by Harvey Wrightman
Seven years ago when we first entered the fight against wind projects, everyone including myself assumed that wind companies sought to put their turbines on the sites with the most wind. Wind data was gathered and fiercely guarded by wind companies, the data being “proprietary.” That’s how it is in the real world – performance is the goal or should be.
Well, in the alter-world that is Ontario Energy Policy, real data is undesirable. Imaginary data is much more useful. It’s almost impossible to find out how much the wind companies are getting paid. The terms of the Feed in Tariff (FiT) contracts are never released to the public – that’s also proprietary and confidential information. However, from the minutes of the final Community Liaison Committee (CLC) meeting for NextEra’s Adelaide wind project in mid July this year, a smidgeon of real data did surface revealing how much power NextEra was claiming to have produced – it’s a lot more than anyone ever expected.
Here Operations Manager, Peter Miller, let slip how much NextEra was billing the Ontario Power Authority for power production (p 7):
“ … over 160,000 MWH of wind energy has been produced since commercial operation.”
That’s 160,000 MWh for 9 months, or 213,000 MWh/year.
Nameplate capacity for Adelaide Wind is 60 MW which means Adelaide Wind will produce 60 MWh x 24h x 365 days = 525,600 MWh/year if at 100% of capacity. This means that Adelaide Wind is claiming production efficiency of 41%!
At $135/MWh the Adelaide Wind project will rake in $28,755,000/year.
But, but, but… real world operational efficiency in SW Ontario rarely exceeds 25%according to the Independent System Operator (IESO) records. The windiest sites mightgenerate close to 40%, but that’s definitely the exception. It seems the Ontario government has decreed that the wind industry shall be paid what the wind industry believes it should be paid. Real numbers/data don’t matter.
Then a question is posed as to how the Independent System operator (IESO) determines who gets to put power into the grid (p 9). Ben Greenhouse, NextEra Executive Director of Development states:
“… our electricity system is bizarre … If we bid zero [to IESO, system operator], we would get zero from IESO but we would get compensated at the end of the month for our contract price which is 13.5 cents per kilowatt [$135/MWh].”
Greenhouse conveniently neglects to say that the grid must take renewable (wind/solar/biomass) if available over any other source, and the price for wind is 13.5 cents/KWH. He also doesn’t explain the complex calculation process used to determine the “theoretical availability” of a wind project. Whether it is operating or not doesn’t matter. It’s the theoretical or imaginary availability that does matter for payment purposes.
What the grid managers do to fill in the “theoretical” gaps is their headache. Wind companies could care less.
With payments based on an imagined capacity factor of a whopping 40%, it hardly matters where the project is sited – it could be in a cave! A little bit of creative data and you’ll be paid close to max. No doubt this is standard industry practice.
Let’s see how much of the $28.755 million filters down to the community. NextEra presents the annual payments to the municipality and lease-signed landowners (p 5):
Property taxes $250,000
Lease payments $500,000
Community contribution $150,000
Total: $900,000 or 3% of earnings goes to host community.
Estimating maintenance at ~ $2 million/year, total annual costs of Adelaide Wind come in around $3,000,000/year. This leaves NextEra Adelaide Wind with a tidy profit of $25,755,000/year.
Adelaide Wind cost ~$132 million to build. The return on investment is 19.5%! Where else can you get that?
I haven’t included the financing costs because these projects offer so many “securities packages” that are secured by liens on the farmland. Since the operating companies are “shell” entities lacking any real assets, attaching a lien to the leaseholder property is rather convenient.
Note also that NextEra states:
“Previous estimates included taxation on transmission line infrastructure, which we have determined is currently not being assessed.”
Once again Nexterror delights in rubbing a bit of dirt in your face.
Presently NextEra has 592 MW of nameplate capacity in its Ontario wind projects. Using the same calculated 41% capacity factor, NextEra will earn $287,040,645/year from its Ontario wind projects. Not much wonder they want to build more!
…and on an even larger scale, Ontario has 4042 MW of nameplate wind capacity. Using that figure from CanWEA , the yearly cost to Ontario homes and industry is about $2 billion/year for wind turbines – most of it imaginary power that has never been produced.