Aspire Talks With Keewatin’s (KWPW.OB) Chris Craddock

Apr 07, 2009
Author: SCP Editor

Aspire Talks with Keewatin’s Chris Craddock
Interview by Todd M. Pitcher, Managing Partner of Aspire Clean Tech Communications

April 7, 2009 - Canada’s wind power market grew 28.3% year-over-year last year, eclipsing the 2,000MW milestone to post capacity at year end of 2,369MW. Despite the current macroeconomic crisis, the Canadian Wind Energy Association projects that this year installations will exceed last year’s installed capacity which would put it at more than 3,000MW installed.

Research Capital’s Matt Gowing told Aspire recently that he expects the pace for wind installed capacity to quicken in Canada, pointing to the recent proposal for a feed-in-tariff in Ontario, which would be the first such framework in North America. Gowing said that other provinces will be watching this development closely and if a feed-in-tariff is successful in Ontario, we can reasonably expect that to be adopted by the other provinces. The Ontario proposal calls for ¢13.5kWh for onshore wind and could be in place by this summer.

I recently had the chance to talk with Keewatin Windpower’s (KWPW.OB) CEO and founder, Chris Craddock about Keewatin’s business and in particular, about its pending acquisition of Sky Harvest, a private Canadian development-stage wind developer.

Aspire: Hi Chris, thanks for taking the time with us. One of the things that our readership would be interested to know more about is the Sky Harvest acquisition. In particular, why is Keewatin acquiring Sky Harvest?

Craddock: Thanks Todd. As a backgrounder, Keewatin is currently developing a wind project involving government land while Sky Harvest is developing a wind project on private land.  The Sky Harvest project was further along in development and engineering. We felt that we could have the project prepared for a power call in advance of the Keewatin site.

Also, we believe Sky Harvest brings some attractive cost advantages that would enable us to accelerate our business plan.

Aspire: Can you elaborate on that? Craddock: Well, the Sky Harvest development project has certain geographic advantages that will enable us to move at a faster pace through the environmental impact assessments, as well as being more accommodative from a road and infrastructure perspective.

Aspire: Are you still pursuing the Keewatin wind development?

Craddock: Of course. The Keewatin property is a valued and high-end resource. But it will require additional time in planning road activities and to thoughtfully assess and address environmental impact issues.

Aspire: The principal supplier of electricity in Saskatchewan, which is where the Keewatin and Sky Harvest developments are located, has recently made a base load power call, and a peaking power call. It currently has about 172MW of wind power in service, but it has indicated that it intends to develop a wind power deployment strategy in 2009. Last year, it invited developers with experience in wind monitoring in Saskatchewan to participate in the Saskatchewan Wind Data Study – I believe you were invited to participate in that. Do you expect a wind power call in the near term? If so, when do you expect submission and commissioning?

Craddock: The answers to those questions are subject to the utility in Saskatchewan determining a time frame.

Aspire: I understand. Based on comments on its website, its’ stated objective is to announce a deployment strategy this year, so it seems to be a noncontroversial expectation that a power call for wind is eminent.

Craddock: It may seem that way Todd, but we wouldn’t propose to make any forecast on timing. Our objective is just to be prepared to respond if and when a power call for wind does come. We have more than three years of wind data that shows promising results. We have engaged the services of Golder Associates, which is performing environmental studies and analysis. We have instructed our engineers at Genivar to move ahead with the sight planning, turbine placements to achieve maximum yield and all of this helps us to lock in our cost structure ahead of erection of turbines.

Aspire: It sounds like you are prepared. Research Capital’s Matt Gowing makes a compelling case in a recent report that valuations, from an EV/MW basis, are most impacted amongst Canadian wind energy firms based on projects in development. If that analysis is correct, then the timing is probably better than it ever has been to invest in Keewatin ahead of a power call.

Craddock: As I am sure you can understand, I am not going to make any comments about valuations, when and whether it is a good time to invest in our business. I can tell you that I think we have some terrific prospects for wind development in Saskatchewan.

As I mentioned before, the SkyHarvest acquisition makes sense because it is both an attractive project and also because it will help us to accelerate our business. We have made a strategic decision, which I believe is the right one, to focus on building out one project at a time, as opposed to trying to do multiple projects at once. I think the latter approach increases the execution risk. So the approach we are taking, I think, is the right one, and the one that will put us in the best position to create value as a business and to our shareholders.

Aspire: That is a smart approach, and one that I think will resonate with investors given the current economic environment. And what then, are your plans for the Keewatin project?

Craddock: It will require more extensive environmental work, but we think it has tremendous potential.

Aspire: It sounds like it. Between the two projects, Keewatin is targeting 300MW of wind capacity, which is quite a lot, when you consider the fact that the entire province of Saskatchewan has 171MW capacity installed.  And from what we have seen on net capacity and wind resource maps in the province, it looks like there is a great opportunity. Thanks for the time Chris.

Key Milestones Keewatin and Sky Harvest have Achieved to Date

• Keewatin and Sky Harvest are participating in the Saskatchewan Wind Power Integration and Development Study
• Keewatin and Sky Harvest have provided data to Genivar, a Calgary-based engineering firm that is conducting the study on behalf of the utility to define a productive plan for wind power in Saskatchewan
• Keewatin has entered into a letter agreement dated March 26, 2007 to acquire 100% of the issued and outstanding common shares of Sky Harvest Windpower Corp. ("Sky Harvest") a private Canadian company incorporated under the federal laws of Canada. Sky Harvest holds the rights to construct a wind power facility on approximately 8,500 acres of land located in south-western Saskatchewan. Sky Harvest has completed a wind resource assessment on the property that demonstrates that the potential wind resource exceeds the minimum capacity factor necessary to justify the planning and construction of a 150 megawatt wind power project. The assessment was completed by Genivar of Calgary, Alberta.