Community-Based
Wind Power:A New Crop for the
Nation’s Small Farmers
Community-Based
Wind Power:A New Crop for the
Nation’s Small Farmers
Dan ThiedeThe Minnesota Project
Dan ThiedeThe Minnesota Project
• Basics: 30-year-old nonprofit organization serving Minnesota & Midwest dedicated to making clean energy work for rural communities
• Research, Education & Outreach: We know small farmers who want to get involved in community wind projects have incredible potential to see economic, environmental and social benefits
• Policy Development: We also know there is much work to be done to create policies that support community wind projects
Who is The Minnesota Project?
Who is The Minnesota Project?
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What is Community Wind?What is Community Wind?
• Definition: Locally-owned wind projects that optimize local benefits
• Locally-owned: One or more members of the local community has a significant direct financial stake in the project other than through land lease payments, tax revenue, or other payments in lieu of taxes
• Community wind: Method & intention of project, not the size• Quote: “Community wind helps get people connected to their
energy use. Local energy production helps to build a better society, a better culture, and a better planet” – MN County Commissioner and Farmer
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Benefits of Community Wind
Benefits of Community Wind
• Economic Benefits:– Revitalizes & stimulates economy– Stabilizes energy prices– Creates jobs
• Environmental Benefits:– Produces Clean Electricity– Keeps Water Sources Clean
Social Benefits:– Promotes energy independence
& national security– Creates a new crop– Promotes local ownership– Galvanizes support &
neutralizes opposition
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Where Are We As A Nation?Where Are We As A Nation?
• Total wind capacityin United Statesis 28,635 MW
• Community-owned wind makes up a small
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Community Wind in Minnesota
Community Wind in Minnesota
• MN set to have 800 MW of community wind capacity by end of 2010
• This is more than any other state in the nation, and can be largely attributed to our community wind
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Wind-Related Policy in Minnesota
Wind-Related Policy in Minnesota
• Community-Based Energy Development (C-BED):– Most aggressive community wind
goal at 800 MW by 2010– Front-end loaded tariff– Utility requirement
• Wind Property Tax Exemption:– Wind energy systems are exempt
from the state's property tax
• RE Production Incentive:– Small wind projects under 2 MW– State incentive of 1.5 cents/kWh– Utility PPA of 3.3 cents/kWh
• Net Metering:– Utility pays retail utility rate for
excess generation (under 40kW)
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Wind-Related Policy in Minnesota
Wind-Related Policy in Minnesota
• Minnesota's Next Generation Energy Act of 2007 included a Renewable Portfolio Standard—one of the strongest in the nation:– 25% by 2025 for most utilities
• 7% by 2010; 12% by 2012; 17% by 2016• 30% by 2020 (25% wind energy) for Xcel Energy
– Protections for Minnesota ratepayers– Encourages local ownership of energy production
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National Wind-Related Policy
National Wind-Related Policy
• American Clean Energy & Security Act (ACES):– Passed U.S. House by vote of 219 to 212 on June 26, 2009– Includes National Renewable Portfolio Standard (RPS) provision, requiring
that investor owned utilities buy a minimum of 15% of their energy from renewable sources by 2015—much of this will come from wind power
– The 15% can also be combined with energy efficiency, to a point– ACES does not preempt state Renewable Portfolio Standards (RPSs), and
states can operate an RPS that is more stringent than the federal program– The U.S. Senate is scheduled to vote on ACES this fall
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Harvesting the Wind on Small Farms
Harvesting the Wind on Small Farms
• Ownership– Small Wind– Land Leases & Associations– Commercial-Scale
Community Wind
• Financing & Incentives
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Ownership: Small WindOwnership: Small Wind
• Definition: Wind turbines with rated capacities of 100 kW and less
• Use: Generally for electricity use on the farm to offset energy costs—will not create a great deal of excess net generation for sale
• Development Steps:– Choosing the turbine that’s right for you– Financing a small wind project – Getting a building permit – Evaluating the site and connecting to the grid
AWEA Small WindDevelopment Toolbox:
www.awea.org/smallwind
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Ownership: Wind Land Lease?
Ownership: Wind Land Lease?
• Popular: Most landowners out there participate in wind via leases • Do your homework: Leases can vary greatly, and you want
to make sure you’re getting a fair deal• Typical leases:
– $2,500 to $5,000 per turbine;– $3,000 to $4,000 per megawatt of capacity, or – 2-4% of gross revenues
• Scaling up: Larger turbines should translate to larger payments
Windustry Land Lease Resources:
www.windustry.org/leases
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Ownership: Landowner Associations
Ownership: Landowner Associations
• Definition: Association comprised of several landowners in a geographic area that market themselves to developers through maps and aerial photos, wind data and environmental assessments, local regulations for siting, and landowner goals and motives
• Benefits to Developers:– Minimizes costs to developer– Create blocks of land owned by landowners educated about wind energy– Political strength of landowners who support wind development in the area
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Ownership: Community Wind
Ownership: Community Wind
• Public Ownership– Municipal utilities– Public schools– Municipalities
• Private Ownership– Individual farmers– Local businesses
• Public/Private Ownership– Groups of local
landowners/investors– Public/private
partnerships
PublicPrivate
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Why Plan a Community Wind Project?
