAA regulations on hazard warning systems for the 390' high structures. No filing has been announced by the FAA and the current hazard lighting consists of only two small red lights, one at either end of the line of turbines.

As a partner Dominion Power seem to have a struck a sweet deal with the financing including "The project has entered into two identical power swaps, fixing the electricity price for five years". This means that as the price of electricity goes up the project will be getting the same fixed price that is less than market value for power being generated and Dominion will pocket the difference. This will further erode the viability of the project. On the other hand it is harder to sell wind power generated electricity on the regular daily spot market for the grid because of the uncertainty of generation. So having a guaranteed buyer is probably the attraction for Nedpower.

But then project viability and energy generation don't appear to be considered as priorities by those sponsors of the project. The intent appears to be farming out as much profit for themselves and their partners and minimizing the costs - as can be seen by their willingness to wreak a public road with their heavy construction vehicles and then dodge having to pay to replace the road (the PSC left it open for the project to negotiate "arrangements" with the WV DOT but these have not been made public).

So who exactly is funding the Mt Storm project? "BBVA is one of the top four banks in the Eurozone in terms of market capitalization and is one of the main international banking groups in Latin America with leading subsidiaries in Argentina, Chile, Colombia, Mexico, Peru, Puerto Rico and Venezuela. The bank is also present in the world's main financial centers through its New York, London, Frankfurt and Tokyo branches and representative offices.
Fortis Merchant and Private Banking is a division of Fortis, a global financial services firm".

As with the purchase of original Spanish turbines we see US tax dollars and revenues being syphoned off overseas - now also to offshore banking groups in interest payments and revenue agreements. Interest alone on the $185M loan is likely to be in the range of $9M+ annually.

Would someone please mind explaining how this is all helping the people of Grant County and West Virginia?

New Wind Power book - story in pictures

People facing the challenge of deciding about wind power in their own community need to see first hand what it means to those already coming to grips with living with an industrial wind project in the mountains of West Virginia.

This book by David Webber paints the details in pictures that show directly what impacts locals can expect in a mountain region of the eastern United States.

The book illustrates a project being underwritten by Shell WindEnergy and showcases how a high end multi-national corporation is being represented by its project on the ground.

Coming soon to a mailbox near you

As you walk up your driveway to the mailbox you are aware of a 390’ high structure in your eye view. Whereas before you had a clear field of view over relaxing fields and trees, now your vision is distracted. As you approach your mailbox a large moving shadow rapidly flicks over you, followed by another and then another and then another. The huge moving blades in the suns light provide a constant effect that is both distracting and annoying. Your senses simply hone into this constant movement and there is no way to shut it out of your minds eye. A little voice inside your self-response alerting systems keeps chirping “Watch Out!” and you cannot switch that off.

Well now you have gotten over the shock value of living next to an industrial wind turbine, maybe you are ready for more technology in your life? How about microwave towers for cell phone communications or emergency response teams or high definition TV and radio? Why not? Your once rural area is now an industrial park anyway, so what does a few more poles and towers matter now?

And remember your driveway and small country road? Well it’s now been widened and graded and 50’ wide access roads carved away from it to provide clearways for giant tractor trailers. And the deer you used to enjoy so close to your home? Gone, gunned down by hunters who before could not penetrate the area but now have free and easy access with open lanes to shoot hapless wildlife from. Now deer start up and move off immediately from any human nearing them (deer and road).

That small country road also is no longer the simple drive it once was. Now it’s more like an army vehicle testing course. With the heavy equipment vehicles on it literally tearing up the surface on inclines and slopes large sections are now barely passable. So you have to weave from one side of the road to the other to find even tarmac. And what about towing in your boat or camper? The uneven camber makes low slung loads bottom out in many places, so now you have to have someone ahead of you to hold up traffic while you are negotiating around the worst sections.

Why not complain to the DOT? Sure go ahead. We did that last year and they spot patched and re-surfaced areas, but now whole new areas have been damaged instead. Seems like the turbine company controls that whole process anyway, and they are not rushing to pay for repairs each time they damage the road. The DOT even seems to let them re-route the road as they please. They were adjudged to have turbines too close to the road so that literally the spinning blades pass directly above the edge of the road. So what is their solution? Relocate the sites of the turbines perhaps? Of course not, simply dig up the original road and in its place put a detoured temporary gravel section instead.

But doesn’t all this create local jobs for people who need them? That seems to be the clarion call around these parts. In fact the turbine company uses it often to gloss over the fact that they want to do pretty much as they please around here. Come to find out that the federal government is paying millions of tax dollars to support this whole Nedpower/Shell WindEnergy venture. So what else in your community is not getting done because the money is spent already? Is this project really cost effective or is this just a boondoggle and public relations exercise for a large mega-corporation, subsidized by the tax payers?

Turns out that the numbers game may actually have worked against the mega-corporation as the exchange rate of the US dollar to the Euro has almost halved since the wind turbine project was conceived and approved and the funding calculated. The turbines and parts are being purchased from Spain and the Ganesa company and shipped to West Virginia. Every cost has escalated, right down to the cost of diesel to haul the parts from Baltimore by rail and road to the construction site. But most importantly the turbines which once cost $1.25M each are now effectively costing twice that when the price is fixed in Euros rather than dollars.

Nedpower optimistically said the entire system would be operational by the fall of 2007. Well here we are in 2008 and it is obvious that not all the turbines are even installed yet. Not to mention completed their equipment testing and integration with the power plants own switching station so that electricity can actually be generated in a controlled way and feed into the grid.

Looking at the current state of installation one could estimate that it will be well into 2009 before they are ready.

Another concern is safety to both aviation and migrating birds. The turbines across the mountain top currently only have two working red hazard warning lights visible at night. This despite the fact that even during the day turbines disappear into the low cloud and mist and being a gross violation of FAA regulations on high structures and hazard light requirements.

The biggest concern is that this whole project simply becomes uneconomic. The pay back period was previously somewhere around 10 years. But now they must have a better idea of actual wind conditions on the mountain and the likely yield. Wind conditions are really only ideal in the fall and otherwise are intermittent and inconsistent for the rest of the year. An annual yield of somewhere in the region of 20% would be typical for this mountain location. So yes – over $300M of tax subsidy is being spent overseas for systems that only work 20% of the time. Your car would not be much of a purchase if it did that.

Now if you double the unit costs through the exchange rate hike, your cost recovery time goes out to twenty years which is past the lifetime of the equipment. Suddenly investors will be jumping ship as there is no way they can recover their money. This leaves just mega-corporations left who can write off to tax against profit and do creative accounting to shift moneys between Spain and the USA. Does this all sound like its going to create sustainable jobs in WV? There are clearly much better things to spend a $300M subsidy on if that is your goal.

And whose brainchild is all this anyway? One Mr. Hieronymous Niessen who I’m sure is right now pouring over maps of rural mountain areas looking for the next one to pass his brilliant schemes off on. Fortunately though the internet now allows people to find out first hand exactly what these projects entail and educate themselves on the choices they face (http://www.windaction.org/faqs/16715).

So what was your life once like back in those tranquil old days before your property area became an industrial wind energy site?