Monday, December 21, 2009

600 MW Deal Coming to Texas

A-Power Energy Generation Systems Ltd. announced that Shenyang Power Group (SPG), together with affiliates of U.S. Renewable Energy Group (US-REG) and Cielo Wind Power LP, have entered into a definitive agreement for their ownership of a project company to develop a 600-megawatt (MW) wind farm in Texas. The signing ceremony was held this in Washington D.C.

A-Power is a majority shareholder of SPG. A-Power has been chosen to supply wind turbines to this project, which is expected to be one of the largest wind farms in the U.S. No details of the agreement were disclosed. On October 29, 2009, A-Power announced the signing of the framework agreement of the joint venture among SPG, affiliates of US-REG and Cielo Wind on the Texas wind farm.

The terms of the agreement include the purchase of up to 240 units of A-Power's 2.5-MW wind turbines. The agreement also includes a delivery schedule starting in March 2010, subject to SPG securing third-party financing, among other conditions. The project, which will be 49% owned by SPG, with the rest of the equity ownership held by US-REG and Cielo Wind jointly, is expected to be one of the largest wind farms in the United States.

The project is expected to cost in total approximately US $1.5 billion, a portion of which is designated for wind turbine purchases, and its establishment is subject to, among other things, further due diligence by the parties, the securing of financing from commercial banks in China, and other project development conditions. This project is in line to receive U.S. tax credits, which has prompted criticism from Senators and business leaders who are worried that the tax credits and stimulus grants the project is in line for will in effect leave the country and create jobs in China, not in U.S. as they are intended to do.

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