Xantrex lands a deal to supply the wind
Bruce Constantineau
Vancouver Sun
Wednesday, January 16, 2008
Burnaby-based Xantrex Technology Inc. has just secured a $25-million contract to supply wind power converters to an unnamed "leading North American wind turbine manufacturer."
It's a significant deal that represents about 10 per cent of the power electronics firm's projected 2008 revenues but it can't officially name the buyer.
"By agreement, we cannot disclose the purchaser," Xantrex chairman Mossadiq Umedaly said in an interview.
But the buyer is likely California-based Clipper Windpower Technology, because the contract announcement Tuesday indicates it's an extension of a previous $12-million deal to supply wind converters to a turbine manufacturer.
In November 2005, Xantrex announced a $12-million contract to supply Clipper Windpower with the converters.
Xantrex wind converters control and convert variable power from wind-turbine generators into high-quality AC power for utility grids and Umedaly said the wind market has very strong growth potential. Wind energy capacity in the U.S. grew by about 30 per cent last year.
"Wind power is very cost effective now, without needing any real significant incentives," he said. "As countries try to meet their renewable power targets, the use of wind will go up a lot."
Umedaly said renewable energy sources -- including solar, wind, biomass and hydro -- represent less than one per cent of most countries' energy supply and many want to boost that figure to 10 to 15 per cent by 2020.
"In North America, it's not unrealistic to think wind could supply 10 per cent of our power needs by 2020," he said.
Umedaly, who was recently appointed chairman of BC Hydro, said Xantrex wind converters are used on 2.5-megawatt wind turbines that can generate enough power for about 100 homes.
He wouldn't disclose the unit cost of the converters but they are believed to be worth about $125,000 US each.
PI Financial Corp. analyst Philip Tulk said the wind converter deal is an important transaction for Xantrex.
"It's probably more important than the numbers would indicate because the renewable side of Xantrex -- which represents about 40 per cent of total revenue -- is also the fastest-growing side of the company," he said in an interview. "Frankly, it's the most exciting side of Xantrex."
The company's three main product divisions include renewable, programmable and mobile power.
Tulk said about 70 to 80 per cent of Xantrex's renewable energy revenues come from solar power products but everybody likes the potential of wind power. He noted there are just four or five potential wind turbine customers Xantrex can sell to in North America and it would be good to find another customer besides Clipper Windpower.
full article continues at: Xantrex (XTX:T) news; windpower inverter contract
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