Winds of change stall project.

The plan to build wind turbines in Sudbury may be a dream floating in the breeze unless the province comes through with some financial carrots for the developers poised to move ahead with the project.

The Ernie Eves government's decision to cap hydro rates almost put the nails in REpower Canada's coffin, says Rick Gagnon, a principle in the Canadian-German joint venture, which was supposed to begin manufacturing German-designed turbines last fall. But his German partners are keeping the faith in Sudbury, buoyed by a potential deal with an Alberta company for wind turbines.

The plan is to supply wind turbines to the North American market.

"The project is moving along, but not at the pace we would like," says Gagnon, president of Gagnon Renewable Resources, a Manitoulin Island green-energy manufacturer, who signed a joint-venture agreement last year with the Hamburg-based REpower Systems AG, one of the world's most advanced builders of wind turbines. Sudbury entrepreneur Rick Walker of the Consbec Group of Companies is also involved.

Gagnon says the government is too slow in rolling out incentives to encourage privately built alternative energy generation or manufacturing plants. To that end, REpower has temporarily suspended plans to build a wind turbine manufacturing plant in the Valley East Industrial Park in Greater Sudbury, and create 90 jobs.

"Everybody's talking, but nobody's doing," says Gagnon, referring to the Ontario government's claims it has solid plans in place within a deregulated and flexible market to encourage the creation of green energy.

The government's cap to keep prices at an artificially low 4.3 cents per kilowatt-hour does not make the Sudbury project viable to cover their costs.

The cap is slated to be in place until May 2006, at which time the government hopes there will be enough privately built generation plants operating so that consumers are not whacked with hefty electricity bills.

"The price of power is retailing at roughly 11 or 12 per cents a kilowatt," says Gagnon, "It's just not a realistic number. In order to get into wind energy we need it to be at six-and-a-half to seven cents a kilowatt. At 4.3 it's just not going to happen."

REpower is set to close a deal with a private corporation in Alberta for 50 1.5-megawatt units, the same type that would be built in Sudbury. If a contract is signed, the plan is to build them in Germany and ship them to Alberta, leaving Sudbury out of the picture. Gagnon, who returned from Alberta in mid-August, planned on flying to Germany by month's end to finalize negotiations.

Gagnon says he talked with Ministry of Energy officials on several occasions, including Commissioner of Alternative Energy Steve Gilchrist, and was told the Eves office has a major incentive plan for green energy in Ontario. The province was supposed to announce their plan this past spring, but it never materialized. The latest news Gagnon has heard from Toronto is that an alternative energy plan will not come until after the elecion.

Gagnon says his German partners remain "very disappointed" with the price cap. "They've seen other countries do it and realized it was a great mistake because it is not a realistic price. It is definitely a setback and will take time to turn that around."

If an election is delayed until next spring and a green energy platform is put off, "that will be even worse for us" and could have consequences with the joint venture.

The partners have a brownfield site in the Valley East Industrial Park with more room available to expand. REpower is also considering establishing a wind park on Manitoulin Island in conjunction with the City of Greater Sudbury and Northland Power (a Toronto energy developer and financing firm), capable of generating 20 megawatts. It would be the largest wind farm in Ontario.

Wind studies have been completed and land leases at the McLean's Mountain farm, south of Little Current, are in place. It has been offered to the City of Greater Sudbury as the first phase of its wind farm project that is ready to be developed now.

"We're just waiting to see where prices are going to be," says Gagnon. "But until the province steps to the plate and becomes real partners in wind energy, all these projects are going to stall."

He mentions there are several other larger wind farm projects of 150 and 200 megawatts of energy that are on hold because of the provincially-imposed cap on power.

"We're evaluating the surrounding areas of Sudbury, and if Little Current is more favourable, it would be (the city's) choice of where they would want to develop. They have already voted that they would go outside their boundary."

The hydro blackout represented a "push in the right direction" for wind energy and alternative fuels, says Gagnon, and with end users expected to be saddled with higher bills to upgrade a "Third World" grid system, wind energy will start to look very competitive.

"Everybody knew there was going to be a crisis and Ontario knew ahead of time they were consuming more than they were producing, so why aren't the incentives in place?"

To get their Sudbury project back on track, he says the province needs to initiate an incentive for green power to come alive.

"The City of Sudbury is ready and willing to go ahead with a wind project and this could all be a solution for these power outages. But too little, too late."

Gagnon adds Ottawa's $1-billion Kyoto Plan, which has $250 million earmarked for research and development in new technology to reduce greenhouse gases, has no impact on his project.

"They need to put their money toward actual production. Let's face it there are 10 major players in the world that have 10 to 15 years in manufacturing large-scale wind generators. We're not going to re-invent the wheel here."

By IAN ROSS 

Northern Ontario Business