Under its court-ordered current half-time operating schedule, the two municipal wind turbines are not generating enough green energy to pay for themselves.
And if they are ordered to be shut down, it would mean be a huge financial loss to the town, said Douglas H. Jones, chairman of the board of selectmen.
“At this point, I have no idea how we would cover the financial loss. We don’t have the money to cover it…it would mean tough choices,” he said on Wednesday, September 23.
Cutting departmental budgets, reducing town services, and a [Proposition 2 ½ property tax] override may have to be looked at, he said.
The second turbine erected in 2011, known as Wind 2, was funded by the federal American Recovery and Reinvestment Act, through the Massachusetts State Revolving Fund for water pollution abatement projects. If the turbine is ordered to cease operations, the state would require the town to repay the $4.87 million grant, said assistant town manager Heather B. Harper.
The town bonded in 2010 just shy of $5 million to pay for Wind 2, with annual payments due each year through 2029, too.
In total, it would cost taxpayers between $12 million and $15 million to shut them down and remove them, according to numbers supplied by the town manager’s office.
The Town of Falmouth is set to apply next month for a special permit from the Falmouth Zoning Board of Appeals to keep the turbines spinning, after the Massachusetts Court of Appeals ruled that the town had needed a special permit before erecting Wind 1.
In the interim, the zoning board of appeals filed a cease-and-desist order Wednesday against the town that requires that Wind 1, one of the two turbines, be shut down immediately.
During Tuesday’s board of selectmen meeting, Mr. Jones said the board will discuss at its next meeting the possibility of a Special Town Meeting for the purpose of wind turbine bylaw changes.
Under the current operating schedule of 12 hours a day, excluding Sundays and holidays, the turbines are unable to produce enough wind power to sustain themselves financially, and operational costs have been augmented with a $2 million renewable energy certificates (RECS) prepayment, but that money will not last forever, Ms. Harper said.
RECs are a tradeable green commodity calculated on a one-to-one ratio for every hour of megawatt electricity generated from renewable energy.
In 2009, the Massachusetts Clean Energy Center (MassCEC) gave the $2 million in exchange for RECS to be paid back, starting in 2015. This year, the CEC excused the town from delivery of those RECs based on the mandatory curtailment and will pay up to $73,000 a year for any additional RECs the town delivers. That number reduces to $65,000 per year, should the turbines return to a 16-hour-per-day schedule.
The 12-hours-a-day schedule is based on a 2013 Barnstable Superior Court order that stated the turbines were a nuisance to neighbors, who maintain the turbines produce ill health effects and devalue their property.
The 1.65-megawatt turbines located at the wastewater treatment plant have the capacity to pay for themselves, if they could operate for at least 16 hours per day, according to an estimated financial report produced by Sustainable Energy Advantage for the town in 2013.
It shows about a $90,000 yearly deficit until Fiscal Year 2018 and modest income that increases each year after that from $41,000 in 2019 to $140,000 in 2025.
The same report indicates negative cash flow under the current curtailment and, by 2025, that would be a $1.66 million financial drain.
Yearly costs for the turbines are estimated to be between $417,000 and $294,000 for debt payment on Wind 1, $188,000 for a maintenance contract with manufacturer Vestas, and $7,000 for a yearly insurance policy.
Additionally, the controversial turbines have produced numerous lawsuits requiring the town to hire special counsel to litigate them. In 2015, the town spent $128,000 on turbine lawyers. Ms. Harper said this is the most to date the town has spent on turbine special counsel.
Revenues fluctuate each year based on wind velocities and the REC market, which is very changeable, said assistant wastewater superintendent Amy A. Lowell. Last year, the turbines yielded $180,000 based on a price of $45 to $49 per REC. However, she noted REC prices were as low as $17 per unit two years ago. The town also receives some funds from electric company Eversource for the excess power it sells back to the electricity grid.
The turbines generate power to run the wastewater plant, saving the town $120,000 per year. Even with the plant’s upcoming expansion, the turbines should still generate enough energy to power it, Ms. Harper said.
The CEC also granted the town $500,000 to be placed in the turbines reserve account for unplanned or catastrophic failures, Ms. Harper said. The grant is on top of $400,000 approved for the reserve by Town Meeting. This account had been depleted for turbine operations.