Wind Power Generation

Jim Hamilton
Published November 8, 2006

Case Summary

As a source of electricity, wind power has many advantages from a sustainability perspective. Aside from equipment manufacture, it carries with it little ecological impact, produces no green house gases, physically takes little room for implementation (one reference quotes 2 per cent of a farmer’s field), and substitutes for a number of environmentally problematic technologies such as the burning of coal or gas, the creation of new hydro reservoirs and/or the use of nuclear energy. Consequently, many see wind power as a potential, if not an integral part of a sustainable solution for Canadian communities.

Several initiatives have proposed that directly link wind power to the needs of nearby communities, such as the Wolfe Island Wind Project at Kingston, Ontario.

A number of planning and economic issues offset the advantages of wind power. On a kilowatt hour cost basis with today’s technologies, wind power appears twice as expensive than other power sources, and to take advantage of economies of scale typically requires a size of investment that often is beyond the means of smaller communities. In addition, wind supply can be intermittent, and there is anecdotal evidence that the maintenance costs of wind turbines may be considerably higher than initially anticipated.

The Wolfe Island proposal evolved into the Ontario Power Authority awarding a contract to the Canadian Hydro Developers Inc on November 21, 2005 for 86 wind turbines to be located on Wolfe Island just east of Kingston, Ontario. This investment, valued at approximately $410 million, is sufficient to power 75,000 homes, a population base more or less equivalent to the larger Kingston area. The investment can be seen as a major step in creating a sustainable community in Kingston and the surrounding islands; however, the investment also requires the “deep pockets” of the Ontario Power Authority to proceed and the ready availability of a grid-based alternative to provide continuity when the wind stops blowing. An environmental assessment is now underway to assess the proposal.

Sustainable Development Characteristics

Wind power undoubtedly supports environmental sustainability, and hence as a tool can play an integral part in the development of a sustainable community. As noted above, it produces no greenhouse gases, physically takes little room for implementation, and substitutes for a number of environmentally problematic technologies such as the burning of coal or gas, the creation of new hydro reservoirs and/or the use of nuclear energy. Intermittency is a problem. Nevertheless, within a larger grid-system, when not intermittent wind power does directly substitute for less sustainable technologies such as oil/gas generation.

Critical Success Factors

Critical success factors include:

1. a significant upfront investment to take advantage of economies of scale, especially with respect to linking into electricity grids so as to have an alternative in intermittent conditions;

2. a “deep pocket” to finance the additional costs of wind power investments at least until per unit costs begin to approach those of other power sources;

3. proximity to a wind-strewn area. This of course presumes that the investment will be undertaken as an integral part of a community’s sustainability plan. It can be maintained that wind power should more properly be considered a provincial-wide matter; and,

4. linkage to a long-term plan. Wind power requires significant investment with returns spread over 20 to 25 years and planning horizon should reflect this.

Financial Costs and Funding Sources

Natural Resources Canada notes that modern wind turbine generators cost between $1,500 and $2,000 per kilowatt for multi-turbine wind farms. Smaller individual units cost up to $3,000 per kilowatt. The Wolfe Island Wind Project (referred to above) will put down 86, 2.3 megawatt turbines with an estimated total cost of $410 million or very slightly over $2,000 per kilowatt. Financing for the project will be through Canadian Hydro Developers Inc on the basis of a long-term contract with the Ontario Power Authority.

The Clean Air Renewable Energy Coalition estimates that wind power costs range from 8 cents to 10.2 cents per kilowatt hour, exceeding the 2002 average actual wholesale prices of electricity in Canada by 1.2 to 7.8 cents per kilowatt hour depending on province. If costs for administration, distribution, marketing, etc. are included, the additional costs increase to 3.2 to 11.8 cents, implying that provincial energy agencies are paying a considerable premium for wind power. To partially offset these differences, the Government of Canada's Wind Power Production Incentive offers a financial subsidy of one cent per kilowatt hour to suppliers of electricity generated through the use of wind power.

In remote areas, the cost of generating electricity using diesel generators can range from $0.25 to $1.00 per kilowatt hour as opposed to $0 .10 to $0.12 for wind power, making wind power clearly cost effective in these sorts of situations where and when good wind is available.

Research Analysis

Analysis of this case study presents leads to four key observations:

1.  As a technique, wind power provides a renewable and sustainable energy source, but is problematic as to cost with today’s technologies.

2. Wind power is only one of several renewable technologies leading to electricity generation and/or effecti  ve energy management.

3. For wind power, it is not clear whether the appropriate planning/implementation authority should be at the community or at the provincial level due to the intermittent nature of wind power. 

Detailed Background Case Description

The Environmental Impact of Wind Power

As a source of electricity, wind power provides many advantages from a sustainability perspective. Aside from equipment manufacture, it has little ecological impact, produces no green house gases, physically takes little room for implementation (one reference quotes 2 per cent of a farmer’s field), and substitutes for a number of environmentally problematic technologies such as the burning of coal or gas, the creation of new hydro reservoirs, and/or the use of nuclear energy.

The following, largely taken from the Canadian Electricity Association’s publication entitled Power Generation in Canada, compares the environmental impacts of electricity generation options:

Impact of Electricity Generation Options

1. Greenhouse gas emissions from energy conversion process only, not as a result of equipment manufacture or construction.

2. Difficult to compare for different technologies.

3. From ash management and/or flue gas treatment.

Comparative Technological Features

Wind power is considered an intermittent technology for generatng electricity in that its production of power can be variable. Nevertheless, the output of wind power can be integrated into long-term power planning if the technology can be twinned with more controllable technologies such as reservoir-based hydro or oil/gas plants as outputs can be varied to compensate for wind power down-times as well as service peak load situations. To put this into context, electricity usage in Ontario on July 16, 2006 typically varied from just over 14,000 megawatts at 6:00 am EDT to almost 23,000 megawatts at 6:00 pm.

The Wolfe Island project is an example of a wind-power based renewable energy project. The Ontario Power Authority cites other examples within the Province of Ontario including:

The following is derived mainly from Power Generation in Canada and compares a few major technological features of various wind power technologies, particularly with respect to responding to changes in demand and to seasonal variability.

Comparative Costs of Electricity Generation

The Clean Air Renewable Energy Coalition estimated in 2002 that wind power costs range from 8 cents to 10.2 cents per kilowatt hour, exceeding the 2002 average actual wholesale prices of electricity in Canada by a cost premium of 1.2 to 7.8 cents per kilowatt hour depending on province. If costs for administration, distribution, marketing, etc. are included as well, the cost premium increases to 3.2 to 11.8 cents. For comparison, the following table presents comparative estimates of actual wholesale prices of electricity disaggregated by province.