Canada - The Best Wind Energy Stocks

Wind energy is booming in Canada and a growing number of new companies are becoming involved. For investors who are prepared to do some research, and who are aware of the risks, it is a chance to buy into some highly promising companies at a very early stage in their development.

In 2010 Canada installed 690 MW of new wind power capacity, representing an investment of C$1.7 billion. This was down from 950 MW in 2009. But at a time when financial instability meant that project financing was often hard to obtain, it was still the second best year ever.

At the end of 2010 Canada had 4,009 MW of installed wind power capacity, placing it ninth in the world, up from 11th at the end of 2009. (By May 2011 the figure had risen to 4,588 MW.)

The growth has been dramatic. Wind energy capacity in Canada has increased more than 20-fold since 2001, and nearly 10-fold since 2004.

A record 1,000 MW is expected to be installed in 2011, and already more than 6,000 MW has been contracted to be built over the next five years, with much more expected. Many believe the country will have 12,000 MW of capacity by 2015.

The Canadian Wind Energy Association has a target that 20 per cent of Canada's electricity demand should derive from wind energy by 2025, implying capacity of around 55,000 MW.

Unlike many other countries, the initiative for much of this development has come from the provinces, rather than at the federal level.

In 2009 the Ontario government introduced North America's first feed-in tariff program, and in 2010 more than 1,500 MW of wind energy contracts were awarded under this scheme.

In 2010 Nova Scotia decreed that 25 per cent of the province's electricity needs would be supplied by renewable sources by 2015. In British Columbia the government aims to achieve energy self-sufficiency by 2016, with 50 per cent of new generation to come from clean energy sources.

Quebec has a target of 4,000 MW of wind energy by 2015. Manitoba aims to have 1,000 MW of wind energy capacity by 2016. New Brunswick wants 10 per cent of its electricity to come from new renewable sources by 2016.

So the news is good. But the risks are high, and investors need to be aware that these are speculative investments.

I have identified seven small stocks that are developing wind power resources. Most are still at the development stage. Some have no revenues, let alone profits. All of them face many hurdles, not the least of which will be raising large amounts of finance for their projects.

Yet the rewards for success could be high, and investors, who buy in at this early stage, could be well rewarded.

Here are the seven stocks:

Finavera Wind Energy (FNVRF.PK, FVR.V) - has a 25-year power purchasing agreement with British Columbia Hydro and Power Authority for four developments. Financing has been agreed for the first of these - the 77 MW Wildmare Wind Energy Project - and construction is expected to start later this year.

NaiKun Wind Energy Group (NKWFF.PK, NKW.V) - is developing a 396 MW offshore wind project off the Northwest coast of British Columbia. However, the company is struggling to find a prospective purchaser of the power, after it was rejected by British Columbia Hydro and Power Authority.

Sea Breeze Power (SBEZF.PK, SBX.V) - has a 20-year power purchasing agreement with British Columbia Hydro and Power Authority for its planned 99 MW Knob Hill Wind Farm on northern Vancouver Island. The first electricity delivery is expected late in 2012.

Shear Wind (SWDSF.PK, SWX.V) - Phase 1 of its 62 MW Glen Dhu Wind Farm in Nova Scotia was fully commissioned in March 2011, and the company envisages the eventual addition of a further 170 MW in capacity, over two phases. It is working to obtain regulatory approval for its 100 MW Willow Ridge project in southern Alberta. Also in the pipeline is the 120 MW Coyote Ridge project in southern Alberta.

Sky Harvest Windpower (SKYH.OB) - is in the advanced engineering stages for the 175 MW Sky Harvest development in southwest Saskatchewan. It is also looking for partners for a second development in the same region, the 175 MW Keewatin/Matador project.

Western Wind Energy (WNDEF.PK, WND.V) - this very interesting company is already making money from wind energy, with two developments in California, the 30 MW Mesa project and the 4.5 MW Windridge project. Last December it started construction of its 120 MW Windstar project, also in California, and has signed a Power Purchase Agreement with Southern California Edison Company. It has other projects in the development stage - in Canada, the US and Puerto Rico - and believes it could have more than 720 MW of wind capacity by 2015.

Wind Works Power (WWPW.OB) - is working on the development of a string of projects in Ontario with a total capacity of 170 MW. It also has interests in projects in the US and Germany.

* Learn more on the attractions of the Canadian wind sector in the ebook Investing in Canadian Wind Energy.

May 17th, 2011

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