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Farmers and Local Groups
On June 16, 1997, Sacred Heart Monastery began producing electricity from wind turbines. They had installed two, used Silver Eagle wind turbines with Micon internal workings. At the time they ventured into this project, just about everyone told them it was a “bad” idea.
This story is chronicalled on the The Benedictine Sisters of Sacred Heart Monastery Website
Small Wind Turbines in Illinois
Kendall County, Illinois
Gary Kizior installed a 10 kW Bergey turbine in December 2002, replacing his old Whisper 3 kW machine. It sits on the same 80-foot tip-up tower that Whisper machine used. This project was half funded by the Illinois Renewable Energy Resources Grant Program and was among the first small turbines in the state to receive a grant through this program.
Gary chose a Bergey Excel 10 kW generator with a 23-foot diameter rotor because it had a reputation for quality and being low maintenance. There are no regular lubrications required and he anticipates very low costs for upkeep and repair in the future. The turbine cost approximately $20,000.
Gary applied to the Illinois Department of Commerce for funding in July of 2002. Two months later he learned that his application had been approved and after submitting some additional paperwork he received his check in a few weeks. Wind turbines from 5 kW to 200 kW currently are eligible for grants for up to 50 percent of the hardware and installation costs through this state program.
This project took advantage of the exemption from zoning restrictions for agricultural projects in agriculturally zoned areas of the state of Illinois. This is a low-hassle route for farmers interested in small wind turbines.
Gary has a wind anemometer mounted 65 feet off the ground on the 80-foot tower. Data collected last year showed the annual average wind speed at this height to be 9.5 miles per hour. However, according to Gary, 2002 was a lower than average wind year, especially during the winter. The Bergey Windpower website has a calculator designed to model cash flow and payback periods for Bergey products. The calculator shows that an average annual wind speed of 9.5 mph will yield a yearly production of 7,923 kilowatt-hours, or an average monthly output of 660 kilowatt-hours. This figure is based on an open site for the turbine free of obstacles to the wind. Gary's site and electrical configuration produces a little bit less than this estimate. He uses a transformer and existing inverter to charge batteries at the same time. These both consume power and reduce the amount he can sell to Commonwealth Edison through the company’s net metering program.
Gary reports that he is saving approximately $500-$600 per year in electricity costs. ComEd reduces his monthly bill by the avoided cost rate (approximately $0.02 per kilowatt hour) for the energy that he generates. Then at the end of the year ComEd calculates the total amount of electricity he used and amount of electricity he generated at the summer and winter peak and off peak rates, resulting in ComEd sending a check for the additional amount. In the end, he will average closer to $0.09 per kilowatt-hour for the electricity he offsets by generating his own power. Simple payback on such a system is 15-20 years, after the grant award. This payback is for the turbine only; Gary used an existing tower and electronics and the cost of those is not included in this analysis. Bergey advertises their turbine and inverter as $22,900 and an 80-foot tower that tips up is $8,400. Labor would cost extra if you don’t do all the work yourself.
This project demonstrates one of the best scenarios available for landowners interested in buying a small turbine in Illinois. Gary was able to use both of the state’s strongest incentive programs for small wind turbines: ComEd’s net metering program and the state grant program. Illinois residents outside ComEd’s territory might still be eligible for the state grants if they live in the service territory of another investor owned utility. However, they will not be eligible for net metering and could only expect to receive the avoided cost rate for their excess electricity. Receiving roughly $0.02/kWh rather than closer to $0.09/kWh would significantly lengthen the payback period for the turbine.
From the Great River Energy Press Release
Trimont, Minn. - The Trimont Area Wind Farm, the nation’s largest landowner-developed wind farm, was officially dedicated on Saturday, July 8 at the Trimont Chocolate Festival. Generating enough electricity to serve the annual energy needs of nearly 29,000 Minnestoa homes, the wind farm consists of 67 wind turbines, each nearly as tall as a 30-story building.
The project, developed and operated by Portland-based PPM Energy, provides power to Great River Energy, which distributes the renewable energy to member electric cooperatives throughout Minnesota.
“This project is a significant step that will help spur the creation of homegrown, renewable energy in our state and in our region,” said Jon Brekke, vice-president, member services, Great River Energy. “The land continues to be owned and farmed by local landowners, and energy customers throughout the state will benefit from the wind energy produced at the Trimont Area Wind Farm.”
Tim Seck, business developer, PPM Energy, adds: “The Trimont Area Wind Farm has become a model for community wind across the country, and we hope to replicate the success elsewhere as well as expand Trimont.”
The wind farm generates up to 100 megawatts (MW) of clean, renewable energy. Forty-three landowners in the area partnered with PPM Energy and Great River Energy to develop the project, which will help Great River Energy meet the Minnesota Renewable Energy Objective, calling on electric utilities to produce 10 percent of their energy from renewable sources by 2015.
The project will generate more than $1 million in local economic impact to the Trimont area in the form of taxes, easement payments, landowner revenue participation payments and jobs.
Neal VonOhlen, chief manager of the Trimont Area Wind Farm and a local farmer, notes his satisfaction with the project saying, “As a Minnesota farmer, I understand the value of wind energy to my farm, my community and the importance of it to our partners in the project. We’re incredibly excited to dedicate the wind farm, and look forward to producing energy for many years to come.”
Wind energy is the fastest growing energy source, with an annual average growth rate of more than 35 percent since 2001.
