Danish power giant to establish 25-MW wind farm in Ilocos Norte

Northwind Power Development Corp., a Danish power firm, will build a 25-megawatt (MW) wind farm in Bangui Bay, Ilocos Norte under a build-own-operate scheme (BOOS), the Department of Energy (DOE) reported yesterday.

DOE said Northwind will also construct a 69-kilovolt transmission line to complement the wind power project.

The project, estimated to cost some $25.064 million, will be financed by the Danish International Development Agency (DANIDA). Construction will start in the first or second quarter of next year, and will be completed in 2004.

Northwind and Ilocos Norte Electric Cooperative (INEC) together with the National Electrification Administration (NEA) signed yesterday a memorandum of clarification (MOC). The signatories to the contract are Northwind president Niels Jacobsen, INEC vice president Lorenzo Rey Ruiz and Energy Secretary and NEA chairman Vincent S. Perez

INEC and Northwind entered into a renewable energy sales agreement (ESA) on July 19, 2002. The agreement states that Northwind will supply electricity to INEC for 20 years based on bundled tariff rates. But with the passage of Republic Act 9136 or Electric Power Industry Reform Act (EPIRA), the two power firms will have to clarify some provisions in their contract so that its terms will be compliant with the new power law.

The NEA and the DOE said there was a need for INEC and Northwind "to acknowledge and recognize in the ESA the structural changes introduced by Republic Act 9136 or EPIRA specifically in the unbundled tariff structure of the generation companies and the National Transmission Corp."

Despite the effects of the unbundled tariff structure on the contract signed by the two parties, they agreed that electricity purchased by INEC from Northwind will always be at a discount compared to the rates of the National Power Corp. (Napocor). Perez said "this signing is very historical because this is the first wind farm in the Philippines."

Aside from the Northwind project, the PNOC-Energy Development Corp. is also planning to construct a 40-MW wind power project in Burgos, Ilocos Norte. These wind power projects, if they push through, will be the largest wind farm projects in the entire Asia. "But this project is more significant because it is a project that did not require any guarantee from the government. There will be no stranded costs too. Instead, we are guaranteed of a very low electricity cost," Perez said.