Construction on Manitoba's largest wind farm is now underway near the community of St. Joseph in southern Manitoba.

A ceremony to mark the official groundbreaking for the project was held Thursday, during which time area landowners were also given their first payments as part of the deal between the provincial government and San Francisco-based Pattern Energy Group.

"Today we celebrate the start of construction on Manitoba's second wind farm and we also celebrate the expansion of renewable energy sources in Manitoba," said Finance Minister Rosann Wowchuk, minister responsible for Manitoba Hydro.

"This wind farm will more than double wind capacity in the province."

Power deal for 27 years

The announcement follows the successful negotiation of a 27-year power-purchase agreement between Hydro and Pattern Energy, signed late last month.

The deal will see Pattern Energy invest $95 million in the 138-megawatt wind farm, located about 100 kilometres south of Winnipeg. Manitoba Hydro will loan Pattern Energy up to $260 million, which is to be repaid over 20 years.

When finished in the spring of 2011, there will be 60 wind turbines covering an area of 125 square kilometres in the rural municipalities of Montcalm and Rhineland.

Pattern expects the first turbines will be running by year's end.

At full capacity, it will produce enough electricity to serve the needs of 50,000 homes.

Pattern is expected to pay an estimated $38 million in total to landholders and an additional $44 million in local municipal taxes over the life of the project.

Manitoba's other wind farm is located near St. Leon, about 125 kilometres southwest of Winnipeg. The 100-megawatt farm became operational in 2006.