Allco in US wind farming

Weekend Australian
Saturday 23/12/2006 Page: 26

ALLCO Finance plans to build a $2.5 billion wind energy plant in California to take advantage of rising institutional demand for wind investments. It will be the largest wind farm in the US.

Allco global infrastructure chief Nick Bain yesterday said the project would be as much as 75 per cent debt funded. The company was in the process of inviting financial partners to join the venture, he said.

Edison International's Southern California Edison unit will buy the power produced by the plant.

Mr Bain said institutional investors favoured putting funds into wind energy projects because of the steady long-term cash flows provided by the power sales contracts.

Under the Edison deal, California's second-biggest electric utility will buy 1500 megawatts of power for 20 years. Allco said the contract equated to providing power to as many as 1 million Californian households.

The project will be built in Tehachapi, a rural region northeast of Los Angeles where there have been wind turbines since the 1980s. Edison said the project would produce more than twice as much electricity as Rosemead, the biggest US wind farm.

Allco owns 100 per cent of the project but Mr Bain said the company would probably progressively reduce its stake to no more than 15 per cent. Allco has also secured rights to develop wind energy projects in Australia and New Zealand and is in talks to buy wind farms being developed in Europe.

"We like wind because it's an asset class that is in demand, especially in the US," Mr Bain said.

Allco said it expected to generate more than 2500 megawatts at Tehachapi, comprising several smaller projects of about 100 megawatt capacity on average. The wind farms would start operating between 2007 and 2012, it said.

Mr Bain said US and Australian institutions would probably invest in a fund to partner Allco in developing the project.