Community- Based Wind Power:

Transcription

1 Community- Based Wind Power: A New Crop for the Nation s Small Farmers Dan Thiede The Minnesota Project

2 Who is The 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

3 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

4 Benefits of Community Wind Economic Benefits: Revitalizes & stimulates economy Stabilizes energy prices Creates jobs Environmental Benefits: Produces Clean Electricity Social Benefits: Promotes energy independence & national security Creates a new crop Promotes local ownership Galvanizes support & neutralizes opposition Keeps Water Sources Clean

5 Where Are We As A Nation? Total wind capacity in United States is 28,635 MW Communityowned wind makes up a small

6 Community Wind in MN set to have 800 MW of community wind capacity by end of 2010 Minnesota This is more than any other state in the nation, and can be largely attributed to our community wind

7 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 RE Production Incentive: Small wind projects under 2 MW State incentive of 1.5 cents/kwh Utility PPA of 3.3 cents/kwh Wind Property Tax Exemption: Wind energy systems are exempt Net Metering: Utility pays retail utility rate for excess generation (under 40kW) from the state's property tax

8 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 % by 2020 (25% wind energy) for Xcel Energy Protections for Minnesota ratepayers Encourages local ownership of energy production

9 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

10 Harvesting the Wind on Ownership Small Wind Land Leases & Associations Commercial-Scale Community Wind Small Farms Financing & Incentives

11 Ownership: 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 AWEA Small Wind Development Toolbox: Evaluating the site and connecting to the grid

12 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 Windustry Land Lease Resources: 2-4% of gross revenues Scaling up: Larger turbines should translate to larger payments

13 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

14 Ownership: Community Wind Public Ownership Municipal utilities Public schools Municipalities Public/Private Ownership Groups of local landowners/investors Public/private partnerships Private Ownership Individual farmers Local businesses Public Private

15 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

16 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?

17 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

18 Community Wind: Trimont Wind Farm 100 MW Wind Farm ( 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

19 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

20 Financing & Incentives Federal Support & Opportunities Overview State Support & Opportunities Private Support & Opportunities

21 Financing & Incentives: Federal Support Corporate Tax Credits: Investment Tax Credit (ITC) Renewable Electricity Production Tax Credit (PTC) Federal Loan Program: Clean Renewable Energy Bonds (CREBs) DOE Loan Guarantee Program USDA REAP Loan Guarantees Federal Grant Program: Treasury Grants (in lieu of ITC) Other: Renewable Energy Production Incentive (REPI) Residential Renewable Energy Tax Credit USDA Rural Energy for America Program (REAP) Grants

22 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

23 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

24 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

25 Tap Into your Power as an Advocate Learn as much as you can about wind power and work to influence federal, state, and local policies!

26 Learn 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 Community Scale Wind Energy Systems (link)

27 Wrapping 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

28 Wrapping Things Up Community wind is a quickly growing crop for America s small farmers! Dan Thiede The Minnesota Project dthiede@mnproject.org Questions?