A Canadian subsidiary of United Kingdom firm International Power PLC (OTO: IPRPY, Stock Forum) is taking a majority stake in what is expected to be Vancouver Island’s first operating wind power project.

Sea Breeze Power Corp. (TSX: V.SBX, Stock Forum) said it is pleased to have struck a deal with International Power Canada Inc. which will become the majority owner of the Knob Hill wind farm, which is located about 35 kilometres northeast of Port Hardy on the northern tip of Vancouver Island.

“We have every expectation that this project will be built and operating by the end of 2012,’’ said Sea Breeze chief executive officer Paul Manson.

Shares in the junior rose 19% Monday to 21.5 cents.

When construction of phase one of the $300 million project is complete, Knob Hill is expected to generate 99 megawatts of installed capacity, or enough power to meet the needs of 100,000 people.

Manson said terms of the deal remain confidential.

However, he said it has been arranged after the Vancouver junior secured a deal in March to supply electricity to provincial utility the British Columbia Hydro and Power Authority for 20 years.

International Power PLC is a leading electricity generating company with interests in over 50 power stations, 32,398 megawatts in operation and a further 4,527 under construction.

As Knob Hill is located on the traditional territories of three First Nations – the Quatsino, Tlatlasikwals, and Kwakiutl -- development is still subject to the signing of impact/benefit agreements with the aboriginals.

Sea Breeze said the transaction agreement with International Power Canada gives Sea Breeze and the three First Nations the option to buy an equity stake in the project. Sea Breeze would also receive a developers’ fee and an ongoing revenue royalty for the duration of the electricity purchase agreement with BC Hydro.

Knob Hill was the first wind project in B.C. to receive an environmental assessment certificate from the provincial government. It got the certificate in 2004.

Other companies who are currently working to develop wind power in B.C. include Capital Power Corp. (TSX: T.CPX, Stock Forum) , Finavera Renewables Inc. (TSX: V.FVR, Stock Forum) and Plutonic Power Corp. (TSX: T.PCC, Stock Forum).

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Peter Kennedy

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