A new government document on community wind farms could mislead municipalities such as Fredericton into spending tens of millions of dollars on a project that could end up losing money, says the Alliance for Community Energy.
The Department of Energy recently published a paper called New Brunswick Community Wind Projects – Getting to the Tipping Point, which includes a mock business plan based on NB Power paying 10 cents a kilowatt/hour plus an inflation factor for wind-generated electricity.
The province wants to buy 75 megawatts of electricity from community-owned renewable energy projects eventually. But that business plan assumes a small wind farm would operate 34.8 per cent of the time.
Alliance spokesman Raphael Shay said 30 per cent is more realistic, which would have a drastic effect on such a project’s cash flow.
Only the largest wind farms in Canada have a capacity of 34.8 per cent, he said.
“The Department of Energy is trying to justify the unrealistic price they have set for electricity from community wind projects by assuming far more electricity production than industry averages,” he said.
“For hydro the 10 cents might work.
“But for wind we believe their business plan is overly optimistic and it is misleading communities into believing this 10 cent feed-in tariff is going to be enough.”
A Summerside, P.E.I., wind farm was expected to have a capacity of 36 per cent before it was built and now operates at well below 30 per cent, he said. That $27-million P.E.I. project had a $21-million government grant, he said.
The New Brunswick mock business plan is based on a community raising 30 per cent of the cost of a wind project and borrowing 70 per cent, although one alternate plan includes a $5-million government grant.
The mock business plan suggests that a 15MW wind farm with 10 turbines, each 80 metres high with 82 metre diameter blades, would cost between $30 million and $35 million to build and would have a positive cash flow of just more than $1 million a year on annual revenues of $4.6 million.
“The projects, although smaller than a nuclear plant, are not small projects,” said Shay.
“Which is why it is important for a community to have a viable business plan so they can actually go and raise equity … and have a return on equity that makes sense and a cash flow that makes sense.”
He said if that wind farm had a capacity of 30 per cent rather than 34.8 per cent, then it would product 14 per cent less power and revenue.
The Danish Wind Industry Association, which estimates that 12 per cent of the world’s energy will come from wind power by 2020, suggests that 25-30 per cent is a more realistic capacity for a small wind farm, said Shay.
He said small wind farms have less capacity than large wind farms. If a facility has 10 turbines and one goes down for maintenance, then it loses 10 per cent of its capacity.
By comparison if a wind farm has 100 turbines and one stops working, then it loses only one per cent of its capacity, he said.
“Those variables really impact the overall project,” he said.
Shay also said that the Department of Energy is projecting the cost of building a community wind farm at $2.4 million per megawatt while the Canadian Wind Energy Association estimates it would cost $2.8 million per megawatt.
He said the alliance issued a news release last week expressing its concerns and so far has had no reaction from the province.
But the alliance does sit on the government’s steering committee on community energy policy and it hoping to make changes, he said.
“It is election time so anything is possible,” said Shay.
The Department of Energy couldn’t be reached for comment.
Don’t expect to see any wind farms in the Fredericton area soon.
It turns out that the capital, all political jokes aside, is a relatively calm spot when it comes to wind in New Brunswick.
According to the province’s wind atlas, the mean wind speed in the Fredericton area is 5.5 metres per second to six metres per second and a successful wind farm needs mean wind speed of between seven and eight metres per second.
The nearest good wind farm sites are well to the east and south west of the capital.
The New Brunswick Wind Atlas can be seen at www.gnb.ca/0085/wind-e.asp.
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