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Sunday, 17 March 2013 22:00

Multimillion-dollar deal to benefit distributed wind energy development

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Clean Green Energy LLC recently secured $25 million in funding to launch production and distribution of its Wind•e20 vertical axis wind turbine. Clean Green Energy LLC recently secured $25 million in funding to launch production and distribution of its Wind•e20 vertical axis wind turbine. COURTESY PHOTO

The movement toward distributed power generation has not been easy, especially for companies in the renewable energy sector.

But two Michigan-based companies see a future in the distributed energy model that gives business owners and residential energy customers the ability to generate electric power on-site and further reduce their energy bills with major utility providers in the state.

The key to the projects’ success has been working with utilities to develop power purchase agreements (PPAs) that will work for people looking to install the renewable energy systems.

That’s where McKenzie Bay International Ltd. comes in. The holding company, which started in Brighton and for a time operated from the Grand Valley State University Michigan Alternative and Renewable Energy Center in Muskegon, acquires the rights to renewable energy technology and then licenses it to manufacturers, installers and developers.

Under an August 2012 agreement with Brighton-based Clean Green Energy LLC (CGE), McKenzie Bay has exclusive rights to sell CGE’s Wind•e20 vertical-axis wind turbine and to develop power purchase agreements with public and municipal utilities. Along with the deal, McKenzie Bay also secured a 5-percent ownership stake in the company.

CGE recently locked down $25 million in financing for the first production run of its vertical-axis wind turbine, for which officials at McKenzie Bay hope to find buyers.   

While PPAs are commonplace in the solar industry and on large wind farm projects, CGE is taking advantage of these long-term agreements, usually for a period of 20 to 25 years, to make on-site wind power generation accessible to more customers, both commercial and residential.

With the initial funding, CGE plans to manufacture 100 wind turbines and distribute them nationally, said Brian Zaplitny, president and CEO of the company.

Additional financing up to $200 million is earmarked in CGE’s current deal, but the young company is taking it slow and not trying to bite off more than it can chew, he said.

“We’ve really looked at the market and what the need is, and we’ve designed a product that is needed,” Zaplitny said. “We’ll be servicing a customer that in today’s market doesn’t have the capital to pay out for this type of equipment.”

The turbines are 105 feet tall, but instead of the traditional propeller-type blades, CGE’s product uses curved, vertical axis composite blades that can retract in extreme conditions. It can produce 65 kilowatts of electricity, doesn’t require any concrete to be poured for installation and comes with the added benefit of reduced noise compared to traditional turbines, Zaplinty said.

CGE also says it will install the turbines at customers’ locations at its own expense.

Life for McKenzie Bay, a publicly traded, development-stage company in the emerging renewable energy value chain, didn’t start out so smoothly. In August, McKenzie Bay, with the help of CGE and new members on its board of directors, announced it had satisfied nearly $15 million in debt it owed to New Jersey-based YA Global Investments, the main fund of the hedge fund firm Yorkville Advisors LLC.

The original 2005-2006 financial contracts with YA Global provided $6.5 million in funding to McKenzie Bay and were the focus of a 2009 lawsuit that was settled before going to trial, according to release from the company.

According to OTC filings, McKenzie Bay defaulted on a standby equity distribution agreement with YA Global in 2006. The two parties signed a replacement agreement in April 2010, which Zaplitny personally paid off in August 2012, filings stated.

“It has been a long road and a challenging process to get to this point,” McKenzie Bay President and CEO Kevin Cook said in a release announcing the debt settlement. “We’ve said from the beginning that our primary goal was to rescue the company from the financial and administrative disarray that it had fallen into and put it on a path towards becoming a healthy and sustainable business, restoring value to McKenzie Bay for our shareholders. This announcement today represents a major step forward in pursuit of that goal.”

McKenzie Bay was unavailable for comment for this story.

McKenzie Bay relocated in 2010 from Southeast Michigan to MAREC but, in its latest OTC filing from Feb. 14, listed its address as Brighton, Mich. Arn Boezaart, the director of MAREC, said the company recently decided not to renew its lease for office space at the facility.

In the meantime, CGE is in the midst of two marketing campaigns, the “Wind for a Better Community Grant” and “Start Some Good,” as the company prepares to start manufacturing and nationwide distribution. CGE is focusing on schools, businesses and municipal buildings. 

Read 3890 times Last modified on Friday, 15 March 2013 15:35

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