MBA final project proposal requirements and structure

Wind Farms in Canada

As pollution and global warming threaten our environment, wind farms represent a particularly sustainable response via the creation of energy from wind.

In Canada, the wind farms are becoming more and more popular and a question is, at this stage, being posed relative to the means in which these farms generate benefits and costs. Specifically, the question is whether the benefits of constructing such a farm outweigh its costs. In order to answer this particular query, the current chapter focuses on the collection and analysis of information. The data collected originates from various sources and contexts and is comprised in the form of the case study. The following subsection of the chapter then deals with the presentation of the methodology used in the collection of information. Emphasis is then placed on the actual information retrieved, through both review of the available literature, as well as the construction of the case study. Finally, the chapter comes to an end with a section summarizing and restating the most important findings of the research and analysis conducted.

2. Methodology

The methodology used throughout this chapter -- and throughout the entire project in fact -- is represented by the case study. The case studies are integrant parties of the qualitative approach to research projects. Qualitative research approaches are characterized by a wide array of elements, the most relevant of them being presented below:

Qualitative research endeavors -- among which the case study -- are efforts of the researcher to understand the behavior of the studied community through the sustained observation of the selected sample.

Qualitative research efforts complete their objectives through approaches based on words and personal observations and interpretations. This is crucially different from the quantitative approaches to research, which base their activities on numeric data, which is statistically manageable.

The findings retrieved from qualitative research endeavors only explain the phenomenon within the context of the limited sample which has been created for research purposes. Quantitative research on the other hand generates results which can be extrapolated to explain the phenomenon within the context of the wider community outside the selected sample (Saunders, Lewis and Thornhill, 2009).

In terms of the case study, as a particular tool to conducting research, it has to be noted that it provides the research process with numerous insights linked to various issues pertaining to the assessed phenomenon. In other words, while other research methodologies will assess in detail a specific issue pegged to the construction of wind farms in Canada, the case study approach allows the researcher to simultaneously assess numerous issues pegged to the greater topic. Sue Soy (2006) at the University of Texas at Austin described the use of the case study as a research tool within the following terms:

"Case study research excels at bringing us to an understanding of a complex issue or object and can extend experience or add strength to what is already known through previous research. Case studies emphasize detailed contextual analysis of a limited number of events or conditions and their relationships. Researchers have used the case study research method for many years across a variety of disciplines" (Soy, 2006).

In terms of the rationale for using the case study as a research tool, its benefits and limitations, these are generally those of using any process of qualitative research. On the one hand, while the case study does not generate results which can be generalized, it does lead to a superior understanding of the phenomenon within the selected sample; a qualitative (statistic) approach would not generate as in depth results as the case study would.

Then, another argument in favor of using the case study is represented by its flexibility as opposed to the rigidity of the statistical approach. In this order of ideas, the quantitative approach is based on a limited number of variables and their numeric interpretation. The study is as such focused on these variables and is not flexible to include others, however new important variables could be identified throughout the course of the actual research. The case study on the other hand is more flexible and it allows the integration of new information, as this is uncovered throughout the actual development of the project. This feature explains why differences might occur between the information initially integrated in the research proposal and the data to be actually revealed in the final project.

Finally, the last argument in favor of the case study is represented by the fact that the research project is competed and constructed in a manner which is more accessible to the public. The case study as such explains the findings and interprets the results in a means which is understandable by all readers, whereas the statistical surveys and analyses would not be comprehended by all readers. In other words, the case studies have a stronger impact within the society that statistics (Shuttleworth, 2008).

3. Data collection

The Data collection and analysis section would be divided into two important sub-sections, as follows:

Literature review, and The case study

The Literature review section is also an integrant party of the qualitative research approach and it plays the part of constructing a starting point in the analysis of the costs and benefits of constructing a wind farm in Canada. Nevertheless, the shortage of the section is that it is based solely on information presented within the specialized literature, with the specification that the literary emphasis on the topic is limited. In other words, the Literature review section would only constitute a starting point for the future issues to be addressed throughout the case study.

