By Karl-Erik Stromsta in Chicago
Friday, April 11 2014
Updated: Friday, April 11 2014
Last month Maine's Department of Environmental Protection (DEP) informed First Wind of its “concern” regarding the financial structure of several of its projects in the wake of a recent ruling by the state’s highest court.
One of the projects – Oakfield, which will employ 48 Veasts V112 turbines – is already under construction.
At the heart of the matter is the 2012 joint-venture formed between First Wind, a Boston-based wind developer, and Emera, a Canada-based electric utility, and owner of Nova Scotia Power.
Emera sank $333m into the JV in exchange for a 49% equity stake in a series of First Wind projects under development across the US Northeast. The First Wind-Emera JV is seen by some as a precursor to the recent rise of the yieldco model in renewables.
Emera currently owns two power-distribution businesses in Maine. Yet in spite of a 2000 Maine law intended to split up the state’s generation and transmission sectors, Maine regulators allowed the 2012 First Wind-Emera JV to go ahead, ostensibly because Emera would not have had a controlling stake in any of the wind farms.
However, last month Maine’s Supreme Judicial Court – the highest in the state – ruled that regulators may have botched that decision.
While agreeing that some of the language in the 2000 law was ambiguous, the court insisted that the JV “would run completely contrary” to the spirit of the law, which is intended to foster more competition in the state’s power sector.
The case was brought by a group representing industrial power consumers in Maine.
Before a wind farm can enter construction in Maine, the developer must demonstrate that it has the financial wherewithal to build, maintain and ultimately decommission a project.
Typical ways of doing so include a performance bond, a surety bond or a letter of credit, according to the DEP.
With the validity of the First Wind-Emera JV called into question in Maine, the DEP has asked First Wind to explain by mid-May how it will finance four affected projects.
The affected projects are Oakfield, which is under construction; Hancock, which is approved but not yet under construction; Bingham, whose application is under consideration; and Bowers, which was initially rejected by the DEP but is pursuing an appeal.
First Wind has already made its first $600,000 community-benefit payment on the Oakfield project.
A spokesman for First Wind expresses confidence the company will be able to meet the financial requirements demanded by the DEP, pointing to a $75m bond offering the company successfully closed last week as evidence.
“The Emera joint venture provides an important but certainly not the only source of capital for [our] Northeast projects," the spokesman says.
“We are moving ahead with the Oakfield project in a timely manner. Construction is continuing on the project and we expect it to be completed next year,”he says.
“We have three other projects in advanced stages of development in Maine, and we have every intention of moving ahead with them."
First Wind has raised more than $7bn in capital since 2006, and invested $1bn of that in Maine, the spokesman adds.
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