WIND POWER
Pattern Energy Executive
Director Hunter Armistead
with his son, Cannon, outside the company’s office
on San Francisco Bay.
Energy
for Generations
San Francisco-based Pattern Energy Group is one of North America’s
leading independent wind and transmission companies. CEO Mike
Garland and Executive Director Hunter Armistead explain why Pattern
is betting big on wind, share why it helps to find the right partner in
the energy business, and examine the policy landscape in the USA.
And then there’s the 13-year-old who might end up running the company someday.
Photo (right): private
Text: Justin Gerdes, Photos: Michelle McCarron
“My mom was not very happy,” says
Cannon Armistead. He and his father,
Hunter, exchange a knowing look and
smile. Cannon, 13, is recounting the
story of how, on the night of a personal triumph, he wasn’t there to receive
the accolades.
For his seventh-grade science fair
project, Cannon had devised an ingenious experiment to test the efficiency
of wind turbines. He built a scale model
test turbine, which he then attached
to a generator and to a fan that provided the “wind.” Next, he connected
the generator via alligator clips to a
voltmeter, so he could measure voltage
generated. He tested turbines with a
different number of blades and blades
of different weights.
Cannonʼs presentation took first place
at his school in the Bay Area – Science
& Technology category, and he was a
generic finalist in his Catholic Diocese
before broader competition. “They
never said ‘go to the awards,’” insists
Cannon.
Living Energy · Issue 6/February 2012
“He figured he didn’t have a chance
because there were so many kids. There
was pretty nerdy stuff going on,” says
his father. “He and I made the joint
decision it was OK not to go to the
awards night.” Instead, Cannon went to
his school’s skate night. His principal,
his teacher and some classmates, meanwhile, went to the awards ceremony.
Cannon ended up taking first prize.
“I was inspired by my dad’s job,” says
Cannon.
Why Wind?
In just over two years, Pattern Energy
Group has emerged as one of North
America’s leading independent wind
and transmission companies. The
company was founded in June 2009
by Cannon’s father, Hunter Armistead,
Executive Director, and Mike Garland,
CEO.
Business has boomed. “We’re very
lucky compared to a lot of our competitors. We’re two to three times what
our business plan was originally,” u
Cannon Armistead with his
award-winning wind energy
project.
63
WIND POWER
says Garland. The company aims to
be a top-ten wind developer within two
years, with projects under way in the
USA, Canada, and Latin America.
Pattern is especially bullish on wind.
Garland closed his first wind deal in
1989 and has gone on to manage the
development and investment of nearly
4,000 MW of wind projects.
“About 40 percent of the energy projects developed in the USA in the last
three or four years have been wind. It’s
a natural place for us to be,” he says.
“People talk a lot about the technology
and the cost reduction in the solar
area, but they forget that wind has been
just the same. We estimate 30 to 40
percent cost reductions over the last
three years in the cost per kilowatthour of producing electricity out of
wind.”
Industrial Revolution in Wind
There is an industrial revolution at
work in the wind sector, says Garland.
“You realize it if you look at the various components, the composite materials, the effort Siemens is making,
for example, to reduce parts, the improvements in electronics, the software
improvements, and the blade improvements.”
The benefits accrue not just to new
wind farms, but also to those already
standing. “It’s even spilling over into
existing projects, where they can go
back and retrofit,” says Garland. Hunter
Armistead notes that Pattern Energy
undertook the first major repowering
project at the Altamont Pass, east of
San Francisco, California, where the
company replaced 400 early-model
wind turbines with 38 modern, more
powerful ones.
Fewer turbines mean a smaller site
footprint and less harm to wildlife. “In
the first year and a half, we were monitoring that project after we put it in,”
says Garland, “and there was a reduction in bird fatalities of 80 percent.”
quickened. “If you look at the very first
turbine we bought from Siemens, it
was using 93-meter blades; for that
very same machine, in the exact same
wind regime, two years later, we’re
buying turbines using 108-meter
blades,” says Armistead. Year over
year, the new turbine is 20 percent
more productive with the same
wind resource.
“It opens up new markets,” says
Garland. “We can start looking at places that three, four, or five years ago
we never would have thought about.”
“More wind in more places,” says
Armistead. “Projects that used to be
too low for production – now, all of
a sudden, they move up to an area
where they are cost-effective.”
A perfect example, says Armistead,
is Pattern’s Finca de Viento Santa Isabel
wind project, in Puerto Rico. The
75-MW project is scheduled to go online in September 2012. “That project
never would have been economical
18 months ago, because the blades u
Pattern Energy Group
An independent, fully integrated energy company that develops, constructs,
owns and operates clean energy and transmission assets in the USA, Canada,
and Latin America.
Founded
June 2009
Offices in San
Francisco (headquarters), Houston,
San Diego, New York, Toronto and British Columbia
The management team has developed, financed, and managed more than
US$15 billion of energy assets and over
2,000 MW of wind power.
1,581 MW of 20+ year tenor contracts for wind power projects.
Example: Finca de Viento Santa Isabel (75 MW). The first
commercial wind energy project in Puerto Rico provides safe, renewable
energy to about 25,000 homes as well as new jobs and tax revenue.
More Wind in More Places
Pattern CEO Mike Garland:
“About 40 percent of the energy
projects developed in the United
States in the last three or four
years have been wind. It’s a natural place for us to be.”
With established players such as
Siemens in the wind market, the pace
of technological improvement has
Living Energy · Issue 6/February 2012
65
www.patternenergy.com
66
WIND POWER
WIND POWER
would not have been efficient enough
to capture the low wind,” he explains.
“Or, if you bought very, very long
blades, they wouldn’t have been strong
enough to withstand the hurricanes.