3.1. Literature review

Canada has a generally windy climate, which makes the country adequate for wind farms. The country is in fact an important owner of various sources of alternative energy, such as bioenergy, biofuels, solar energy, geothermal energy and tidal energy. This is due to the fact that the state has an increased access to vast and diversified resources which are used in the creation of alternative energy. And this production of alternative energy plays an important and incremental role within the overall country:

"Currently, bioenergy is Canada's second most important form of renewable energy and represents about 5% of the country's total primary energy. The most important type of biomass is industrial wood waste, especially waste from the pulp and paper industry, which is used to produce electricity and stream. […] At the end of 2006, Canada had 62 bioenergy power plants with a total electricity generating capacity of 1,652 megawatts. […] In 2006, 7 million megawatt-hours of electricity were generated using wood and spent pulping liquor" (The Organization for Economic Co-operation and Development, 2010).

In terms of the regions in which bioenergy is mostly produced, these refer primarily to forestry areas, but also regions in which the forestry activities are intense. Such regions include Ontario, the British Columbia, Quebec, New Brunswick or Alberta. Aside from the bioenergy however, Canada also takes prides on its biofuels, activity which has been growing in importance and popularity across the country. The bases of biofuel production are similar to those across the globe, referring specifically to the production of ethanol from agricultural output. The more common agricultural sources of biofuel in Canada are represented by wheat, corn and barley, materials for which Canada is a major producer and exporter. Other sources used in the creation of biofuels include vegetable oils and animal fats, which lead to the production of biodiesel.

The biofuels are not only created by specialized companies, but also by farms, which create outputs of biofuel that complement those launched by the companies. Within the future, the volume of biofuels produced by both specialized agents as well as farms is expected to increase as the Canadian government has issued legislations to support the development of biofuels.

At the level of the solar, geothermal and tidal energy, the capacity of producing energy from these sources varies across the state. The capacity for solar energy production is for instance increased in the central regions of the state, but decreased in the coastal regions, where the climate is more clouded. Still, it is believed that half of the electricity needs in the Canadian residences could be satisfied through the installation of solar panels. For geothermal and tidal energy, the actual capacities and current productions are limited, but efforts are made in the direction of increasing their role:

"Installed capacity of for solar thermal power has seen average annual growth of 17% since 1998, reaching to 290 megawatts of thermal power in 2005. For geothermal energy, Canada's steam resources are limited, but electricity generation projects are being considered. Furthermore, approximately 3,150 ground-source heat pump units were installed in residential, commercial and institutional buildings across Canada in 2006. Finally, ocean energy is a potential opportunity because much of Canada is surrounded by oceans. Currently, Canada has a tidal power plant in Nova Scotia with a generating capacity of 20 megawatts of electricity. Additional tidal current demonstration projects are being considered" (The Organization for Economic Co-operation and Development, 2010).

At the level of the wind farms, these reveal an incremental popularity due to the favorable climate in the country. Most of the Canadian wind farms are located in coastal areas, where the winds are more intense and the power generation input is as such higher. Still, the diffusion of the wind farms is decreased as a significant portion of the Canadian coastline is placed in spaces outside the electrical grid.

"Canada has large areas with excellent wind resources and therefore significant potential for expanding wind-generated power. […] At the end of 2007, Canada had 1,400 wind turbines operating on 85 wind farms for a total installed capacity of 1,846 megawatts, compared with only 60 wind turbines, 8 wind farms and 23 megawatts a decade earlier. The provincial leaders in wind power capacity are Alberta, Ontario and Quebec" (The Organization for Economic Co-operation and Development, 2010).

In spite of the developments it has registered in the field of wind generated energy, Canada still remains far behind the major generators of electricity with the use of wind: the United States of America, Germany, Spain, China and India. The chart below represents a graphic illustration of the volumes of wind power capacity in the wind power generating top five states and in Canada.

Figure 1: Installed wind power capacity in the top five countries and Canada (megawatts)

Source: The Organization for Economic Co-operation and Development, 2010

An important argument forwarded by the Organization for Economic Co-operation and Development stated that the wind generation capacities are reduced since significant parts of the coastlines are outside the electricity grid. Still, Robert A. Battram (2010) reveals that the Canadians are extremely adaptable and inventive and that they created wind hybrid projects outside the electricity grid.

"Of potential use in smaller isolated communities not connected to the main power grid are wind-diesel and wind-hydrogen. One Canadian example is the community of Rama, Newfoundland and Labrador that initially used a wind-diesel system and is now being converted to wind-hydrogen technology" (Battram, 2010).