Why Plan a Community Wind Project?
• Under the corporate model, landowners receive: – Land lease payments
• Under the community model, landowners receive:– Land lease payments – Return of development cost,
plus royalty payments; or– Return of development costs,
service fees plus ownership
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Community Wind: Planning a Project
Community Wind: Planning a Project
• Important Steps:– Secure site control – Enter transmission queue studies– Gather wind data– Secure power purchase agreement
with a utility– Get a site permit to construct– Arrange financing for the project
• The biggest questions are:– Who does the work?– Who takes what risks and when?
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Community Wind: Minnesota Flip Model
Community Wind: Minnesota Flip Model
• The Setup: Partnership between landowners & equity investor that allows equity investor to take advantage of federal tax credits while providing local owners the economic benefits of ownership
• How it works:– LLC formed to own & operate project, made up of investor & local owners– LLC agreement allocates financial and governance rights of project– Investor has controlling interest for around 10 years to utilize all tax credits– Controlling interest “flips” to local owners for remainder of the project’s life– Owners can also lease their property to the project
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Community Wind: Trimont Wind Farm
Community Wind: Trimont Wind Farm
• 100 MW Wind Farm (67 1.5 MW GE Turbines)• Organized by group of local farmers and landowners
(Pre-development)• Answered a RFP from Great River
Energy to develop the project• Sold it to PPM Energy• Some opportunity for revenue in
addition to lease payments
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Community Wind: Minwind LLC
Community Wind: Minwind LLC
• 85% percent of the shares must be owned by farmers• During first project, 66 local investors snapped up available shares in
just 12 days—this demand spurred several additional projects• Each Minwind company has a completely different group of people• Today, Minwind operates eleven turbines that can power 3,800 homes• “We wanted a farmer-owned project that would bring economic
development, get farmers a return on their investment, and use local businesses and contractors to do the work” – Mark Willers
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Financing & Incentives Overview
Financing & Incentives Overview
• Federal Support & Opportunities
• State Support & Opportunities
• Private Support & Opportunities
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Financing & Incentives: Federal Support
Financing & Incentives: Federal Support
• Corporate Tax Credits:– Investment Tax Credit (ITC)– Renewable Electricity Production
Tax Credit (PTC)
• Federal Grant Program:– Treasury Grants (in lieu of ITC)– USDA Rural Energy for America
Program (REAP) Grants
• Federal Loan Program:– Clean Renewable Energy Bonds
(CREBs)– DOE Loan Guarantee Program– USDA REAP Loan Guarantees
• Other:– Renewable Energy Production
Incentive (REPI)– Residential Renewable Energy Tax
Credit
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Financing & Incentives: Federal Support
Financing & Incentives: Federal Support
• The American Recovery & Reinvestment Act (ARRA) contains a number of provisions benefitting wind energy on the farm:– Small Wind Turbine Investment Tax Credit (ITC) – 30% tax credit for
purchase & installation of systems rated 100 kW or less– Expansion of CREB program by $1.6 billion– Repeal of subsidized energy financing limitation on the ITC– Extension of bonus depreciation for businesses through 2009– Five-year carryback of net operating losses for small businesses
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Financing & Incentives: State Support
Financing & Incentives: State Support
• The best place to find out what policies and incentives exist in your state for wind energy is the Database of State Incentives for Renewables & Efficiency (DSIRE) at
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Financing & Incentives: Private Support
Financing & Incentives: Private Support
• Capital requirements:– Federal Production Tax Credit– Wind turbines– Development experience
• Probable sources of capital:– PPM Energy, Inc.– Edison Capital– Babcock & Brown– John Deere– Invenergy– Others…
Tap Into your Power as an Advocate
Tap Into your Power as an Advocate
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Learn as much as you can about wind power and work to influence federal, state, and local policies!
Learn as much as you can about wind power and work to influence federal, state, and local policies!
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Learn More & Take ActionLearn More & Take Action
• Organization: The Minnesota Project (link)
• Organization: American Wind Energy Association (link)
• Organization: Windustry (link)• Agency: U.S. Department of Energy,
Wind Powering America (link)• Book: Wind Energy Basics—A
Guide to Home and CommunityScale Wind Energy Systems (link)
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Wrapping Things UpWrapping Things Up
• Economic, social and environmental benefits accrue– Community wind allows for greater local ownership, has 5 times the local
economic impact, and 3.4 times the local job creation impact as a corporate-owned development
• Involve your neighbors and the public– Be prepared to explain how the project will help keep power costs down – Take into account concerns and work with them to build comfort & support
• Projects take hard work, innovation, champions, & policy support– Planning and development typically takes several years– Dedicated team of professionals with consultants in many fields
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Wrapping Things UpWrapping Things Up
Community wind is a quickly growing crop for America’s small farmers!
Questions?
Community wind is a quickly growing crop for America’s small farmers!
Questions?
Dan ThiedeThe Minnesota [email protected]
Dan ThiedeThe Minnesota [email protected]
