Not economically viable at present



With regards to Blowing the Right Direction?, August 11, we encouraged the community to send through their views on the proposed wind turbines in Awhitu. John Allen, Director from Rural Connect, sent through the following response.

Your August 11th edition posed a question about the future of the Awhitu Wind Farm.
From the perspective of a major electricity generator, wind farms are not economically viable at the moment. There are a couple of reasons for this.
First is that electricity demand is in decline (until recently that is) and coupled with uncertainty around the future of the aluminium smelter, the construction of new generation capacity is difficult
to justify.
Second is that selling the generation from wind farms on the wholesale market at spot prices, gives a return on investment less than normal corporate objectives. Selling at a fixed price under a power purchase agreement is only marginally better for generators.
So there is no economic rationale for a major generator to proceed with the Awhitu Wind Farm project.
However, there is an alternative approach to making wind farms both economically attractive and desirable.
Were the Awhitu Wind Farm to proceed as a community owned project, then a significant doubleedged benefit would accrue to the local Franklin community.
In a community owned approach, demand uncertainty is not an issue because the owners of the wind farm would be the purchasers of its output. With a secure customer base, the profit expectations of a community owned enterprise are lower than that of a corporate.
So the first benefit is that community owners would pay a lesser perunit price than they presently pay.
Even paying a lesser price, the wind farm would still earn a significant profit. By structuring the business operating the wind farm as a taxexempt charitable company, those tax-free profits could be returned to the local community. So the second benefit is the funding of beneficial projects in the local community. To me, such an approach is a win for people, a win for communities and a win for the environment.
This win-win-win would restore the concept of energy democracy to people and communities that are hurting from the impact of high energy prices. The real costs of successive governments selling our electricity generation assets owned as Commons, to public corporations for private profits, would be reversed.
There was a local project to achieve such potential for community benefit.
I regret that project will come to nought when the resource consent for the Awhitu Wind Farm expires in December this year.

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