Wind Energy Options for Farmers, Ranchers & Rural Landowners. Lisa Daniels, Windustry Executive Director. Warren, MN June 18, 2008

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1 Wind Energy Options for Farmers, Ranchers & Rural Landowners Lisa Daniels, Windustry Executive Director Warren, MN June 18, 2008

2 Outline About Windustry What makes a good wind project Wind Options and Lease agreements Community wind: What is it? A few success stories

3 Who is Windustry? Windustry promotes progressive renewable energy solutions and empowers communities to develop wind energy as an environmentally sustainable, communityowned asset. Through member supported outreach, education and advocacy we work to remove the barriers to broad community ownership of wind energy.

4 Windustry Non-profit organization based in Minneapolis, MN - work locally, regionally and nationally Focus on landowner/community options Wind Farmers Network National Community Wind Energy Conference

5 Windustry Resources: Community Wind Toolbox

6 Yep, they make some noise, but it s the soothing sound of money being made. Louis Woodward, Texas Rancher,Landowner Prepared by Virtus Energy Research for Public Citizen and the SEED Coaltion

7 An up close look: What makes a good wind project?

8 What makes a good wind project? Average wind speed Verifiable data more one year

9 What makes a good wind project? Average wind speed Proximity/access to the power grid

10 What makes a good wind project? Average wind speed Proximity/access to the grid Cost of capital

11 What makes a good wind project? Average wind speed Proximity/access to the grid Cost of capital State and Federal incentives

12 What makes a good wind project? Average wind speed Proximity/access to the grid Cost of capital State and Federal incentives Market for the power

13 Landowner Options Lease your land to a wind project Local project External developer Be a partner in a community wind project Put up a residential or farm size wind turbine for your own power

14 Wind Development: Risk vs. Reward Lower Risk & Responsibility: Lower Reward Intermediate Risk & Responsibility: Intermediate Reward Greater Risk & Responsibility: Greater Reward Leasing Land Wind Company, Utility Cooperative, Investment Pool, Partnership Individual Ownership

15 Options for easements and leases are typical components of most wind energy projects, large and small.

16 Windustry s Package of Lease/Easement Resources Materials in this Package: Easements and Lease Agreements What might appear in these contracts and what to watch out for. An updated version of Windustry s original Wind Energy Easements: Legal Issues. Compensation Compilation of compensation packages from real wind projects. Policy and Best Practices Recommendations and Proposals to facilitate sustainable wind development. Bibliography of additional resources.

17 Wind Energy Options for Leases and Easements Main way for landowners to participate in wind energy development No cash outlay Low financial risk Few standards: range from good to bad to ugly. Compensation varies widely based on turbine size, wind resource, price of energy and many other factors. Long term commitments usually last 20 to 40 years. Best results when landowners make informed decisions.

18 Windustry s Package of Lease/Easement Resources Primary Goals of this Work: 1) To help landowners make informed decisions about their land. 2) To promote land agreement practices that are mutually beneficial to landowners and project developers. Motivation: Wind development must be an asset for both the owners of windy land and their local communities for the industry to thrive long term. Wind energy is a significant economic opportunity for rural communities if windy landowners and communities are well informed partners in the development process.

19 Before you sign on the dotted line How much of my land will be tied up and for how long? How much will I be paid and how will I receive payments? Are the proposed payments adequate now and will they be adequate in the future? How will a wind project impact my other land uses? Have I considered all of my other options and is this the best one for me? More questions listed in the Outline.

20 Compensation Packages How much can you expect? Old: $2,000 per turbine year. Based on turbines in the kw range. Average figure popularized in late 1990s. New: bigger turbines (1,500-2,500 kw) usually mean bigger payments. Price of energy is another key factor (especially in contracts that offer a % of revenue) Other factors to consider: wind resource, transmission access, competition, value of alternative land uses, geographic region.

21 Compensation Packages: Examples Project State Year Size Turbine Per turbine* Per MW* Lake MN Benton I Storm LakeIA MW 193 MW 750 kw 750 kw $1,500 $2,000 ($ % rev) $2,000 $2,667 $1,200- $2,400 $2,667 $2,667 Vancycle Ridge Top of Iowa Woodward OR IA OK MW 80 MW 102 MW 660 kw 900 kw 1,500 kw $1,500- $2,000 $2,400 $4,000 High Winds CA MW 1,800 kw $9,500 $5,185 Trimont Crescent Ridge MN IL MW 55 MW 1,500 kw 1,650 kw $3,500- $4,500 $5,000 (minimum) $2,500- $3,000 $3,030 *Several figures are based on estimates and averages. Payments to individual landowners may vary.

22 What is Community Wind? Working Definition: Locally owned, commercial-scale wind projects that optimize local benefits. -Locally owned means that members of the local community have a significant direct financial stake in the project other than through land lease payments, tax revenue, or other payments in lieu of taxes.

23 Benefits of Community Wind All the benefits of large wind development, plus: Greater stimulation of local economies Increased local energy independence Increased competition in energy markets Greater acceptance of wind power

25 Moving Community Wind Out of the Midwest: Community Wind Energy 2008 in Albany, NY

26 Minnesota Supports Community Wind Through Public Policy Utility resource acquisition requirements Renewable Energy Objective Renewable Development Fund Production Incentives Small Wind Energy Tariff Department of Commerce and USDA Grants Community-Based Energy Development Tariff

27 Wind Energy An Economic Opportunity for Rural Communities Benefits of Conventional Wind Projects Wind easements and land owner payments ($3,000-$5,000 per year per MW) Local tax revenue (Lincoln County, MN collected $471,822 from 156 MW in 2003) New jobs and investment in rural communities.

