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Jan Paulin has known highs and lows of wind energy business
By Craig D. Rose
UNION-TRIBUNE STAFF WRITER
http://www.signonsandiego.com/news/business/20060530-9999-1b30paulin.html
May 30, 2006
As a sailor, pilot and entrepreneur, Jan Paulin uses wind for recreation, transportation and occupation.
The 55-year-old chief executive of La Jolla's Padoma Wind Power says his fascination with wind and sky began early in life, when he dreamed of being a military fighter pilot. The dream ended with a boyhood eye exam and a prescription for glasses.
These days, Paulin is piloting Padoma through what might be described as a pleasant storm: The wind energy business is booming as fossil fuel costs remain high and concerns about the environment grow.
The boom is being driven by the growing number of state mandates requiring that a fixed percentage of electricity be generated from renewable sources, including wind.
The industry is also getting a strong lift from a federal production tax credit passed last year of 1.9 cents per kilowatt hour for wind projects. The credit makes the price of wind power competitive with the cost of electricity generated by burning natural gas, which has become the fuel of choice for conventional power plants.
But the boom has put companies like Padoma – which has just seven employees – in a bind.
Where wind energy projects once involved say 15 to 25 megawatts of wind power and costs of perhaps $25 million, they now typically involve upward of 150 megawatts and cost hundreds of millions of dollars.
What's more, said Paulin, the boom in wind projects has led to a wave of mergers and acquisitions, along with the entrance of large Wall Street players into the business.
“Padoma doesn't have that kind of capital,” said Paulin, who predicted his business will be absorbed by a larger company.
But what the company does have, he quickly added, is vast experience in the wind business among its top officers.
In many ways, Paulin has the perfect résumé for navigating the changes Padoma needs to make.
Twenty years ago, long after his dream of being a pilot died, Paulin was an attorney in Denmark doing international deals for a wind turbine builder that has since evolved into Vestas, the world's largest manufacturer of the machines.
With most of its sales in California, the manufacturer was financing many of its deals through PrivatBanken, a Danish bank with offices in New York.
Within a couple of years, Paulin was recruited by the bank to be its general counsel, just in time for one of the wind industry's periodic lulls.
Because of mechanical problems with the turbines two decades ago and inexperience in project development, the business lost hundreds of millions of dollars in the late 1980s.
“For a couple of years, I did little but restructuring,” Paulin said.
In the course of that work, Paulin learned another lesson: “Foreign banks tended to get the worst deals, the leftovers not taken by U.S. banks.”
But it was good experience: pick a snag or hassle in the wind energy business and it's likely Paulin has dealt with it. Not to mention the hassles of commuting to his job in mid-Manhattan from a home in Princeton, N.J.
Paulin is a polite type with a stunning memory for dates and events that prove pivotal, at least on a personal level.
He can recall, for example, arriving at the office on a particularly hot day, drained by the commute before the start of his workday.
“I would be less than forthright if I said it did not occur to me that this was not the smartest move,” he said.
The sweaty, long commutes left him open to the prospect of a move. So when an opportunity to join San Diego-based SeaWest Windpower as general counsel came along, he jumped at it.
Paulin figured he couldn't lose.
“I thought that if I didn't like the position, I could always sit for the California Bar and get a real job,” he said.
The change proved a tonic in more ways than the weather. Instead of fixing deals, Paulin found himself making them. But again the industry went from phenom to funk.
After a high profile wind energy venture failed after a public offering, Paulin said most institutional investors fled the industry.
“There was a period when you couldn't say wind without being thrown out of the room,” he said.
That began to change about six years ago, when General Electric moved strongly into the business and the industry began to adopt variable speed turbines.
Since then, the industry has been in boom mode, with an annualized U.S. growth rate of 29 percent over the past five years, according to the American Wind Energy Association.
But as the business boomed, things soured for Paulin at SeaWest, and in the summer of 2001, he and two other top executives – Jeffrey Marks and Gary Dodak – left the company during a corporate shake-up.
Within days, the three joined to form Padoma. Within a month, the company had its first deal.
Paulin says Padoma has since been involved in some 500 megawatts of wind turbine projects. Each megawatt of wind power can provide electricity for 250 to 300 homes, depending on average wind speed.
Marks said the trio has a terrific blend of skills, dating back to their days at SeaWest. Dodak knows operations, Marks knows finance, and Paulin's strength is cutting the deals, Marks said.
Later, Jerry Fuchs joined the company as a senior vice president, bringing what Marks described as an encyclopedic knowledge of the U.S. wind energy industry.
Padoma generally gets its projects by winning a competitive bidding process. The company does permitting, site acquisition, purchases the turbines needed and oversees construction of its wind farms. Then it typically sells the completed projects to companies specializing in operating the farms.
