Owner of mothballed wind turbines on Chatham Islands finally put in liquidation

Thursday 3rd August 2017

Chatham Island Wind, an Australian-owned business that had promised to slash power bills for islanders dependent on diesel generators, has been put into liquidation three years after its parent went into voluntary administration.

The two French-designed 225kW turbines were installed on land leased from Chatham Mayor Alfred Preece after the local utility, Chatham Islands Electricity, signed a 20-year build own operate transfer (Boot) agreement with Chatham Island Wind in 2010. The contract was terminated in 2014 after the parent of Chatham Island Wind, now known as BlueNRGY Group, got into financial difficulties. While BlueNRGY emerged from administration in 2015, efforts to renegotiate the agreement on terms more favourable to the local community and get the turbines running again were unsuccessful.

The second turbine was dismantled this week and the equipment is now in the hands of liquidator Vivien Madsen-Ries of Deloitte, who was appointed after Inland Revenue sought to have Chatham Island Wind wound up. As of last year, the local utility had planned to take possession of the turbines and invest in battery storage but nothing came of that. Chatham Islands Electricity wrote off the value of the wind turbine resource consents last year.

"We've discontinued our relationship. There's a significant amount of money that needs to be expended on the turbines," said Brian Harris, chief executive of Chatham Islands Enterprise Trust, which oversees the power company as well as the airport, forestry, port and fishing quota companies. Any proposal to get the turbines up and running again "needs to be cost-effective and reduce energy costs on the island."

BlueNRGY, which has stock that trades on the over the counter 'pink' market in the US, where managing director William Morro is based, didn't respond to requests for comment but it may be focused on bigger issues. The stock was last at 10 US cents and has been as high as 80 US cents this year, although it trades infrequently.

BlueNRGY describes itself as "a pioneer in providing internet-of-things (IOT) technologies to the renewable energy sector." According to its 2016 annual report, when it emerged from administration in 2015, several of its businesses continued to post losses, leaving the company struggling to continue as a going concern. It also faced a class action lawsuit, which it was in the process of settling in March this year.

In May, BlueNRGY announced a strategic realignment of its businesses, "closing its operations and maintenance service offerings globally" and saying it would no longer provide engineering, procurement and construction services. Those parts of the business had included the Chatham Islands wind turbines. Its focus is now on its Draker and Inaccess software platforms designed to help manage portfolios of renewable assets.

Many Chatham Islanders use solar cells along with diesel generators to power their businesses and homes. Those connected to the power lines paid up to $1.02/kWh for electricity, according to a Martin Jenkins report in 2014, the highest in New Zealand, eating up the profits of power-dependent companies and hindering economic development. That's encouraged interest in alternative sources of electricity including micro-hydro and biogas energy systems but it has also presented the Chathams with some false dawns.

One of those was wave power. In 2010 the then Energy Minister Gerry Brownlee gave a $2.16 million grant to Chatham Island Marine Energy, a company that planned to "install a shore-based device to capture wave energy". It didn't get built and that company is no longer registered, although its owner, Pacific Marine Energy, is still registered.

The grant came from the $8 million Marine Energy Deployment Fund, set up by the previous Labour government in 2007 and administered by the Energy Efficiency and Conservation Authority until 2011. EECA's website says that "while some useful lessons were learned, none of the six projects selected for funding have gone ahead."

Still, Mayor Preece is optimistic about the prospects of cheaper power on the Chatham Islands. "There's no silver bullet. They talked about hydro for about 50 years," he says. "There's always been a myth that the wind blows all the time in the Chathams but it doesn't." The wave energy proposal "didn't have any financial credibility."

Preece says he is travelling to the US in the next week or so and is hoping to catch up with BlueNRGY's Morro or his Australian executives about the wind turbines, which he says are "very good units" that could "work extremely well with the improvements in battery technology." He cites the contract won by Elon Musk's Tesla to build the world's largest lithium ion battery for South Australia as part of the state's renewable energy strategy.

The turbines "aren't scrap metal but there's a use-by date. It's a salty, windy atmosphere the turbines have been operating in," Preece said.

(BusinessDesk)

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