September 13, 2023
Prince Edward Island
Prince Edward Island
Profits at the P.E.I. Energy Corporation were slashed by more than half last year, with auditors warning revenues will drop even further as the Crown enterprise tries to fix one of the province’s biggest wind farms.
In its annual report released last week, the P.E.I. Energy Corporation recorded a profit of $3.5 million. That’s less than half of what the utility has posted in any fiscal year since 2014-15, the first full year the Hermanville wind farm in eastern P.E.I. was in operation.
As a government business enterprise, the corporation’s profits go into the P.E.I. government’s general revenues, the same pot of money that pays for health care, education, and all other provincial operating expenses.
In 2021-22, the Energy Corporation contributed $7.6 million to general revenues, even as maintenance problems at Hermanville began to cut into proceeds from electricity generation.
Last year, Hermanville operated at a financial loss for the first time ever, as electricity production dropped to roughly a third of what it was when the wind farm first opened.
Auditors warn production has fallen off even more since the start of the current fiscal year, and that they will continue to fall, leading to a further loss of revenue.
On top of that, compensatory payments from the company under contract to maintain the wind farm have almost run out.
That company, Nordex, guaranteed an availability rate for the turbines of 98 per cent. In other words, it said the turbines would be functional and able to generate electricity any time there is wind to power them.
Below 97 per cent availability, the company is required to pay damages to the province. But there are both annual caps on the amounts and a cumulative cap on that compensation.
In its annual report, the Energy Corporation said the annual cap on damages was exceeded by about $100,000 in 2021-22 and by $1.5 million in 2022-23.
Availability for the turbines in 2022-23 was rated at 58 per cent.
Meanwhile, the corporation says the cumulative cap on damages will be reached in 2024-25, four years before Nordex’s maintenance contract with the province runs out.
The annual report said once the overall cap is reached, “all turbine downtime will have financial impacts for the corporation.”
$10M repair work underway
Last month, Environment, Energy and Climate Action Minister Steven Myers said the Energy Corporation is moving forward with a plan to repair the turbines, pegging the cost to the province at $10 million.
Myers said the province was pursuing a “legal component” to try to recoup those costs from the company, but provided no further details.
(Shane Hennessey/CBC)
On Monday a spokesperson for Myers’s department said a work crew, crane and some replacement parts had arrived on site, and blades from one of the turbines could be removed this week.
The tower for each turbine stands 92 metres tall. The diameter of the blades is 116 metres.
The wind farm was originally constructed at a cost of nearly $60 million. When it became operational in January 2014, it marked the first time this model of turbine – the Acciona 116/3000 —had been commercially deployed in North America.
Now, questions are being raised as to whether those turbines were properly suited to P.E.I.’s climate.
An older provincial wind farm down the road from Hermanville at East Point opened in 2007 using Vestas V-90 turbines, and has maintained its reliability for the past 16 years.
“The newest fleet of Acciona 116/300 turbines are proving to require the largest amount of maintenance,” the province told CBC in an email outlining the repair work needed at Hermanville.
Committee may call witnesses
CBC reached out to Nordex, which bought Acciona in 2016, but did not receive a response.
“For them to not be operating at a profit is shocking,” said Green MLA Peter Bevan-Baker regarding the situation at Hermanville.
Bevan-Baker said he would bring the issue forward at a planning meeting of the province’s Standing Committee on Natural Resources and Environmental Sustainability on Thursday.
He said he would urge the committee to call witnesses to explain what went wrong at Hermanville, what the plan is to fix things, “and what government is planning to do to make sure that Islanders are not stiffed with the cost of this.”
URL to article: https://www.wind-watch.org/news/2023/09/13/financial-hit-from-faulty-wind-farm-turbines-expected-to-deepen-in-p-e-i/