Financial Concerns

High-Level Estimates from Sustainable Energy Developments, Inc. (SED)

  • $3,000,000 to $3,300,000 = estimated cost
  • 9 year = break even period
  • $2,700,000 = Estimated 20 year benefit to the town
  • $135,000 = Annual benefit to town
  • $27 = Annual benefit to Duxbury Household
  • $9 = Annual benefit per Duxbury Citizen

Concerns with SED’s Financials

  • Financial analysis shows that this project has marginal to weak fundamentals
  • Financial performance is directly related to wind performance
  • SED report states wind speeds are marginal – reflecting low capacity factor. Capacity
    factor is over-estimated at 21% to 29%
  • SED capital assumptions for construction and interconnection appear low – especially
    related to crane and electrical installation
  • Financial assumptions are tailored to fit the financial feasibility requirements of third party investors.
  • $0.25 REC (renewable energy credit) could fluctuate dramatically based on power prices, REC supply and demand.
  • ITC (investment tax credits) are not available for municipally-owned projects
  • Detailed analysis of project financials are requested before the town commits to the economic, environmental, public safety and health risks associated with a large wind turbine project

Expert Reaction

An expert in energy, historically giving opinions on both sides of this debate, Tom Hewson of Energy Ventures Analysis, Arlington, VA. reviewed SED’s Feasiblity Study. He has written an evaluation of SED’s study, but also had the following initial comments:

“I’ve reviewed about a half-dozen wind developer project applications for sites in MA and CT over the last year, and this project has probably the worst fundamentals of them all.”

“Wind projects are best suited for high-wind, rural areas (Texas, North Dakota) that allow for 25-100 enormous (1.5-3 MW) turbines to be constructed near one another. This way, the construction, interconnection and other capital costs are spread out and the economic risk is mitigated if one of the turbines is inoperable.”

“Single turbines in high-density residential areas such as Duxbury are always questionable.”

“SED is banking on the town revising the 250-ft ordinance, otherwise, “there is no currently available wind turbine which would generate significant economic returns to the town.” The 450 Kw model is under development and has not been used in commercial operation. The area’s wind resources are poor, as SED’s modeling accurately projects marginal output from each unit (21% capacity factor for the 900 Kw and 14.2% for the 450 Kw).”

“SED’s capital assumptions toward construction and interconnection appear low, especially with regards to crane and electrical installation. By understating these costs, they make it appear that the overall project costs are lower thus making the payback period appear shorter.”