POWER July 2014 - 61

POWER BRITISH COLUMBIA
Lex Engineering design for a BC Hydro 69 kV, 25 MVA substation at
Langley, British Columbia. Photo courtesy of Lex Engineering.
2006 was more developer-friendly showing a lower attrition rate,
2008 was tougher and had a higher attrition rate. "
While M&A activity in the IPP sector was robust from 2010 to 2013,
most opportunities for a well-capitalized buyer to snatch a long term
EPA at an attractive price have passed, even with Site C on the horizon.
" Site C should have little impact on M&A activity in respect of
current projects with EPAs, as the current IPPs are locked into EPAs
ranging from 25 years to 40 years, guaranteeing their cash low, " said
G. Henry Ellis, a partner at Gowling Laleur Henderson LLP's
Vancouver ofice.
As BC Hydro moves forward with Site C, it will likely dampen the
prospects of IPPs in the province according to Ellis: " The bigger
issue is that as Site C progresses, BC Hydro will reduce its emphasis
of engagement with IPPs, as it is conident that Site C
will supply most of the incremental power required for the next
20 years. The government's focus on LNG, coupled with the results
of existing power calls and BC Hydro's current interest in cancelling
some EPAs where the opportunity presents itself, suggests
that the government will place less emphasis in the future on contribution
from IPPs and greater reliance on Site C for the extra
required capacity. "
Vancouver-based Alterra Power, which plans on delivering its 62
MW Jimmie Creek run of river hydro project in 2016, is in many
ways the quintessential example of an IPP navigating the cocktail
of confusion in BC through geographic diversiication and derisking
its assets. However, the company has a desire to continue
its growth in BC if political decisions allow it. " If there is a call for
more power input, Alterra is ready, " commented Carson.
Regardless of the course of action for Site C, opportunities for IPP
developments, albeit small ones, remain under BC Hydro's Standing
Offer Program, SOP. The SOP is designed to allow small projects a
streamlined, ad-hoc EPA process with BC Hydro, rather than having
to bid through a power call. Recently, the size of projects allowed
under the SOP was increased from 10 MW to 15 MW and the government
is reviewing the program with the relevant stakeholders
to create a more impactful program. " The IRP may have shut the
front door to IPPs; the side door is still open via First Nations opportunities,
as well as the SOP, " observed Michael Walsh, principal
and international managing partner at Midgard Consulting.
While the SOP will be an option for IPPs, it will be a niche market
and will take the right developer to execute the project according
to Mark Bohn, managing partner at Travelers Capital Corporation.
" There are some mid-market developers that have the experience
July 2014
Global Business Reports // POWER BRITISH COLUMBIA
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POWER July 2014

Table of Contents for the Digital Edition of POWER July 2014