“Jan is a tough negotiator because he does not flinch after he carves out a position,” Marks said. “He is good at the chessman's view of the board, so you always want him in the boardroom for negotiations.”
Ron Fawcett, a former chief executive of SeaWest, agreed.
“Jan is one of the best transaction guys I know,” Fawcett said. “He is very good at the art of the deal.”
But he has his weakness, Fawcett added.
“Jan is a terrible golfer,” he said. “We played with him in Scotland and after he whiffed on the first tee four times, we told him to go for a drink.”
The U.S. wind industry this year is expected to have its best year ever, with an projected $4 billion of investment and 3,000 megawatts of turbines planned for installation.
But the bullish pace has exhausted the ability of turbine manufacturers to keep up with the demand and has greatly increased the cost of equipment. In that environment, the companies with the deepest pockets have a lock on supply of the critical machines.
So Paulin expects Padoma to merge with a larger company sometime in the next two years.
“You always want to align yourself with the biggest balance sheet,” Paulin said. “We have projects we could build, but we can't get the turbines.”
But the once-frustrated fighter pilot has fulfilled his dream of flying airplanes, albeit far more modest civilian aircraft. And he says he takes particular satisfaction from the business he ended up in.
“I remember driving in New Mexico and seeing one of our projects with 120 turbines in the setting sun,” he said. “It's a monument to all the hard work that went into the project. And it's satisfying to be something that is good for me as businessman and good for society.”
Canada lagging in wind power, Wind Energy Association chief says
http://money.canoe.ca/News/Other/2006/05/30/1606723-cp.html
TORONTO (CP) - Canada has "probably the best wind resource in the world" but lags behind other developed countries in generating electricity from the air, the head of the wind industry's national organization told a Bay Street crowd Tuesday.
"Wind energy is increasingly cost-competitive . . . and will clearly become more so," said Robert Hornung, president of the Canadian Wind Energy Association, but development depends on a "stable policy environment."
He observed that nuclear power and energy projects in the oilsands and offshore wouldn't have been developed without government involvement, and cited wide public and political support for wind energy.
While wind power supplies 20 per cent of the electricity demand in Denmark and five per cent in Germany, Canada currently has 944 megawatts of wind power representing 0.4 per cent of demand, Hornung told an Economic Club of Toronto lunch.
That's expected to swell to at least 9,000 megawatts by 2015, or about three per cent of demand.
If this seems negligible, "natural gas today contributes four per cent of Canada's electricity, and people seem to think natural gas is an important player," Hornung said, adding that the wind might eventually generate one-fifth of the country's electricity.
"Canada's starting pretty far behind a lot of other countries, and even with the type of growth that I'm talking about Canada will move maybe to the middle of the pack," behind countries that regard wind power as "an industrial opportunity . . . a key technology for the 21st century," he said.
"China wants 30,000 megawatts of wind energy by 2020; the U.S. is putting in 10,000 megawatts of wind energy in the next three years."
In addition to its "very small" environmental impact, wind power is "a significant form of economic revitalization" for rural areas afflicted by feeble farm incomes and declines in other resource industries.
It also provides certainty about future costs, unlike other energy sources: "When you construct a wind farm, you have a really good sense of what that power's going to cost for the next 20 years."
It also complements hydroelectric generation, especially in the winter when winds are stronger but water supplies are lower, Hornung said. And although the wind is more variable from day to day, on an annual basis it's more consistent than water power, which is affected by dry years.
Large wind turbines have little effect on bird life and new models have little noise impact, Hornung added.
As for complaints that wind-power farms are eyesores, "different people have different opinions," he said.
"That's a subjective issue; the only way we can deal with that is on a project-by-project basis; you have to consult with communities and try and find solutions."
He said one of the association's 230-plus corporate members, which range from tiny start-ups to industrial giant General Electric (NYSE:GE), computed that its wind project required 77 approvals from various levels of government, ranging from municipal zoning to federal aircraft-safety requirements.
Ottawa currently provides a subsidy of about one cent per kilowatt-hour under the Wind Power Production Intitiative designed to help the the country's greenhouse-gas-reduction commitments under the Kyoto accord.
Asked about the attitude of the new federal government, Hornung responded that "we don't know yet," but "we do know that there's actually broad support for wind energy within the Conservative caucus" and wind energy accords with stated Conservative priorities in terms of clean air, rural development and innovative technology."
Meanwhile, he noted that the Quebec government has a target of 4,000 megawatts of wind-generated power by 2015, while Ontario aims for 2,700 megawatts by 2010 and Manitoba has a target of 1,000 megawatts by 2014.
