Turbines stoush puts two firms in jeopardy

Windflow Technology says it faces material damage if NZ Windfarms continues to delay payments but the latter says it needs certification. Photo / Supplied

Listed companies in a bitter dispute over wind turbines at a Manawatu project are warning of serious financial risks if the impasse is not resolved.

NZ Windfarms says it does not know if it can pay its debts as they fall due while it considers issues with the turbines at the Te Rere Hau site near Palmerston North.

It needs to raise more money to complete the project but says it would not finalise funding until it had a better understanding of the implications of not receiving certified turbines and had established that the turbines were "fit for purpose".

Yesterday turbine maker Windflow Technology warned that it faces material damage if NZ Windfarms continues to delay payments on 38 turbines. It would not discuss the amount outstanding but when the project was started four years ago its cost was put at $80 million.

Both companies' shares were sold off yesterday; Windflow Technology down 18c, or 12.5 per cent to $1.30 and NZ Windfarms down 9c, or 13.4 per cent to 58c.

While they are working towards resolving the stoush, there appears to be some distance between them.

Windflow founder and chief executive Geoff Henderson said the on-the-ground performance of the 59 turbines already installed needed to be taken into account, as well as being given a certification document.

He likened the process to getting a university degree. "Is it the piece of paper at the end of the process that matters or is it the process? They are running - that's what matters."

Windfarms says it is having to ensure an independent expert can gain access to Windflow documents, in the hope turbines already up are retrospectively assessed.

Both companies agree that those already built cannot be certified to the higher International Electrotechnical Committee (IEC) standard. Henderson said the final documents had not been submitted to the IEC until late in July.

"It has taken us longer than we'd hope to be sure but we've kept NZ Windfarms informed of progress."

Windflow has a 3.6 per cent stake in Windfarms, which was spun off from the Christchurch company and listed in 2005.

NZ Windfarm's chief executive Steve Cross said the lack of certification had become a fundamental issue. Windfarms knew the design had been modified by Windflow since turbines were installed at Te Rere Hau in 2005, but didn't understand how significant the design changes were.

"We no longer have a reference to measure ourselves against in terms of fitness for purpose."

Wind Energy Association chief executive Fraser Clark said it was disappointing the spat had spilled into the public arena.

Wind power last year provided about 2.5 per cent of the country's power and is set to grow quickly over the next decade.

SQUARING OFF

Windflow Technology
* Christchurch maker of twin-bladed wind turbine.
* Says it's working towards certifying machines at Manawatu wind farm.
* Mighty River Power holds 20 per cent stake in company.
* NZAX listed, market capitalisation of $18 million.

NZ Windfarms
* Spun out of Windflow Technology in 2005.
* Says delays in completing wind farm impact on viability.
* Vector holds 20 per cent stake in company.
* NZX listed, market capitalisation of $52 million.