Creating Canada's Next Renewable Energy Shark
Source: RenewableEnergyWorld.com
Success in the renewable energy sector is largely determined by having a large balance sheet and a small cost of capital. Small developers can do all the little things right and eventually build a large portfolio of operating projects and an attractive pipeline, but at the end of the day the big utilities will have their way. But does it have to be like this? Economics teaches us that young, fragmented industries eventually experience consolidation, but is it possible that one or more of Canada's renewable energy minnows could become a shark?
Greengate Power of Calgary has been one of the most innovative and nimble power developers in North America. It has the backing of several important institutional investors and through a series of recent deals, President and CEO Dan Balaban has positioned his company for a very bright future.
Despite its friendly business climate, Alberta is not the easiest market for renewable energy developers. The province is home to Canada’s only fully-deregulated electricity market and there are no long-term Power Purchase Agreements (PPAs) to be awarded by public utilities and no Renewable Portfolio Standard (RPS) established by the provincial government. As a result, renewable energy developers must prove the economics of their projects in competition with all other fuel sources such as coal and natural gas, of which the province has abundant supplies. Still, companies such as Enbridge, ENMAX, and TransAlta had recognized and taken advantage of the province’s world-class wind resource and when Balaban founded the company in 2007, Alberta was already home to nearly 400 megawatts (MW) of operational wind projects. Unfortunately, these represented the lowest-hanging fruit and any new wind power would cost more to install. [Full Story]
