By Torgny Møller, publisher of the Danish magazine Naturlig Energi
Naturlig Energi, Vol. 33, No. 7, www.naturlig-energi.dk
Translated and published following agreement with Torgny Møller, July 2011.
Who owns the wind?
Are wind turbine owners entitled to compensation if new turbines are likely to interfere with the wind reaching an existing turbine? Or is a neighbor entitled to compensation if new turbines use wind passing over their property before it reaches the turbines? In short: Who owns the wind?
Second Danish ruling on the question of who owns the wind...
The turbine owner receives compensation of DKK 750,000 (US$140,765) for loss of wind
In a recent ruling by the Danish valuation authority, an owner of existing turbines received compensation of DKK 750,000 (US$140,765) for lost production and increased maintenance costs on his two wind turbines because of a wind turbine repowering project nearby. The closest of the new turbines is located only 171 meters (561 feet), or nearly 1.1 blade diameter from the nearest existing turbine.
The claim was filed by the owner of two 750 kW turbines installed near the city of Esbjerg on the west coast of Denmark.
The owner claimed his turbines would be affected by wind shadow and hence experience production losses. The owner also claimed his turbines would be exposed to tremendous turbulence, causing increased wear and multiple stoppages and reducing the life span of the existing turbines. The owner also anticipated he might experience difficulties obtaining insurance coverage for his turbines if the projected new wind turbines were installed so close to his own.
The developer of the repowering project contested the fact that wind turbines can be regarded as real estate — a designation that is required for them to qualify for compensation — and therefore the claim should be rejected. Furthermore, the developer of the repowering project stressed that the wind conditions for the neighbor’s existing turbines will actually improve once the repowering project is complete.
The appraisal, performed by Professor Bent Ole Gram Mortensen and realtor Kjeld Faaborg, concludes that the fact wind turbines are installed on a foundation and thus, in a legal sense, wind turbines are real estate.
As a wind turbine’s market value is valued by its power production, the valuation authority, consisting of the Danish wind turbine association and EMD International, has calculated the production loss caused by installation of the new wind turbines. They conclude the production loss to be 2.4% with a ± 20% uncertainty.
EMD has calculated the actual production loss at DKK 300,000 (US$56,430), increased repair costs at DKK 690,000 (US$130,885) and a reduced life cycle at DKK 1,130,000 (US$212,554). EMD warns that the unusually short distance between old and new turbines "will result in an increased turbulence" on the existing turbines.
The appraisers conclude that the total loss of value will be DKK 750,000 (US$ 141,765), representing a lower production and increased operating costs. However, they did not find that a reduced life cycle was documented, considering that operating costs are incurred and turbines thus maintained. The appraisers, therefore, concluded that compensating increased maintenance as well as accepting a reduced life cycle is double compensation. The appraisers also draw attention to the fact the existing turbines are installed in a relatively unusual wind regime relative to the new turbines, namely a southerly wind direction.
As a result, the valuation authority concludes appropriate compensation to be DKK 650,000 (US$121,996) for production losses and DKK 100,000 (US$18,769) for losses from increased maintenance costs incurred from downtime due to increased turbulence.
Because DKK 750,000 (US$140,765) exceeds 1% of the market value of the two existing turbines, compensation must be paid. In an earlier case, (Naturlig Energi June 2011 www.naturlig-energi.dk and from my desk at www.sindal-lundsberg.com ) the valuation authority determined the turbine owner was eligible for compensation of DKK 700,000 (US$ 131,670). However, it was not paid out because the amount represented less than 1% of the market value of the turbines.