Wolfe Island Shoals Economic Impact

The Wolfe Island Shoals project was the largest contract awarded in the last round of wind projects, with a capacity of 300MW.  It is located at the eastern end of Lake Ontario and is slated to be the first “off-shore” wind project in at least Canada, and may end up beating out Cape Wind for that dubious honour in North America.

The project developer (Windstream) thought it would be a good idea to remind everybody how many jobs are at stake and what the economic impact of the project’s construction and operation would be.  So their project manager (Ortech) hired a consultant (Aecom) to write a paper entitled “Potential Employment and Income Impacts in Ontario from the WI Shoals Project“.  The executive summary sounds impressive.  It’s a $1.36B (yes, that’s a “B”) construction project, 1900 jobs and $89M in labour income  for 5 years.  Then 175 jobs and $9M in labour income for 20 years.  No mention of labour income to dismantle the project – they must have just forgotten to mention it.  I am (of course) more interested how they got those numbers and what other details they forgot to mention.

As an aside, this report probably sets a new record for the ratio of white space and extraneous information to anything useful.  The entire report is 10 pages.  The executive summary is a small part of one page, the details cover 2 pages and a marginally-useful appendix is one more page.  Maybe they figure the less they write the less there is to critique.

To me the most interesting part of the report are the numbers in the four tables in the details: construction costs/Ontario capture, operating costs/Ontario capture, annual jobs and annual labor income.

Construction Costs.  I have no reason to doubt the numbers in these tables, but it seems odd that the costs are presented with 9-digit accuracy while the Ontario capture percentages are clearly at best 2-digit guesses.  In total about 50% of the $1.36B stays in Ontario.

Operating Costs.  Their annual service contract (over 90% of the total) is based on the number of MW-H generated, which strikes me as odd.  Do they expect the maintenance costs to vary directly with their production?  More interesting is they are estimating the project will generate 1M MW-H per year.  If the capacity is 300MW the annual potential generation is ~2.6M MW-H.  That calculates out to an expected capacity factor of 38%, which is 14% higher than the nearby Wolfe Island project managed over its first year of operation.  Also revealed is they are currently planning on 95 turbines, which comes to 3.2MW per.  These are big ones, perhaps from Europe (Siemans or Vesta) since the construction costs are quoted in Euros, then converted to $CDN.  UPDATE – these numbers don’t agree with the System Impact Assessment Report.  That report says 100 3.0MW Vestas turbines.  Whatever…

The other tidbit that got my attention was the $4500 per turbine per year for “power consumption”.  One of the more mysterious aspects of wind turbines is the amount of electricity they consume during their operation.  I had heard that CanWEA had managed to convince Ontario to provide wind projects free and even unmetered electricity, but apparently Shoals has to pay for theirs.  The annual consumption, assuming they pay the $30/MW-H wholesale rate, is about 135,000KW-H per turbine, roughly the consumption of 10 homes.

Annual Jobs.  Someone didn’t review this report before it was published – this table erroneously has the labour income numbers (identical to the following table), not the jobs numbers.  Oh well.  It seems that the 1900 construction jobs includes not only the direct jobs, but also indirect and induced jobs as well.  The direct jobs might number about 725, with the other 1175 jobs assumed.  In a like vein, there might be 58 direct operational jobs with the remaining 117 being assumed.

Annual Labour Income.  An average of $270M (1.36/5) will be spent annually over the 5 year construction period.  Of that, $34M will be spent on direct labour, with the remainder of the $89M consisting of indirect and induced income.  That comes to ~13% (34/270) of the total cost going to labour. I’m having trouble seeing this as something to brag about.   During the 20-year operational period, the direct annual labour income is $3M, out of the yearly operating costs of $30M.  We’re down to ~10%.  Of course, they don’t mention either of these percentages, and it’s a good bet no politician will bother getting past the effusive executive summary.

At what cost? One of my main complaints about politicians in general is they propose all these grand schemes (like wind energy) but never seem to ask “at what cost?”  In this case the cost is quite significant.  Using their numbers, the project will generate 1M MW-H, and be paid $190 for each of them.  That comes to $190M annually, or a total of $3.8B over the 20 years.  That $3.8B will come out of ratepayers’ pockets at the rate of about $15 per year per Ontarian.  The wholesale price of electricity is about $30/MW-H, so of the $190 a full $160 is a subsidy, or ~85%.  The Shoals project will take about $13 extra out of your pocket, my pocket, our kid’s pockets, every year.  In the aggregate, we will pay $3.8B for about $600M worth of electricity.

CanWEA should be proud.

One thought on “Wolfe Island Shoals Economic Impact”

  1. “In the aggregate, we will pay $3.8B for about $600M worth of electricity.”

    Nice!

    Thanks Dalton!

    Sean.

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