Academics for hire to justify wind farm economics

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Condiments needed

Haldimand County‘s former council appears to have been advocates of industrial wind turbines; they signed several “Vibrancy Fund Agreements” all dated September 26, 2011.  The agreements will, or have already, allowed industrial wind developers to erect 198 of 400-500-foot turbines in the county.   The fund disclosures come after news that those same councilors also agreed to sell the local distribution company, Haldimand Power, to Hydro One.

A total of 443 megawatts (MW) of industrial wind turbines have appeared or will appear in the community shortly. Presumably to assure the current council that all is well, they recently received a report from Associate Professor Guy Holburn, PhD, Ivey School of Business, Western University.  Mr. Holburn’s Case Study, prepared for Summerhaven Wind LP (on behalf of NextEra Energy Canada owned by NextEra of Florida) is dated February 27, 2015.

Mr. Holburn appears to have been selective choosing the facts and used them to colour reality. His report carries this disclaimer:

“The report does not include analysis of the economic impact of Haldimand’s wind power on electricity prices, its technological impact on grid operations, or its environmental impact on electricity sector greenhouse gas emissions, since these issues are driven by government renewable energy policies determined at the provincial level. Nor does the report assess any potential impact of wind farm development on local property values.”

In other words, it avoids any contentious issues!

Here are highlights of a few of facts either coloured or ignored.

The “study” has much to say about the Community Vibrancy Fund (CVF), which will annually contribute $1,6 million to the township ($37.00 per resident).  To put the CVF in context: the 443 MW capacity should generate, on average, about 1.2 million megawatt hours (MWh) of electricity annually (30% of capacity) and receive about $160 million from Ontario electricity ratepayers for that production.  It is easy to figure out that the CVF payments represent about 1% of the gross revenue.  There is no estimate on whether the mandated assessed value of the turbines (capped at $40K per MW of rated capacity) will generate tax revenue sufficient to offset the potential loss of tax revenue on homes that lose value and receive assessment reductions caused by the proximity of the 198 turbines.  The tax value to the township translates to $2,100 per MW annually (with a capital cost of about $1.5 million) or $21.00 per resident.

Other facts in the report are coloured or outright false.

As a simple example the professor claims: “Ontario is Canada’s leading province in the wind power sector with 2,480 MW of installed capacity”.   The information, obtained from the Independent Electricity System Operator (IESO), as of January 26, 2015 is wrong.  A visit to the CanWEA website claims 3,490 MW of installed capacity in Ontario as at December 31, 2014.  Haldimand’s council should rely on the CanWEA information which is over 1,000 MW (40.1%) higher!

Associate Professor Holburn also claims “on average” the 443 MW of the Haldimand located wind “farms” provide “annual direct local payments by the wind power companies”, “equivalent to $260 per person” per annum.  Professor Holburn’s calculation makes the incorrect assumption that each Haldimand resident will be a beneficiary of the largesse of those generous foreign entities like Samsung, NextEra, etc.  He includes Salaries for local workers and employees ($72 million1.) and lease payments to local landowners”($142 million2.).  Later, the case study reveals that “salaries” include construction workers, which would be short-term employment. Associate Professor Holburn offers salary calculations without reference to supporting data.

On the issue of “lease payments” the mathematical calculations suggest farmers who have signed to lease their land for wind turbines will receive $142 million over the 20 years, which translates to $16,000 per MW per year.  Based on what is included in this case study, the dollar value suggested by Associate Professor Holburn is his estimate.   It might be interesting to speak with a few of the farmers who have actually signed on, to determine the validity of the conclusions.

If I were a member of council on the current Haldimand Board I would, as the expression goes, take this study with a grain of salt.

©Parker Gallant,

March 22, 2015

  1. This includes construction workers salaries and “conversations” with wind farm developers.
  2. Holburn’s estimate of lease payments suggests $16,000 per MW per annum— an estimate.

