N.B. municipalities warned about unrealistic profits from wind projects

The Canadian Press
Published in the Amherst Daily News
1st September 2010

FREDERICTON - New Brunswick municipalities are being warned that a government document on community wind farms could mislead them into spending millions of dollars in projects that could end up losing money.

The Energy Department recently published a paper called New Brunswick Community Wind Projects - getting to the Tipping Point.

The paper 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 eventually buy 75 megawatts from community-owned renewable energy projects, but the business plan assumes a small wind farm would operate 34.8 per cent of the time.

Raphael Shay, a spokesman for the Alliance for Community Energy, said Monday that 30 per cent is more realistic and that would have a drastic effect on a project's cash flow.

he said that only the largest wind farms in Canada have a capacity of 34.8 per cent.

"The Department of Energy is trying to justify the unrealistic price they set for electricity from community wind projects by assuming far more electricity production than industry averages," he said.

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 PEI project had a $21 million government grant, he said.

The New Brunswick mock business plan is based on a community raising 39 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 15 megawatt 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.

Shay said that if that wind farm had a capacity of 30 per cent rather than 34.8 per cent, then it would produce 14 per cent less power and revenue.

He said 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 to 30 per cent is a more realistic capacity for a small wind farm.

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, it only loses one per cent of its capacity, he said.

This variables really impact the overall project," Shay said.