Overall, Canada has created a strong system of wind farms and wind energy and this reputation has crossed the boundaries. Much to the surprise of the wind farm owners then, people from the country as well as people outside it perceive the wind farms as touristy attractions and come to visit them. Even the perception of the Canadian population is highly favorable towards wind farms and this was revealed in a 2007 survey, in which 89 per cent of the respondents declared themselves in favor of wind energy.

"In a survey conducted by Angus Reid Strategies in October 2007, 89 per cent of respondents said that using renewable energy sources like wind or solar power was positive for Canada, because these sources were better for the environment. Only 4 per cent considered using renewable sources as negative since they can be unreliable and expensive" (Battram, 2010).

3.2. Case study

The case study research approach is composed from gradual and sustained activities to assess various components of the studied phenomenon. The topics which were identified to be of most relevance include the following:

The history of wind energy in Canada

The benefits of wind farms

The costs of wind farms.

3.2.1. The history of wind farms in Canada

The creation of energy in Canada, however nationally embraced and developed, is a relatively novel activity and it has it rooted no sooner than two decades ago. The first wind farm was constructed in southern Alberta in 1993. It went through processes of internal change as well as change in proprietorship. At the end of the restructuring and upon change of ownership, the Canadian Hydro Developers (by the initial name of Cowley Ridge Wind Power) had a total capacity of 22 megawatts and could ensure energy for 6,000 households. By 1994, the wind farm would be able to provide energy for 17,000 households (Rosano, 2009).

During the same year, 1994, the first wind turbine was installed in Ontario. In Quebec, the first major wind farm was installed in at the turn on the century. In Nova Scotia, wind turbines were installed as part of a wider program in 2002. The authorities argued that the wind farms in the program would further develop and that they would be able to provide 20 per cent of the province's entire energy by 2013.

In 2003, a new wind farm was opened in Newfoundland, and it supplied 10 up to 13 per cent of the overall energy necessities of the community. During the same years, as well as throughout the years that followed, more wind farms were installed in Nova Scotia, Quebec, Ontario, Saskatchewan and Alberta.

In 2006, the first major impacts were observed in the wind power industry, as the country's capacity more than doubled when compared to its capacity in 2005. Specifically, in 2005, the wind energy production capacity was of 684 megawatts, and by 2006, it had increased to 1,460 megawatts. 2006 saw the construction of twenty new farms -- the higher construction ratio of wind farms in Canada -- and these new farms had the capacity to produce energy to serve the electricity needs of an estimated 50,400 households. The picture below represents the wind farms in Canada during 2006. The blue dots represent the wind farms that had been constructed from 1993 through 2005 and the red dots represent the wind farms constructed in 2006 alone.

Figure 2: Existing and new wind farms in Canada in 2006

Source: Rosano, 2009

In 2007, the Taber Wind Farm in Alberta was installed and this remains the largest wind farm in the province through today. It had a total of 37 turbines, a capacity of 81.4 megawatts and the ability to power 32,000 households. The Taber Wind Farm had the second largest production capacity in 2007, after the Anse-a-Valleau wind farm in Quebec. In 2008, it was the twelfth largest wind farm, revealing as such the rapid growth of the sector. During 2008, new wind farms were built in Ontario, Newfoundland and Quebec and also -- for the first time, in New Brunswick. This farm is the largest one on the Atlantic province.

By 2009, there were a total of 70 wind farms in Canada, with a total capacity of 2,550 megawatts. Over 50 wind farms were being contracted or under construction. In 2009, the wind farms served 1 per cent of the entire national demand for electricity. By 2025 however, it is hoped that the wind farms would be able to serve 20 per cent (or more) of the domestic demand for electricity (Rosano, 2009).

3.2.2. The benefits of wind farms

The Canadian Wind Energy Association is the most reliable source of information in respect to the wind farms. A limitation which could be imputed to the source is that it could be subjective and interested in forwarding the benefits, rather than the costs, so that it attracts more participants to the sector and as such supports its development. This feature means that the benefits are best retrieved from the source, but that the costs should be assessed through different lenses. In this order of ideas, the Canadian Wind Energy Association identifies three categories of benefits:

Environmental benefits

Consumer benefits and Community benefits.