NB: In an effort to promote transparency, Associate Professor Holburn should fully disclose what he or the Ivey Business School received as compensation for the production of this “case study” for Summerhaven Wind LP, aka NextEra Energy Canada.

Editor’s note: This example shows, once again, why a true, independent, cost-benefit analysis of Ontario’s wind power development program is needed, as recommended now by two Auditors General. Over 70 Ontario municipalities asked for such an analysis prior to the Green Energy Act—no analysis has ever been done by the Government of Ontario, despite sinking billions of taxpayer and electricity customer dollars into the venture

 

Comments

thebiggreenlie
Reply

Haldimand sounds like a real “gem” for future new homeowners!…………..of course they should be “deaf and blind” to be able to live there! Just another in the many examples of how far down the “rat hole” this Government has taken us all!

NIABY
Reply

Noticed the Ivey Business School is “quantifying social resistance to wind farms in Ontario.” Sounds similar–but is not the same as–“quantifying the damages.”

‘[excerpt] Interns
Gareth Everard
Originally from Toronto, Ontario, Everard is pursuing an Honors Bachelor of Science degree, specializing in environmental science at Western University. He has worked with the Ivey Building Sustainable Value Centre and the Network for Business Sustainability since May 2013. Everard is currently conducting research with the Ivey Energy Centre to generate a report on the impact of social factors on wind turbine project development.

Chad Gray
Originally from Stratford, Ontario, Gray is pursuing a dual degree in Chemical Engineering and Business. Upon graduation in the spring of 2015, he will be pursuing his P.Eng designation with TransCanada as a project engineer. Gray is currently conducting research with the Ivey Energy Centre on factors affecting wind farm development in Ontario.

Caley Savage
Savage is pursuing a dual honours degree with Geography, majoring in social and environmental risk, and Business Administration from the Ivey Business School. She has worked as a market risk analyst as well as conducted studies on First Nations’ responses to nuclear waste. Savage is now working with the Ivey Energy Centre on quantifying social resistance to wind farms in Ontario.’
http://www.ivey.uwo.ca/energycentre/about/staff-interns/

What kind of person thinks that industrial electricity generation is “farming”???

Noticed the business school does not mention the “f-word that rhymes with flawed” that many people are using to describe the global wind energy industry. Or what effects this will have on the contracts and all the dollars they have generated and which are being traded internationally…

Anyway — back to the brain farm… gotta harvest some more thoughts…

Sommer
Reply

The list of complicit players gets longer and longer.

Barbara
Reply

‘Policy Risk and Private Investment in Ontario’s Wind Power Sector’, 2010,
Holburn, Lui, Morand, 25 pages.

P.11, NIMBY effect on the energy sector.
P.13, Strong political connections-advantage over less-well connected in the Ontario energy sector.

If you have the time, this study provides background information on the factors affecting developers investment decisions in Ontario’s renewable energy sector.

http://sites.ivey.ca/energy/files/2010/04/Holburn-Lui-Morand-Ontario-Wind-Policy-Canadian-Public-Policy.pdf

Barbara
Reply

And doesn’t he need people to sell his investments to? If no one will buy them, then what will he do?

Barbara
Reply

Hofstra University: “Cooperative Federalism and Wind: A New Framework for Achieving Sustainability”

Part V, p. 1084
Local control of wind siting increases application and siting costs for developers and enables individual communities to stymie wind energy development.

http://www.law.hofstra.edu/pdf/academics/journals/lawreview/lrv_issues_v37n04_cc6.salkin.final.pdf

Local control of IWT siting presents a big problem for developers.

Some think that there should be national/federal regulations in the U.S. to remove local control so that wind projects can be installed without local opposition.

Barbara
Reply

This Holburn presentation appears to be just another for the “common-good” argument.

Vibrancy funds are another for the “common-good” thing.

Barbara
Reply

This Holburn NextEra study does not mention any of the federal income tax issues as related to how many and how much of the benefits provided by developers to communities and individuals are deductible on developers’ income taxes.

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