Continental Wind Partners – The Power and Profit in Wind

As oil prices are soaring, most segments of the world economy are stalling. But the winds of change are blowing in a positive direction for the renewable energy sector, and that has some investors very excited.

“Wind power will become a bigger factor as developing countries bid against each other for diminishing supplies of fossil fuels,” says Adam de Sola Pool, chief executive officer for Continental Wind Partners, a renewable energy investment group headquartered in Poland. “The cost of wind power is coming down as the industry grows, and once a wind park is developed, it has a tiny operating cost compared to other power sources. That makes wind turbines one of the most exciting new asset classes,” he adds.

While Continental Wind was launched just over a year ago (March 2007), it is already facilitating the construction of some of Europe’s largest wind parks. It has partnered with other sophisticated companies, engineers and financial experts, to initiate projects that will bring 3,000 megawatts of wind power to Poland and Romania. It has also chalked up plans for 2,000 megawatts of wind power in Australia and New Zealand.

“It’s amazing that we started with just 21 million Euros, but we already have construction of several wind parks about to start, and are in the process of obtaining $1 billion of debt and equity financing for these construction projects,” says de Sola Pool, who grew up in Cambridge,Massachusetts and attended Phillips Academy in Andover.

The visionary CEO caught the business bug from his father, a former professor at MIT. “I got to travel around with him while he was doing international business research, and that definitely influenced me,” he recalls.

After attending the University of Chicago and getting his own MBA at the Sloan School, de Sola Pool went to work on Wall Street for Solomon Brothers, learning about finance and dealmaking as part of a mergers and acquisitions team.

When the Soviet Union collapsed, his boss pursued an opportunity in Europe working for The European Bank for Reconstruction and Development and de Sola Pool followed. “I was one of three people assigned to the Polish team, and we quickly got involved in plans to improve the use of resources and energy efficiency,” he says.

“We knew there would be a period of transition toward capitalism and saw that as a huge opportunity, but working it was not easy,” he recalls. “The Polish government would not allow the firing of workers and that required major adjustment. In essence, socialism was about using as many resources as possible to produce as little as possible,while capitalism was about using as little as possible to produce the most you can.”

Before long, de Sola Pool had set up a group called Environmental Investment Partners I to launch commercial efficiency and recycling efforts focused on energy and waste materials; that project went so well that he decided to create Environmental Investment Partners II to profit from propagating highly efficient gas power, heating and air conditioning.

He credits Josef B.Volman of Burns & Levinson with setting up a useful and efficient structure for the second partnership. “I liked what he did for us, so we looked to him for help when we set up Continental Wind Partners, which had a unique need to attract a group of high net worth investors from both America and Europe,” says de Sola Pool. “Joe devised a creative structure [using a Delaware limited liability company] to meet our complex needs involving international issues, investment regulations, tax efficiency and financing,” he recalls. “Joe and his people get positive results without the pain and anxiety that normally goes with it,” he quips.

That has allowed de Sola Pool to focus his energy on the business of wind development with an unusual degree of success. “There was only 150 megawatts of wind power in Poland when we started, and just three in Romania. Now, we’ve completed work on 160 megawatts of power in Poland with much more in progress, and in Romania we have plans for 600 megawatts to come on line by 2009,” he says.“As it looks now, we should be very profitable.We expect early returns in line with competitive venture capital concerns,” he adds.

For purchasers of the developed wind parks, the profits should be solid as well. Because of environmental concerns and government incentives, coal power in relevant parts of Eastern Europe can only be sold for 6 Eurocents per hour while wind power can be sold for 9 cents per hour. But profits are only part of the payoff. “To the citizens of Eastern Europe, this is about freedom and independence from Russia, on whom they would otherwise rely for energy,” says de Sola Pool.

Continental Wind also takes a socially responsible approach, studying wind farm effects on birds and wildlife, measuring noise and other environmental impacts, and emphasizing safety for optimal performance. “Development concerns are complex when you are mounting 86-ton turbines on top of 100-meter shafts,” says de Sola Pool.

“We also set up charitable foundations in each town to serve the future needs of local children and schools,” he says, pointing for example to the establishment of a charitable solar powered project.

“We find local developers and provide them with the money and expertise they need to build wind parks, so we are not just a bunch of foreigners coming in with a wild idea,” adds de Sola Pool, who notes that even quaint Dutch windmills were opposed as “eyesores” when they were built centuries ago.

He predicts that the modern crop of windmills will not die out or become a historical oddity either. “We think we are riding the beginning of a very long wave of renewable energy development – one that will last much longer than my lifetime.”

This interview was published in the Spring 2008 issue
of our newsletter, Focus
Click here to view the entire 2008 Spring Focus