Super investment winded by critics

MATT NIPPERT
Last updated 05:00 16/02/2014

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A wind energy firms' claims it will revolutionise wind power have been questioned by critics following a US$55 million investment in it by the New Zealand Superannuation Fund.

In November the NZSF announced it had invested US$55 million in Ogin Energy, a Massachusetts-based wind turbine designer. Ogin claim to have pioneered a radically different wind turbine that utilises a shroud to accelerate wind through the generator.

The product is on track for commercial roll-out next year.

But Professor Jim Manwell, director of the Wind Energy Centre at the University of Massachusetts, said he has followed Ogin, formerly known as FloDesign Wind Turbines, since its 2008 launch in his state.

Manwell said the company was initially touted as a potential hi-tech high-flier.

"That was what they are selling themselves as - this hi-tech device that could transcend all conventional wind energy devices," Manwell said.

Ogin's design was radical and Manwell believed it would face the insurmountable problems that derailed other shrouded

turbine developments. The most notable was the New Zealand-based Vortec that collapsed in 2001 after chewing through $25m in funding. The NZSX-listed Windfarms New Zealand is not involved in turbine development and uses industry standard propeller generators at its 97-turbine farm in the Tararuas.

Manwell was troubled by Ogin's lack of public progress since 2008, despite several fundraising rounds totalling more than US$100m.

Hefound the information vacuum unusual.

California-based wind energy analyst Paul Gipe, said the collapse of Vortec raised the stakes. "The burden of proof becomes great because of all these failures." He said the investment is a gamble. "That's what venture capitalists do, they try to make a big bet. Your pension fund is betting, and this is a wild bet."

The criticisms are echoed by local wind consultant and PhD candidate Dougal McQueen.

"Wind turbines are a mature technology and the designs have not changed substantially in 30 years," he said. Prior failures showed the ducted model was "fundamentally flawed".

Ogin founder and aerospace scientist Michael Werle understood the scepticism, but said "we've taken all the lessons learned and brought in some new aeronautical and aerospace concepts." Problems with the Vortec development had been closely studied and remedied.

Ogin chief financial officer Jantoon Reigersman said Ogin was finalising its commercial design and hoped to put more information into the public domain next year after gaining engineering certifications and commencing mass production.

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Matt Whineray, NZSF general manager, said the US$55m investment - a mixture of debt and equity seeing the fund take a less than 20 per cent share alongside the likes of Goldman Sachs and the Alberta - followed nine months of due diligence. The fund was well-aware of risks of early stage companies, but believed this one worthwhile.

"This is a small investment in the context of a $25 billion highly diversified fund," he said.

"We expect to be compensated for the risks we are undertaking."

NZSF PORTFOLIO

As the New Zealand Superannuation Fund has grown it has increasingly begun dipping its toes into private equity, as with the investment into Ogin, although this still comprises only a tiny portion of its portfolio. At December 31 the NZSF portfolio was valued at $25.2b, comprised of: Global equities $15.6b Fixed income $2.8b Property $1.3b Timber $1.3b Infrastructure $1.3b NZ equities $1.3b Other private markets $0.76b Private equity $0.76b Rural farmland $0.25b

- Sunday Star Times

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