Western Wind Energy Corp. is now engaged in negotiations reviewing other offers and is in discussions with major United States institutions regarding self-financing initiatives, whereby its 120-megawatt Windstar project will produce directly, $1.7-billion in revenue over 30 years.

Although Western Wind was offered $228-million for all development rights of its 120-megawatt Windstar project, including royalty payments pursuant to a land lease, over a 30-year period, Western Wind believes that, given the market for renewable energy, developing its own projects will provide a greater return.

The California energy market is tied to the price of oil and gas, and consequently, the new market price referent (MPR) for 2008 is anticipated to be as high as $115 per megawatt hour for renewable projects. This price in addition to the production tax credit of $20 per megawatt hour, which offers wind producers, such as Western Wind, the ability to collect an estimated $135 per megawatt hour in total compensation under long-term contracts.

Combining this price structure with the wind resources at the company's Mesa site of almost 10 metres per second (22 miles per hour) and the company's Windstar site of 19 miles per hour allows the production yield margin per megawatt to be 80 per cent higher than any other jurisdiction in North America. It is through this 80-per-cent differential that allows Western Wind to demand a profit of up to $1-million per megawatt of net present value. These are record values for United States wind assets.

The dynamics of the project economics call for a direct project cost of between $2.3-million to $2.5-million per megawatt with a further project developer profit payable to Western Wind for up to $1-million per megawatt or up to $170-million of net present value potential profit payable to Western Wind for Windstar and Mesa only.

In addition, Western Wind has access to 65 further site locations in California for wind energy generation.

High-cash-flow projects such as Western Wind's California wind projects are expected to be 100 per cent financed through debt and/or tax equity once fully operational, which means corporate equity is not required for long-term financing of these projects. The construction phase may also be largely financed through senior and mezzanine debt, which minimizes the amount of corporate equity required to complete project development or an interest at the project level can be sold eliminating any need for corporate equity, which would mean Western Wind could remain dilution free during the capital intensive process.