Wind energy vs. wind energy - Solar, Wind and Land: Conflicts in Renewable Energy Development - page 66

generate significantly less power than their first-choice sites, having values
of only $200,000 and $150,000, respectively.
An optimal wind rights law would result in the two turbine installations
on these parcels that would maximize the productive value of the wind
resources at issue. In this case, those two sites are Site U 1 and Site D 2 .
Turbines on these sites would produce energy with an aggregate value of
$450,000—a combined total that exceeds any other possible pair of turbine
installations.
A non-nuisance rule is likely to produce the result under the assumptions
of this example. Specifically, the rule would entitle Upwind Developer to
install its turbine at Site U 1 without liability and Downwind Developer
would be unwilling to pay enough money to convince Upwind Developer
to do otherwise. Suppose that Downwind Developer, recognizing the
potential for wake interference at Site D 1 if a turbine is installed at U 1 , were
to approach Upwind Developer and attempt to strike a deal to prevent a
turbine installation at U 1 . $50,000 (the difference between the values of
Sites D 1 and D 2 ) is the largest sum of money that Downwind Developer
would be willing to pay to compensate Upwind Developer to install its
turbine at Site U 2 rather than Site U 1 and prevent wake interference. Upwind
Developer would be unwilling to accept that amount because siting at U 2
instead would cost Upwind Developer $100,000 (the difference between
the values of Site U 1 and U 2 ). The parties would thus be unable to reach an
agreement and Downwind Developer would install its turbine at Site D 2 to
avoid wake interference from Upwind Developer's turbine at Site U 2 —the
socially optimal outcome.
Unfortunately, the non-nuisance rule performs less well where the more
valuable wind resources are on the downwind parcel rather than on the
upwind parcel. Suppose, for example (as “Scenario #2”) that all assump-
tions remained the same as in Scenario #1 above except that Site D 1 was
actually at a higher elevation with greater wind speeds and was thus twice
as valuable as under the prior scenario. As shown in Figure 3.7 , maximizing
the productive value of the wind resources at issue under this revised set of
facts would require turbine installations at sites U 2 and D 1 —an outcome
resulting in sites worth a combined $600,000. A non-nuisance rule would
be less certain to produce that optimal result than under Scenario #1
because the rule would legally entitle Upwind Developer to install a turbine
on its own most productive site, U 1 . Downwind developer would thus be
at the mercy of Upwind Developer to negotiate a deal whereby Upwind
Developer relocates to Site U 2 , and attempts to strike such a bargain may
fail.
Again, this idea is easier to see through a more detailed explanation using
the dollar values in Figure 3.7 . The only plausible means of reaching the
optimal outcome under Scenario #2 would be a voluntary agreement in
which Downwind Developer paid Upwind Developer between $100,000
and $150,000 to install its turbine at U 2 rather than U 1 . Unfortunately, even