Alberta currently leads the country with about 285 megawatts, according to association figures, ahead of Quebec with 212, Saskatchewan with 172 and Ontario with 122.
Talk swirls of Great Lakes offshore windmills
By TODD RICHMOND
2006-05-28 13:27:00
Source:
http://money.canoe.ca/News/Sectors/Energy/Emera/2006/05/28/1602420-ap.html
ALGOMA, Wis. (AP) - Little red lighthouse. Beach boardwalks. The blue-green waters of Lake Michigan stretching to the horizon. Just another pretty-as-a-postcard day on the shores of this sleepy town of 5,700 about a half-hour east of Green Bay.
But changes could be in store for Algoma and other towns and cities that line the Great Lakes. Energy experts are set to meet in Madison and Toledo, Ohio, next month to talk about the prospects of implanting giant electricity-generating windmills in the Great Lakes.
Advocates say offshore wind turbines would be a power generation jackpot. Opponents are cringing, fearing the windmills' impact on the lakes' aesthetics, tourism and fishing.
"I'll fight this every way I can," said Algoma alderman Ken Taylor, chairman of the city's marina committee. "The beautiful view we have would be destroyed ... how many (tourists and fishermen) are going to come here if we have these things off our coastline?"
Offshore turbines would be a risky undertaking for any utility. To generate a sizable amount of power, a company would have to install rows of them, either anchoring them to the lakes' bottom in relatively shallow water or allowing them to float. Pricetags could stretch into the tens of millions of dollars.
The turbines would be huge, towering as high as 120 metres with blade spans wider than a football field, said Walt Musial, senior engineer and offshore programs leader for the National Renewable Energy Laboratory, a U.S. Department of Energy contractor. Musial is scheduled to make a presentation at a June 14 conference at the University of Wisconsin-Madison.
The payoff would come in increased energy production, Musial said. Winds over water are generally stronger, less turbulent and more consistent than on land. Major population and industrial centres such as Cleveland, Chicago, Gary, Ind., and Milwaukee sit on the Great Lakes' shores, reducing the need for long-distance transmission and providing an energy boost at the same time, he added.
"Offshore machines can make about twice as much as onshore," Musial said. "It's a potentially big resource for renewable energy. You want to generate the electricity close to where people are going to use it."
The concept isn't new. Several European countries, including Denmark and Great Britain, have developed wind farms in the North and Baltic seas, said John Dunlop, senior outreach representative with the American Wind Energy Association.
Houston-based Superior Renewable Energy plans to build a 170-turbine farm in the Gulf of Mexico about 16 kilometres off Padre Island. Another 50 turbines are planned off Galveston, Texas, and at least two other offshore projects have been proposed on the East Coast - one off Long Island and another off Cape Cod.
But the idea has been slow to catch on in the Great Lakes region.
Green Energy Ohio last fall built a wind-monitoring tower about five kilometres off Cleveland's Lake Erie shoreline to test the lake's potential for offshore turbines. But the state is looking toward land-based turbines, said Merle Madrid, a spokesman for the Ohio Department of Development.
"Offshore siting, particularly in fresh water environments, contains too many technical unknowns at this time, though we continue to be engaged in the research," Madrid said.
Officials with both the Michigan and Wisconsin public service commissions say they haven't seen any proposals for offshore wind in the Great Lakes.
Still, a 2004 report commissioned by the Wisconsin Focus on Energy Program, a partnership between the state and utilities to promote renewable sources, to study Lake Michigan wind speeds and shallows found the southern coastline holds great promise.
Seventh Generation Energy Systems, a nonprofit engineering firm, built a $114,500-US tower three kilometres off Racine's Lake Michigan shoreline last August to monitor wind speeds for three years. The state chipped in $49,000 US for the project.
Seventh Generation executive director David Blecker said the firm has no interest in building offshore turbines, but would-be developers could use the wind-speed data.
"The Europeans have shown again and again it can make sense," Blecker said.
Anyone who attempts an offshore wind farm in the Great Lakes would face formidable hurdles. Aside from the cost of construction - the Padre Island project is expected to ring in at $1 billion to $2 billion US - developers also would have to navigate a web of federal and state permits.
The U.S. Army Corps of Engineers has jurisdiction over structures in the lakes, said Steven Metivier, a corps biologist in Buffalo, N.Y. Developers also would have to lease tracts of lake bottom from the states, which hold the underwater property rights, Metivier said. Plus, state utility regulators would have to sign off.
