Thursday, July 20, 2006

BP and Clipper Windpower Enter Into Strategic Alliance

BP and Clipper Windpower Enter Into Strategic Alliance
14 July 2006

The Liberty turbine.
Clipper Windpower and BP Alternative Energy have entered into a strategic alliance for a long-term turbine supply agreement and the joint development of five of Clipper’s wind energy projects in the USA.

The five wind projects, with an anticipated total generating capacity of 2,015 MW, are located in New York, Texas, and South Dakota. Under the long-term supply agreement, BP has secured a mix of firm and contingent orders of up to 2,250 MW of additional Clipper turbines in its global wind portfolio.

The Clipper/BP Alternative Energy joint development portfolio will be developed over a five year period. Each project will deploy Clipper’s advanced Liberty wind turbines. The projects will be jointly owned by the two companies with Clipper serving as the project operator in two projects and BP Alternative Energy serving as the project operator in the other three.

We believe the Clipper turbine is a break-through in reducing the total cost of renewable energy and we are pleased to be the first large customer for this innovative technology. Our strategic relationship with Clipper represents an important step in expanding BP’s low-carbon power business.

—Steve Westwell, CEO of BP Alternative Energy

The Liberty 2.5MW wind turbine is Clipper’s fourth-generation machine. It is based on Clipper’s patented Quantum Distributed Generation Power-train, DGEN-Q. DGEN-Q uses a compact two-stage helical distributed design. A total of four high-speed output shafts split torque loads from the rotor mainshaft to the generators by a factor that is four times greater than standard gearboxes, according to Clipper.

Liberty also employs two pre-loaded, low-speed tapered-roller main bearings to absorb thrust loads, preventing damage, minimizing downtime and extending turbine life. There is no problematic axial motion or mainshaft mis-alignment in Liberty as both are also stabilized through her two robust tapered roller main bearings.

Liberty’s high-speed gear sets are in cartridge form and can be easily replaced with the on-board hoist without the removal of the gearbox, further reducing costs.

Each turbine uses four permanent magnet (synchronous) generators rated at 660 kW each. Liberty’s generator control technology supports a wide range variable rotor speed, improving turbine aerodynamic efficiency by adjusting to ever-changing wind velocities, briefly storing and releasing energy from wind gusts while also reducing torque spikes. The turbine will continue to operate even with a generator outage.

As part of the long-term turbine supply agreement, BP Alternative Energy has committed to the purchase of 100MW of Liberty turbines in 2007 and 200MW in 2008 which it will use on other projects in BP’s global wind business. These orders represent the initial firm deliveries under the long-term supply agreement for up to 900 Liberty turbines over the next five years.

In recognition of the long-term strategic relationship between Clipper Windpower and BP Alternative Energy, BP has acquired a five-year share option for a 10% equity interest at £3.77 (US$6.92) per share in Clipper Windpower (subject to final approval of the Clipper Shareholders).

BP has agreed to acquire a 50% interest in the project portfolio along with an option to acquire an interest in Clipper Windpower Plc representing 9,596,681 ordinary shares in the capital of the Company and a turbine supply option, for a total of $30 million. In addition, BP has agreed to pay Clipper up to US$30 million upon successful completion of the development projects. BP will also make a US$30 million down payment for the 300MW Liberty turbines for delivery in 2007/2008.

Clipper Windpower designs advanced wind turbines, manufactures its 2.5-MW Liberty wind turbine and actively develops wind power generating projects in the Americas and Europe. Clipper’s project development activities include approximately 6,000 MW of wind resource rights, with new project sites being actively pursued.