Now, technology has improved to where
they are long enough to capture the
wind and strong enough to withstand
the hurricanes. Siemens has really
been the technology leader in making
the turbine more economic and more
competitive. They’ve been able to do
that because they have clients who
continue to buy, like ourselves. When
things were not as good two years
ago, we were ordering turbines.”
Matchmaking with Siemens
A future Pattern Energy
executive? Cannon Armistead
aspires to an engineering
career like his dad’s.
Explaining why Pattern Energy does so
much business with Siemens, Pattern’s
primary supplier, Mike Garland says,
“When we first started working with
Siemens in the wind market, we both
said, ‘We’re relationship-oriented.’ It
was like dating: You both say you want
a long-term relationship, but aren’t
sure the other one really means it.
Pretty soon, you find out that you
both understand each other. We both
threw ourselves at the relationship,
and we’ve had a tremendous result.”
Garland says it was important to Pattern
that Siemens did want a long-term relationship – it makes dealing with
contingencies easier. “There are always
bumps in the road in this business:
delays in the project because of permitting, or maybe there are economic issues on one project that you don’t have
in another. It’s very important for there
to be a collaborative process in which
each side can understand the other.”
He cites Pattern’s partnership with
Siemens in Ontario, where Siemens is
building a factory to supply turbines
for the 870 MW of projects Pattern is
scheduled to build in the province over
the next three years. “We need to appreciate what a level of commitment
that is by Siemens to support our
business in Canada.”
When Siemens invests in R&D, its
customers gain a competitive advantage, explains Garland: “They are trying to stay ahead of the market and
create the next generation of technology. That’s how we stay competitive.
That’s how we can keep getting out and
bidding projects and have them be
cost-effective to the utility or the buyer.”
Barry Nicholls, Vice President of
Siemens Power Systems Sales, says,
“We find that collaborative, trusting,
long-term relationships with customers are productive for both of us,
and we certainly feel that is the case
with Pattern. It’s business, but it’s
also personal, and we both do our best
to provide the other with the results
they expect.”
US Policy Landscape
While Garland and Armistead marvel
at the pace of technological change
and growth in the wind industry, they
express concern that a shortsighted
policy in the USA could derail one of
the world’s hottest markets. A critical
federal tax incentive, the 2.2¢/kWh production tax credit (PTC), expires at the
end of 2012, absent action by Congress.
“We’ve had consistent policy now for
three years, and during that same time,
we’ve seen technology just explode.
If the policy is not continued past the
end of next year, you’re going to see
everything slow down tremendously,”
says Armistead.
In November 2011, US Representatives Dave Reichert (R-WA) and Earl
Living Energy · Issue 6/February 2012
Blumenauer (D-OR) introduced a bill
that would extend the PTC through
2016. “The bill is a great sign that there
still is a lot of commitment in Congress to support wind,” says Garland.
With the USA still reeling from the
economic downturn, Garland is incredulous that any lawmaker would imperil
a booming industry adding well-paid,
domestic manufacturing jobs. “There
are about 400 manufacturing facilities supporting wind in the USA now.
We’ve gone from about a 25 percent
US content to about a 65 percent manufacturing content in the USA,” says
Garland, noting the factories built by
Siemens and Vestas, among others.
“While we are working hard to lower
the cost of wind-generated power
through product innovations and development and cost improvements
on the product side in order to reduce
the dependency on government incentives,” adds Siemens’ Mark Albenze,
CEO Business Unit Americas of Siemens
Wind Power Division since October
2011, “there is still a need for clear
policies that drive the long-term demand of wind energy in the USA.”
In the end, Garland expects Congress
to act. “More than 75 percent of the
US population – Republicans, Democrats, Independents – support wind.
You now have manufacturing or wind
farms in almost all the major congressional Republican and Democratic
districts, so there is going to be a lot
of pressure to protect and continue
wind.”
Energy for Generations
Someday, perhaps, Cannon Armistead
could be the one watching Congress,
developing projects, and leading Pattern Energy into its third or fourth
decade. If the current executives don’t
hire him before then, that is.
Hunter Armistead notes, with pride,
that Cannon could probably reel off
Pattern’s project details as well as
he could. In college, Cannon says, he
wants to study science, math, and
engineering. The images bring to mind
the tagline that greets visitors to the
Pattern Energy homepage – the same
Living Energy · Issue 6/February 2012
67
CEO Mike Garland and
Executive Director Hunter
Armistead: aiming to
make Pattern Energy a
top-ten developer within
two years, with projects
under way in the United
States, Canada and Latin
America.
Mike Garland, CEO, Pattern Energy
Background
Garland has written several books and
articles on energy and finance and holds
a Bachelor of Arts in Physics from the
University of California at Berkeley (USA).
Professional Experience
At Pattern, Garland oversees all aspects
of the company’s operations, focusing
on efficiency, raising and structuring
capital, project selection, strategic planning, and corporate performance and
values. Previously, he led Babcock &
Brown’s North American Infrastructure
Group, where he initiated and managed
projects that grew to over US$12 billion
of assets in less than five years.
Hunter Armistead, Executive Director,
Pattern Energy
Background
Armistead holds a Bachelor of Science
in Electrical Engineering from Rice University in Houston, Texas (USA).
Professional Experience
Armistead manages Pattern’s project
origination, construction and financing
phrase Cannon chose as the title of
his science fair project: Energy for
Generations. p
Justin Gerdes writes about energy and climate
change from Northern California, USA.
initiatives. Previously, he managed the
renewable energy activities of Babcock
& Brown’s North American Infrastructure Group, where he oversaw the expansion of the wind business, which
grew to over 600 MW under construction across the USA annually.