TORONTO, Ontario; EDMONTON, Alberta – Capital Power LP (“Capital Power”), the legal entity that directly and indirectly holds substantially all of Capital Power Corporation’s (TSX: CPX) assets, and Samsung Renewable Energy Inc. (“Samsung”), and Pattern Renewable Holdings Canada ULC (“Pattern”) (collectively referred to as “the partners”) have entered into a limited partnership (“the partnership”) for the development, construction and operation of a 270 megawatt (MW) wind power project to be known as K2 Wind Ontario (“K2” or “the project”).
Formerly referred to as the Kingsbridge II Wind Power Project (“Kingsbridge II”), K2 will continue to be developed in the Township of Ashfield-Colborne-Wawanosh (“ACW”) in southwestern Ontario. The project has an expected capital cost of $750-900 million, most of which will be funded through project financing.
The Ontario Power Authority has signed a Power Purchase Agreement (“PPA”) for K2. The completion of K2 is subject to obtaining necessary corporate approvals, the execution of definitive agreements, and the receipt of regulatory approvals. The partners expect that construction would begin in 2013, with commercial operation in 2014.
At the commencement of commercial operation, each of the three partners will have an equal economic interest in the project. Capital Power will contribute the project lease agreements and development work completed to date to the partnership, while Samsung and Pattern will contribute the PPA and transmission access rights.
Capital Power has been actively developing the project since 2006, and operates the nearby Kingsbridge I wind energy project. Capital Power will continue to lead the provincial Renewable Energy Approval (REA) process for the project. Samsung will serve as the engineering, procurement and construction contractor, and the partnership will finalize the turbine model and supplier.
“This agreement creates an opportunity for the development of one of Ontario’s most promising renewable energy projects,” said Brian Vaasjo, Capital Power Corporation’s President & CEO. “Since its commissioning in 2006, our nearby Kingsbridge I project has twice been Ontario’s best performing wind farm as measured by annual capacity factor. K2 will add significantly to Ontario’s renewable energy resources, and is being developed in a proven wind regime.”
“Canada is a very important market for Samsung and we support the province’s commitment to green energy and related industries. We are pleased to announce our partnership with Capital Power, in cooperation to build one of Ontario’s premiere wind farms which will serve Ontario’s growing power needs. K2 will provide a significant portion of the equipment demand needed to establish our successful manufacturing base here in Ontario – part of many significant milestones announced at the signing ceremony of the Green Energy Investment Agreement between the Korean Consortium and the Province of Ontario,” stated Cheol-Woo Lee, Senior Executive Vice President, Samsung C&T Corporation.
“Pattern is pleased to partner with Capital Power and Samsung on this project, located in one of Ontario’s proven wind regimes,” said Mike Garland, CEO of Pattern Energy. “We look forward to completing the permitting process and beginning construction of the project, so that we can start producing economic benefits for the landowners and the community, as well as generating clean and renewable energy for Ontario.”
The development of K2, together with other projects led by the Korean Consortium and its development partners, is expected to contribute to the creation of hundreds of jobs in Ontario by facilitating the local manufacture of turbine blades and towers, development-stage work for construction trades, and ongoing operations, maintenance and support services.
About Capital Power Corporation
Capital Power is a growth-oriented North American independent power producer, building on more than a century of innovation and reliable performance. The Company’s vision is to be recognized as one of North America’s most respected, reliable and competitive power generators. Headquartered in Edmonton, Alberta, Capital Power has interests in 34 facilities in Canada and the U.S. totalling nearly 4,900 megawatts of generation capacity. Capital Power and its subsidiaries develop, acquire and optimize power generation from a wide range of energy sources. The company’s web site can be accessed at www.capitalpower.com.
About Samsung C&T Corporation
Founded in 1938, Samsung C&T is the mother company of the Samsung Group, South Korea’s largest conglomerate with interests in electronics, chemicals, finance, and numerous other fields. Today, the company’s two business groups – Trading & Investment and Engineering & Construction – are involved in a broad and growing portfolio of businesses, delivering creative, integrated business solutions to customers worldwide through a network of over 100 offices in 44 countries. Both business groups have achieved many landmark accomplishments over the years in preparation for such an opportunity – among them, launching Korea’s first utility scale solar energy project and building the world’s largest skyscraper. Samsung C & T, Korea Electric Power Corporation (KEPCO) and Pattern Energy Group LP (“Pattern Energy”) plan to build and operate the world’s largest renewable energy cluster in Southern Ontario. Samsung was selected by the Ontario Government for its rapidly expanding expertise in the alternative energy field, but also for the proven track record of constructing projects of similar scale from planning and financing to execution. Samsung and its partners intend to take advantage of Ontario’s talented workforce and hire locally. Samsung C&T is an emerging global leader in new and renewable energy solutions with projects in Canada, the United States, Costa Rica, Korea, France, Italy, Greece, and Turkey.
