Harvesting the wind–and crushing ratepayers in Ontario

And the crop is...MONEY. And you're paying for it.
The crop is…MONEY. And you’re paying for it.

Harvesting ratepayer dollars with wind

Visiting the home page of Armow Wind you are struck by the marketing efforts meant to persuade the reader that this project is a wonderful development for the Municipality of Kincardine.  It says:

Harvesting the Wind for Ontario

Samsung Renewable Energy Inc. (Samsung) and Pattern Energy Group LP (Pattern Development) are developing the Armow Wind project in the Municipality of Kincardine. The project will provide enough clean and renewable energy equal to the energy needs of approximately 70,000 homes. The 180 MW wind project will bring many benefits to the Kincardine community, including more than $75 million over 20 years in property taxes, landowner lease royalties and community benefits. The project will fund a long-term community benefits program, which will support education and other initiatives, including a contribution of $1 million to the Kincardine Airport to improve local operations.

The numbers on Armow Wind make the $75 million they claim will be generated for the community look tiny.

Another page on the website states Armow will generate $10 million in realty taxes over the 20 years which is $500,000 annually or $2,777 per MW. The assessed value for the 180 MW project is $7.2 million. That comes from former Finance Minister Dwight Duncan’s instructions to MPAC to assess turbines at $40K per MW.

The truth is, the capital cost of the 180 MW is much bigger. The EIA estimates the cost per MW of onshore wind is $2.2 Million/MW, meaning the capital cost value is about $396 million. If the turbines wereassessed like anything else, at, say, 50% of their actual capital cost, each MW would generate about $35,000 in realty taxes in one year, or $6.3 million in annual realty taxes for the 180-MW project and $126 million over 20 years.

The 180 MWs producing at 29% of capacity should generate 457,000*: MWh per year which would produce annual revenue of $61 million or $1.2 billion over 20 years for the developer. (How we got there: 180MW X 29% X 8760 hours [hours in one year] = 457,000MWh X $135/MWh). So the township will actually receive less than 1% of the gross revenues generated.

The other $65 million will benefit land owners who have signed leases; I calculate the average lease payment is $18,000 per MW annually from Armow.  In other words, they are going to receive six times more per MW than the township.

Conclusion: Harvesting the wind rips off the hosting township of wind development projects and Ontario’s ratepayers!  The takeaway for Armow Wind is $1.1 billion!

©Parker Gallant,

December 1, 2014

* The website claims the power produced will be “equal to the energy needs of approximately 70,000 homes”.  Producing at 29% of capacity will actually generate power for less than 50,000 homes, for 80% of the time the power isn’t needed.

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