Canadian Wind Energy

Plutonic Power and Enbridge: Canadian Energy's Odd Couple

Written by Brian Hicks
Posted October 7, 2009

There's a ton of money at stake in British Columbia.

Here's what I mean...

BC is the epicenter of a huge Canadian energy transformation.

Massive fossil fuel forays, like the Northern Gateway oil pipeline to the Pacific Ocean, are competing with several small clean energy developments for regulatory priority and public support. At the same time, a few intrepid traditional energy companies are stepping in to stake their claim on clean energy expansion.


In fact, some of the Calgary crude kings are seeing the writing on the wall and signing deals to diversify into green power.

Two of the key players in this scenario are Plutonic Power and Enbridge. They're already familiar to Canadian energy investors. But soon, they'll be international names.

Here's what they — and you, as an investor — stand to gain in British Columbia.

Plutonic Power's Wind and Hydro Projects

In June, we looked at Plutonic Power Corp. (TSX:PCC), a Vancouver-based hydropower developer. Plutonic had just teamed up with General Electric's Energy Financial Services arm to push a run-of-river hydropower project in the Bute Inlet just north of Vancouver Island.

Elections in June put politics on Plutonic's side, as CEO Donald McInness told the Vancouver Sun: "It's not a given that our business plan advances, but without the Liberals winning, we certainly weren't going to advance at all."

Yet progress is slogging along for the Bute Inlet initiative, as environmental impact assessments continue and provincial utility BC Hydro considers and reconsiders Plutonic's proposals.

So in the meantime, Plutonic and the GE financing units are pushing forward with plans to tap a woefully underexploited resource in British Columbia: wind.

The pair plans to purchase the existing Dokie Ridge wind farm project from bankrupt developer EarthFirst Canada, adding a 144 MW array to their clean energy portfolios. The Dokie Ridge site can be expanded to 300 MW from its partially completed state. That would serve around 34,000 homes with 340 gigawatt-hours per year (GWh/yr), according to a press release.

If approved, Plutonic and GE will be 51%/49% financing partners, with the local firm taking the bigger stake in completing the 144 MW stage by early 2011.

What started as preliminary due diligence in June became a commitment to buy the Dokie Ridge project in late September.

Regulatory approval awaits, but the outlook is good.

Now Plutonic is on the way to establishing British Columbia's wind energy capacity. And as you can see in the map below from the Canadian Wind Energy Association, BC's wind output is currently next to nothing:

Canadian Wind Energy Installations

Even with GE on its side, though, Plutonic won't be the only company racing to bring BC's wind resource to life. . .

Enbridge Balances Oil Overrun and Wind Energy Options

Calgary's Enbridge, Inc. (NYSE:ENB) is a giant. Its U.S. market cap is $14.6 billion — dwarfing Plutonic's Toronto total of $161.19 million.

Enbridge's main business, as you might expect, is energy delivery. But right now the behemoth is scrambling to save faith in its biggest project, the Northern Gateway pipeline from Alberta to British Columbia's Pacific coast.

The Northern Gateway pipeline was initially backed by PetroChina (NYSE:PTR) in 2005. The subsidiary of national oil company China National Petroleum Company (CNPC) inked a memo indicating the Middle Kingdom's state-owned energy enterprises would be first in line to buy oil from Canada's Pacific Coast. Nothing official was ever finalized.

The oil in question would come primarily from the tar sands of northern Alberta, where petroleum-laden soil is essentially cooked to get crude.

On October 6 of this year, Enbridge admitted that costs to establish the Northern Gateway conduit will exceed drawing-board estimates. That overrun could be a lot or a little over the initial US$3.77 billion estimate, but the main concern is China — Enbridge hasn't had any formal talks with PetroChina since August, according to reports. We have to wait 'til later in the year, when regulatory filings come due, to get the real price tag on the Northern Gateway line.

It doesn't help matters that two parts of the TransCanada natural gas pipeline exploded in September. Enbridge may have an arduous uphill battle ahead of it before the Northern Gateway line gets approved and built.

So here's where home-country clean energy consumption comes into Enbridge's game plan.

If you scour Canadian Wind Energy Association installation lists, you'll see that Enbridge is actually a participant in Canada's wind energy industry, operating the 181.5 MW Ontario Wind Power farm installed in April of this year. All together, Enbridge operates four wind power projects totaling 260 MW.

That kind of energy doesn't go into a pipeline to China. . . it stays up in the Great White North where it belongs.

If wind weren't enough to convince you that Enbridge is diversifying away from oil and gas transport, consider this: Enbridge just announced its acquisition of a 20 MW solar power plant in Ontario from Arizona's First Solar (NASDAQ:FSLR).

That acquisition isn't an experiment or a way of throwing investors a corporate social responsibility (CSR) bone — Enbridge just bought the biggest solar power plant in Canada!

Combining for Cleaner Canadian Energy

BC Hydro bears its name for a reason: Canada's rushing rivers have long been known as a precious resource for mills, fields, fish, and energy.

As Vancouver Sun columnist Miro Cernetig wrote in June, "British Columbia is a laggard in harnessing the wind." Cernetig appeals to BC residents' sense of progressive provincial identity to make his case:

"Despite our efforts to be seen around the world as green, we make no commercial electricity from the wind. We are actually the only province with that status."

That is changing quickly.

2009 is already set to be a record year for wind energy development in Canada, and the first year with wind installations in every province, including BC.

No matter where you are, you can benefit. All types of listed energy companies are positioning themselves to profit from more record-setting years in Canada's clean energy expansion.


Sam Hopkins
Sam Hopkins

P.S. What we see in Canada today represents a broader worldwide trend that finds even petroleum titans like Chevron, Shell, and Enbridge moving into clean energy sectors. Whether they snap up existing projects or start their own, Green Chip International readers are hot on the money trail. To learn more about GCI and follow the next story like Plutonic Power to portfolio gains, check us out today.