Pattern Energy Group LP is an independent, fully integrated energy company that develops, constructs, owns, and operates renewable energy and transmission assets in the U.S., Canada and Latin America. With a long history in wind energy, Pattern’s highly-experienced team of scientists, engineers, construction experts, and legal and financial professionals has developed, financed and placed into operation more than 2,500 MW of wind power projects. Pattern is strongly committed to promoting environmental stewardship and is dedicated to working closely with landowners and communities to create premier renewable energy projects. Currently operating 520 MW of wind energy in North America, Pattern is scheduled to start construction on new projects totalling more than 1,000 MW over the next 12 months. The Company’s full development pipeline exceeds 4,000 MW of renewable energy and transmission projects. Pattern has offices in San Francisco, San Diego, Houston, New York, and Toronto. For more information, please visit www.patternenergy.com.
Certain information in this news release is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial performance, events or strategies. When used in this context, words such as will, anticipate, believe, plan, intend, target, and expect or similar words suggest future outcomes. Forward-looking information in this news release includes, among other things, information relating to: (i) expectations regarding the capital costs and financing for K2; (ii) expectations regarding the timing of construction and commercial operation for K2; (iii) expectations regarding the economic interests of the partners at the commencement of commercial operation; (iv) expectations regarding the contribution of each of the partners to the partnership; (v) expectations regarding the roles of each partner in the development of K2; (vi) expectations that K2 will add significantly to Ontario’s renewable energy resources; (vii) expectations regarding the contribution of K2 to the development by Samsung of a manufacturing base in Ontario and the creation of manufacturing, construction, operations maintenance and support service jobs in Ontario; (viii) expectations regarding the plan by Samsung C&T, KEPCO and Pattern Energy to build and operate the world’s largest renewable energy cluster in Southern Ontario; (ix) expectations regarding local hiring practices by Samsung and its partners; and (x) expectations regarding Pattern Energy’s project construction schedule and project development pipeline.
These statements are based on certain assumptions and analyses made by the partners in light of their experience and perception of historical trends, current conditions and expected future developments and other factors they believe are appropriate. The material factors and assumptions used to develop these forward-looking statements include, but are not limited to: (i) the terms of the partnership agreement for K2; (ii) the terms of the PPA for K2; (iii) ability to obtain necessary regulatory approvals for development projects; (iv) the partners’ assessment of the markets and political and regulatory environments in which they operate; (v) locations of projects and the areas of which they will be developed, including the availability and use of certain optioned lands; (vi) costs of construction and development; (vii) availability and cost of labour and management resources; (viii) performance of contractors and suppliers; (ix) availability and cost of financing; (x) foreign exchange rates; (xi) the partners’ analysis of applicable tax legislation; (xii) currently applicable and proposed tax laws will not change and will be implemented; (xiii) currently applicable and proposed environmental regulations will be implemented; (xiv) counterparties will perform their obligations; and (xv) weather.
Whether actual results, performance or achievements will conform to the partners’ expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from the partners’ expectations. Such risks and uncertainties include, but are not limited to, risks and uncertainties relating to: (i) the failure to receive any required corporate or regulatory approvals in connection with K2 or the partnership; (ii) regulatory and government decisions including changes to environmental, financial reporting and tax legislation; (iii) weather and economic conditions; (iv) competitive pressures; (v) construction; (vi) availability and cost of financing; (vii) foreign exchange; (viii) availability and cost of labour, equipment and management resources; (ix) performance of counterparties, partners, contractors and suppliers in fulfilling their obligations to the partnership; (x) developments in the North American capital markets; (xi) compliance with financial covenants; (xii) ability to successfully realize benefits from the project; and (xiii) changes in the current political or regulatory environment. If any such risks actually occur, they could materially adversely affect the partnership’s or the partners’ separate businesses, financial conditions or results of operations.
Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Forward-looking statements are provided for the purpose of providing information about the partners’ current expectations, and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. The partners and the partnership do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in their expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.