At an environmental level, the Canadian Wind Energy Association argues that wind, as a source of energy, is the most sustainable choice as it does not create pollution and does not consume the scarce natural resources. At the specific level of the environmental benefits, the institution forwards the following:

The creation of energy with the aid of wind decreases the volume of emissions released into the atmosphere. 18 per cent of all greenhouse emissions in Canada are created by the burning of fossil fuels to create electricity. This figure would be substantially decreased if wind was more intensely used to create energy.

The creation of energy with the aid of wind protects water by consuming less that other means of energy creation, and also by pollution fewer waters.

The environmental cost of producing wind energy is significantly lower than the environmental costs of producing other types of energy. The environmental cost refers to the totality of costs incurred in the production and distribution of energy, including the construction of the plant, the mining operations, the distribution and transportation processes, the closing down of the plant and so on. With wind energy, this cost is fairly low as the environmental lifecycle only includes the production and installation of the turbines.

Overall then, it is argued that the environmental print of wind energy is decreased and that wind energy is the most suitable choice for energy production in today's society. But aside from the environment, wind energy also generates advantages for the consumer. These refer to the following:

Wind energy reduces the usage of fossil fuels in the creation of power. The fossil fuels are rapidly depleting and non-renewable sources of energy, used at high costs for the consumers. When wind is used, the consumption of fossil fuels decreases, as does their cost.

Also in terms of cost, wind energy would have a stable price, not influenced by fossil fuels.

The usage of wind to create energy preserves the fossil fuels, such as the natural gas.

Aside from these general benefits of wind energy, one additional advantage is present in the context of the Canadian particularities. The highest need for energy in the North American country is revealed during the winter time. At this point, winds also blow heavily in the state, creating as such the possibility of winds to satisfy the highest need for energy during the required time of the year. Still at the level of the Canadian community, the benefits of wind farms include the following:

Wind farms support the development of the rural communities in Canada

Wind farm constructors purchase or rent the land on which to place their turbines, creating as such additional financial benefits for the individuals owning the respective lands

Wind farms create new employment opportunities for the inhabitants of the Canadian communities, and finally

Wind farms attract visitors and as such boost the touristy revenues of the communities (Canadian Wind Energy Association).

Aside from these social benefits, it is also noteworthy that wind farms represent a popular modern day entrepreneurship, which generates non-negligible incomes. In other words, the ultimate benefit is represented by the ability to attain the personal goals of profitability through the generation of positive impacts within the community and for the environment.

3.2.3. The costs of wind farms

In spite of the fact that the advantages of wind electricity are strong, one must also note that the construction of wind farms generates a wide array of costs. The more important of these costs is represented by the financial investments, which are significant and which would require years to make a return. The financials of the project are complex and include a multitude of expenses, such as land purchase or rent, infrastructure developments to create and distribute the energy, equipments, insurance, and so on. The Wind Industry provides a list of these costs as follows:

"Wind resource assessment and site analysis expenses

The price and freight of the turbine and tower

Construction expenses

Permitting and interconnection studies

Utility system upgrades, transformers, protection, and metering equipment

Insurance

Operations, warranty, maintenance, and repair

Legal and consultation fees

Taxes."

The Wind Industry states that the costs of turbines vary based on size, model, volume of purchase, but also other features. Still, it is estimated that the prices of the wind turbines with capacities under 100 kilowatts are of $3,000 up to $5,000 per kilowatt of capacity. This virtually means that a wind turbine of 10 kilowatt -- the turbine sufficient to generate power for an average household -- would cost somewhere between $35,000 and $50,000.

For economic agents however, who intend to produce larger volumes of electricity, the costs go far beyond this, as the estimated price for an average commercial turbine is of somewhere between "$1.2 million and $2.6 million, per MW of nameplate capacity installed" (Wind Industry). In a context in which most commercial turbines have a 2 MW capacity, their prices are estimated at $3.5 million. With commercial producers of wind energy however, it is noted that these possess scale advantages as compared to the smaller size wind farms and that they are as such able to produce energy at costs per watt lower than the costs at which the megawatt is produced by the smaller size wind farms (Wind Industry).

Aside from the actual cost of the investment in the construction of a wind farm, there are also other limitations pegged to such a project. The more important of them refer to the following:

The energy created by the wind farms varies based on the intensity of the wind, meaning as such that it is not always reliable

From an aesthetical and traditional standpoint, it could be argued that the wind farms are unpleasant to look at and that they damage the natural tranquility and traditional image of Canadian coastline and countryside

Wind farms create phonic pollution as they are lousy; it is estimated that a turbine generates the noise produced by a family car traveling at 70 mph (Ryan, 2009).

