Cannon Power Group has closed the sale of 20 years worth of renewable energy to Southern California Public Power Authority (S.C.P.P.A.) for $547 million – the largest transaction of its kind in the power industry.
Cannon Power will generate energy from its 262-megawatt Windy Flats wind farm in Goldendale, Washington under a long-term power purchase agreement between the two parties in 2009.
The $1.2 billion project went online earlier this year and is part of Cannon Power’s 500-MW WindyPoint/Windy Flats project, which is expected to be completed in 2011. The wind farm is one of the largest wind farms in the United States, covering more than 26 miles of land along Columbia River.
The power authority will prepay, at a discounted price, for Windy Flat’s 20-year block of wind energy, representing more than 70 percent of the project’s estimated annual production. Cannon Power will also sell the balance of power at a formula-based price.
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In addition, the S.C.P.P.A will gain the option to buy the whole wind power project after five years.
“This uniquely structured transaction is a true win-win for both parties. It combined S.C.P.P.A’s low-cost, tax exempt bond financing with the federal stimulus grant program to produce a very attractive long-term cost of renewable power,” said Gary Hardke, president of Cannon Power Group.
In August, S.C.P.P.A. sealed its 20-year bond financing at a price less than four percent, while Cannon Power bagged $220 million in federal stimulus grants for the project.
“It allowed the parties to navigate the credit crisis and take advantage of the low interest rate environment,” said Tom Trimble, head of the Renewable Energy Practice at Washington, D.C.-based Hunton & Williams, who represented Cannon Power in the transaction.
Cannon Power has a portfolio of over 30 utility-scale wind projects in the United States, India, Switzerland, Spain, Italy, Turkey, Greece and Croatia. The company was also responsible for the 1,000-MW Aubanel wind project in Baja California, Mexico.
In 2007, Cannon Power ventured into the solar power industry with the establishment of its solar project division, Cannon Solar Partners.
S.C.C.P.A.is a joint power authority, consisting of 10 municipal utilities and one irrigation district, that provides electricity to about 2 million customers.
