With the province having given Medicine Hat the approval to build a wind farm, the decision as to whether to proceed now rests with city council. Our aldermen should pass on this one. As it stands, the proposed wind farm will cost about $25 million to build and would potentially supply enough electricity to power some 3,000 homes.
Wind power, of course, has been in the news for quite some time. There are wind farms sprinkled across southern Alberta and Montana. These wind farms, however, owe more to government promotion than they do to economics. Wind-generated electricity is one of most expensive forms of power generation around.
Ald. Ted Clugston, chair of the city’s energy committee, admits as much. As he noted on Thursday, natural gas prices would have to be at $10 a gigajoule to make this proposal economic.
Clugston is in favour of building the wind farm and argues that we need to look at it as a long-term investment.
The problem, though, is that even over the long term, wind-generated electricity makes no sense.
Natural gas is currently selling for well under $5 per million British thermal units (MMBtu) and market analysts forecast that its price will be just above $7 per MMBTu by 2035 as expressed in 2009 dollars.
In other words, there is no point in the next 25 years that the wind farms will ever generate a profit, let alone break even.
The problem, as we know all too well in Alberta, is that new processes to extract shale gas have changed everything. There is a massive glut of natural gas on the market and more natural gas in ground than we know what to do with.
In the U.S., utilities are looking to bring on more natural gas fired electrical stations and even with that increase in demand, say the analysts, it will hardly make a dent in the supply.