The production of wind farms is completed in the traditional manner of materials manufacturing and disposal, meaning as such that the very creation of the turbines generates pollution.

Wind farms are generally created on the coastline, where the winds are intense. Land here is however expensive, adding up to the total costs of the project.

Turbines have been argued to interfere with the signals transmitted by television lines and radio waves.

Wind farms kill birds. "Some of these blades can have a span of 100 or more feet. If they are going fast enough, just like a propeller, you really do not see them. With that speed and length of blade, birds easily fly into the blade path and get killed. Some also say the hum of the blade is an attraction to birds and they are lured into the blade" (Alternative Energy Resources).

Finally, the largest wind farm of today cannot provide energy to more than 500 households, by running at full capacity. "How many would be needed for a town of 100,000 people?" (Ryan, 2009).

4. Data analysis

The previous section has focused on the construction of the case study as a source of relevant information. At this stage, the analysis of the data collected is conducted, with the intent of further detailing the issues identified. In line with the initial question of the topic, the current section is divided into two specific subsections, one dedicated to the positive implications of building a wind farm in Canada, and the other dedicated to the concerning issues of building the farm within the North American country.

4.1. Concerns

A first problem linked to the creation of wind farms in Canada is related to the placement and concentration of the wind farms. In this order of ideas, it is noted that the wind farms in Canada are highly concentrated in regions with intense winds, namely the coastal areas. This is the region where the electricity generation capacity is increased. Still, there are areas where the Canadian coastline in outside the electrical grid, meaning as such that the opportunity of opening a wind farm is not only restricted by the need to open it in a coastal region with intense winds, but also in a specific coast region with intense winds and also within the electrical grid. This intersection of demands increases the concentration and the competition within the wind farms industry and makes it even more so difficult and challenging to open and profitably run such an enterprise.

A second concern is raised by the fact that -- while their numbers are small -- some inhabitants of Canada believe that the production of energy from renewable sources is a negative phenomenon since the resulting energy is unreliable as well as expensive. The percentage of the population who believe this is of 4 per cent, an estimated total of 1,361,223 out of the 34,030,589 population of Canada (Central Intelligence Agency, 2011).

The figure of four per cent of the population disagreeing with wind farms does not seem alarming, yet when the four per cent is translated into an actual number of individuals, the fact that over one million people disapprove of alternative energy would be demoralizing. Nevertheless, it is noted that 32,669,365 people do approve and embrace energy from alternative sources. Still, in order to analyze the concern pegged to the lack of trust on the part of the four per cent of the population, it is important to assess their arguments: cost and reliability.

Similar to most environmentally friendly products and services, energy from renewable sources would reveal lower levels of quality as well as increased prices. This is due to the fact that the infrastructure in the creation and delivery of such products and services is novel and still being developed. It as such implies consistent costs with growth, and, from an economic standpoint, it sees that all investments are new and have to generate returns. This as such translates into higher costs due to high investments. Also, at the level of quality and reliability, this is also decreased as the process of creating and delivering the energy is novel and the farms are still improving their processes and their offers.

Nevertheless, as with all environmentally friendly products, more investments are made and more developments are on the way. This specifically means that the quality, reliability and efficiency in creating and delivering the products and services would improve in the future. This is even more so true in Canada, where the public and political publics are declared supporters of energy from renewable sources, and where the developments in wind power are supported at a social and legal level. It is as such expected that the reliability, as well as the costs to delivering wind energy, would improve in the future to better satisfy the needs of the population.

The quick development of the sector -- however described here as an actual incentive -- is also perceived as a threat. The most eloquent example in this sense is represented by the Taber Wind Farm in Alberta. When it was opened in 2007, it was the second largest wind farm in the country. By 2008 however -- only one year later -- it had moved down to be the twelfth largest wind farm in Canada. Such a downfall reveals the rapid pace of development of the industry for alternative sources of energy. And this is a major concern since the opening of a wind farm requires sustained investments, but the fact that the wind farm could easily lose its edge in such a short time means that it would find it difficult to recuperate its investments. In other words, this rapid development impedes the financial stability of the wind farms and creates the risk of them not being able to enjoy a return on the massive investments made in the creation of the wind farms.