28 Community Wind Energy A new economic opportunity Benefits of Community Wind Projects Same benefits as conventional projects, PLUS: Creates bigger economic opportunity for farmers, local investors, industry, and local businesses. Keeps energy dollars local and electricity sales revenue local. Builds more local support for wind energy by keeping more of the benefits local.

29 Community Wind in Minnesota Project Type Farmer & Privately Owned Municipal Utility Rural Electric Coop Public Schools (K-12) Public University Private College Total Megawatts Source: Windustry Database February 2006

Kas Brothers Plant 25-Year Cash Crop First farmer-owned, commercial-scale project in U.S. Two 750 kw NEG Micon turbines installed in 2001.

30 Kas Brothers Plant 25-Year Cash Crop First farmer-owned, commercial-scale project in U.S. Two 750 kw NEG Micon turbines installed in Financed with local banks Dozens of farmers in MN now following this model. Some with an equity partner, some without. Richard and Roger Kas Woodstock, MN

31 Minwind Energy, Luverne, Minnesota Farmer Ownership: Nine LLCs, 11 wind turbines owned by 200+ local investors. Installed in 2002 and Goals: local economic dev., maximize return on investment, diversify local economy.

32 Bankers Lawyers Minwind Board USDA Contractors Elected Officials Equipment Suppliers State Energy Office Accountants Developer Accountants Minwind CEO Investors

Moorhead Public Service Moorhead, Minnesota Two 750 kw turbines, installed in 1999 and 2001. Public utility- used their own funds to purchase the machine.

33 Moorhead Public Service Moorhead, Minnesota Two 750 kw turbines, installed in 1999 and Public utility- used their own funds to purchase the machine. Among the highest subscription rates in the nation and one of the early successful municipal projects. Several good Iowa examples as well, including Waverly, IA.

34 Illinois Rural Electric Cooperative Pike County, Illinois Planning a spring 2005 ribbon cutting for a 1.65 MW turbine. Inspired by new IL wind maps that show some of the best wind in the state to be in IREC territory. Turbine will generate about 4% of IREC s power needs, close to the 5% limit in wholesale power contract. Project supported by 3 grants (USDA, IL state grant, and IL Clean Energy Foundation) IREC Engineering Manager and project leader Sean Middleton.

35 School Wind Projects: K-12 Wind turbines can supply schools with clean energy, new revenue, and learning opportunities. 8 school districts in Iowa have wind turbine from 50 to 750 kw Spirit Lake Schools pioneered the idea in 1993 with a 250 kw turbine, followed by a 750 kw turbine in Other school projects in MN, IL, CO, PA, VT, MA, MI, tribal communities Spirit Lake, Iowa

Carleton College Northfield, Minnesota Dedicated a 1,650

a large scale turbine. Supported by MN Dept.

standard tariff for small wind projects.

36 Carleton College Northfield, Minnesota Dedicated a 1,650 kw wind turbine in September 2004 First college to have a large scale turbine. Supported by MN Dept. of Commerce Community Wind Rebate, MN REPI, and Xcel standard tariff for small wind projects. First of many planned college and university projects Carleton Turbine in November 2004

37 Lamar, Colorado Local project piggybacked on large wind project. Four 1.5 MW GE turbines less than 25 miles from CO Green, a 162 MW project in Lamar Municipal Utilities (Lamar Light & Power and Arkansas River Power Authority) timed their project to coincide with Colorado Green. Coordinated with CO Green to lower development, construction and maintenance costs.

Rosebud Sioux Tribe Rosebud, South Dakota Dedicated a 750 kw turbine in May 2003. Helped by DOE Tribal grant program and USDA RUS loan.

38 Rosebud Sioux Tribe Rosebud, South Dakota Dedicated a 750 kw turbine in May Helped by DOE Tribal grant program and USDA RUS loan. Breaking Trail First step for the ambitious wind power goals of Great Plains tribes. Project leaders Pat Spears and Bob Gough Photo courtesy of Intertribal COUP

39 SMI & Hydraulics, Inc. Porter, Minnesota Photos courtesy

40 Wind energy is where we need to go it s good for the environment and builds American energy independence and American industry. Our family owned business can work profitably in wind power. Gary Stoks CEO, SMI Hydraulics Porter, Minnesota

41 What do Community Projects Need? Access to equipment New and innovative ownership models Low cost financing Incentives that level the playing field Market for energy Pathway to market

42 Project Cost Escalation Construction and equipment costs up 30-60% in last 2 years Booming industry Turbines and towers, construction teams and expertise are scarce Rise of price for copper, steel and other materials Higher transportation costs Warranty contracts

43 Interconnection and Delivery Issues Midwest ISO territory map

44 New Transmission and Wind Resource Maps = New Planning Approach Find maps and study report at: Study performed by CapX 2020 Utilities

45 Policy Opportunities Energy topics are hot at both the state & federal level Policy need to hit the mark to address barriers Now is the time to open dialogue with elected officials

46 In Summary: Work to get the incentives right Work to increase the opportunities for local ownership with diverse array of business models; there are no standards Stay current; the market and the legislative landscape is changing Work together for a stronger voice

47 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. David Benson Farmer and Nobles County Commissioner Bigelow, Minnesota

48 Contact Info: toll free (800) Lisa s phone (612) lisadaniels@windustry.org

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