Academics for hire to justify wind farm economics
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.
March 22, 2015
- This includes construction workers salaries and “conversations” with wind farm developers.
- 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