Energy costs drive state toward wind power
Conservationists have opposed farms
By RAY HENRY
The Associated Press
May 28. 2006 10:00AM
Wind ripples along the Rhode Island coastline and over New England ridgetops. Harnessed by turbines, it could provide a clean source of affordable energy for a state that has some of the most expensive electricity bills in the nation.
But relatively few turbine blades are spinning in New England, and several proposals have hit opposition from conservationists who fear the massive towers will ruin scenic landscapes and kill birds.
Rhode Island Gov. Don Carcieri is gambling that he can overcome that opposition and build enough windmills to satisfy 15 percent of the state's energy needs in five years. Environmentalists say the plan is workable but ambitious considering that Rhode Island would essentially be starting from scratch.
"We're not talking about a major energy-consuming state," said Jeff Deyette, an energy analyst for the Union of Concerned Scientists, a nonprofit advocacy group. "When you talk about the percentages, it's something that's probably achievable, even if you put just one or two small or medium-sized projects in place."
Power plants that run on fossil fuels enjoy an advantage over wind turbines: coal and natural gas can be transported to the plant. Wind turbines can operate only in specific locations that are wind-swept and near transmission lines. Often, these are spots prized by others.
---ADVERTISEMENT---
Aesthetic and environmental concerns have been raised about a proposal to build a massive windfarm off Nantucket Sound in Massachusetts. Another developer recently proposed building up to 120 turbines in nearby Buzzards Bay. There are some smaller projects - mere handfuls of turbines -in Hull, Mass., near Mount Wachusett in Princeton, Mass., and even a single turbine along Interstate 93 in Boston's Dorchester neighborhood.
The best spots to build on land are ridgetops above 3,000 feet, said Robert Charlebois, managing director at Catamount Energy in Rutland, Vt.
"Therein lies the rub," he said. "Once you're on the ridgetops, you run into these conflicts between those who want to preserve ridgetops from ever being developed and those that think windfarms support a huge public good."
His firm found itself embroiled in conflict after it proposed building 19 turbines on Vermont's Glebe Mountain, a ridgeline that includes part of the Magic Mountain ski area.
Jim Wilbur, co-chairman of the Glebe Mountain Group, said Vermont law protects most mountaintops from commercial development, and he doesn't see why wind developers should receive an exemption. The amount of energy produced by Catamount's 400-foot-tall turbines wouldn't compensate for a blighted view, he said.
"Let's just work out a broad energy policy before you start (tampering) with mountaintops you thought were important enough to protect," Wilbur said.
Catamount recently decided against pushing forward in the face of opposition and the state's rejection of another, smaller project that had more support.
"We have concluded that Vermont just doesn't want wind projects," said Charlebois, whose company is now focusing on projects elsewhere.
It could take as many as 150 windmills to reach Carcieri's benchmark of generating 15 percent of Rhode Island's energy needs. The state has to overbuild because turbines normally operate at about a third of their capacity because of varying winds, said Andrew Dzykewicz, the governor's chief energy adviser.
One of Dzykewicz's first tasks is to pay for a statewide map identifying sweet spots for wind. Once that's complete, analysts can cull a list of sites where the local community is supportive.
State authorities are discussing whether a state agency should permit the wind turbine projects, sparing private developers who could spend thousands of dollars on projects that may never get government approval. Since public reaction is uncertain, Dzykewicz said having the government handle permitting could increase interest in developing wind power in Rhode Island.
"It's ideal," Dzykewicz said. "Whether people are going to want them there is another issue."
His office is taking steps to reduce public opposition. Dzykewicz said he would like to scatter individual turbines across the state rather than build massive windfarms that take up acres of land and might rile neighbors and conservationists.
Where turbines aren't feasible, solar or hydropower projects could help the state reach Carcieri's 15 percent goal for renewable energy, he said.
"This is going to be a whole bunch of singles, not a home run,"Dzykewicz said.
Source:
http://www.concordmonitor.com/apps/pbcs.dll/article?AID=/20060528/REPOSITORY/605280373/1002/NEWS02
Seaside Town Touts Wind Turbine Benefits
Turbines Save Town $500,000 In Annual Energy Costs
http://www.thebostonchannel.com/news/9262885/detail.html
US wind co. doing business in China:
VITASTI INC (VITS)
iHub Board:
http://www.investorshub.com/boards/board.asp?board_id=5468
Vertical Axis Wind Turbine
research:
http://www.eia.doe.gov/cneaf/solar.renewables/renewable.energy.annual/backgrnd/fig22.htm
http://thefraserdomain.typepad.com/energy/2005/11/new_vertical_ax.html
http://www.wired.com/news/technology/0,1282,69492,00.html?tw=rss.PLANET
Stock:
Mass Megawatts Wind Power, Inc. (MMGW) http://www.massmegawatts.com/
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