Kas Brothers Plant 25-Year Cash Crop This Season: Wind Power
From one perspective, Richard and Roger Kas of Woodstock, Minnesota are typical Midwestern farmers who have grown up farming the family land with their father, William Kas. But this family has something unmistakably unique taking place on their farm. They have seventeen modern wind turbines on their land, generating enough electricity to power 4300 households, and they’re about to put up two more. What is even more unique is that the Kas brothers will own these two new commercial-scale wind turbines. This is the first project of its kind in Minnesota, and possibly in the whole Midwest. Kas Brothers Wind Farm
The wind development came about pretty quick in Southwest Minnesota when the legislature mandated that Northern States Power, now called Xcel Energy, contract 425 MW of wind generated electricity by 2002 in exchange for allowing nuclear waste to be stored outside the Prairie Island Nuclear Plant. Landowners signed leases giving the utility and wind development companies rights to put wind turbines on a portion of their land. The Kas family was part of this group of landowners. But they chose their developer carefully.
Read this article in the Spring 2001 Windustry News.
The Minwind projects are a series of nine farmer-owned wind projects near the town of Luverne in southwestern Minnesota. All of the Minwind projects were based around the idea that local ownership is central to maximizing local benefits, and the projects are intended to both generate new income for farmers and benefit the local community’s economy.
The first two projects, Minwind I and II, were completed in the fall of 2002, and each consist of two NEG Micon 950 kW turbines. These were among the first farmer-owned turbines in the nation. Minwind III through IX came online in 2004, and each of these consists of a single, 1.65 MW NEG Micon turbine.
The Minwind projects grew out of discussions among a group of farmers about various options for developing agriculture-based energy projects. After noticing the similarities between community wind and cooperative ethanol production, the group decided to begin putting the pieces together for a community wind project.
When Minwind I and II were opened to investors, 66 investors from the region eagerly snapped up all the available shares in both companies in only 12 days. Because of the demand for opportunities to participate in renewable energy projects and the success of the first two projects, planning for the second set began almost immediately following completion of the first.
Minwind’s successful model of community wind development has engaged more and more rural Minnesotans interested in this new investment opportunity. “Our goal was to help as many rural people as we possibly could,” says Minwind Energy CEO, Mark Willers.
The Minwind projects were developed with many objectives in mind, including:
• Generating renewable energy
• Creating local employment opportunities
• Maintaining group ownership
• Keeping profits local
• Using proven technology
• Sustaining stable management
• Creating long-term marketing
• Participating in the future
With local individuals at the heart of development, the Minwind projects are maximizing local benefit in many ways: through economic development, returns on investment, and business relationships. While describing local business support, Willers explains that “the [Minwind] group became friends with the Duluth Port Authority because they shipped turbines in through Duluth. This led to a good relationship with [them] and the discussion of future business relationships.”
What did it take to get these turbines spinning? The short answer is: cooperation, persistence, and creative funding.
After the success of Minwind I and II, participants in III-IX were asked to contribute $500 for research and development funds to see if the new projects would work. Investors knew that their deposit would not be returned if the projects did not fly. This shared commitment carries through into the projects’ governance structure. All nine Minwind management groups are organized as limited liability companies (LLC), and Minwind projects III through IX are largely based on the same cooperative principles as Minwind I and II:
• All shareholders must be Minnesota residents, 85% of whom must be from rural communities.
• Ownership is limited to a maximum of 15% per project for each investor.
These two criteria ensure that both the investment opportunities and the returns remain in local hands. By capping the amount of shares allowable per owner, Minwind is able to open this opportunity to a large number of small investors. “We didn’t do all kinds of work to get a PPA [power purchase agreement] and then have an MBA team come down here and buy the whole thing,” Mark Willers explains. “That’s not what we’re about.”
In addition, projects III-IX included a few new investor conditions to further ensure local control on the wind projects:
• Each Minwind Company has a completely different group of people.
• The business structures were carefully designed to ensure that the shares can be transferable among family members.
These new rules go even further to ensuring that the maximum number of rural investors has an opportunity to participate in the projects, and that the charter members will be able to pass shares to their children, and not have to sell them off to outsiders.
Willers emphasizes the importance of carefully considering the business plan for a wind project, saying, “If you are looking at owning some wind turbines, you need to understand where you’re going. Does the revenue come back to one person, a group, a school, a hospital?”
In additional to the contributions from local investors, Minwind III-IX took advantage of renewable energy grants from the United States Department of Agriculture (USDA). Like all aspects of developing community wind projects, the USDA application process was one that required a lot of time and meticulous attention. “Its good business, but those things take extra time,” said Willers. “You go over it a third time to make sure that these are the criteria USDA needs so there are no mistakes.” Each project was awarded $178,201 in USDA Farm Bill Section 9006 grant funds for expenses including engineering, transmission, equipment, and construction.
The financing of the Minwind projects is unique in that the projects are not dependent on the Production Tax Credit (PTC) for financial viability. The PTC provides a tax credit to wind power producers based on the amount of electricity produced over their first ten years of operation. Minwind investors are individually eligible for the PTC, in an amount proportionate to their investment. It was left to the individual investors whether or not they will participate in the PTC. Willers says that the Board’s decision not to rely on the tax credit for financing brought some additional stability and certainty to the project’s development.
Securing a Power Purchase Agreement (PPA), which defines the rate paid for the wind energy over a set number of years, is a critical factor in the success of any wind project. For the Minwind projects, negotiating both the PPA and the interconnection agreement (which allows the turbines to hook into the larger electrical grid) required working closely with Xcel Energy, which was a relationship that “needed to be built,” noted Willers. “We need to understand where we’re all going – not just show up one day saying, ‘Oh, by the way, we’re going to hook up to your transmission line.’” Willers noted that developing a close, working relationship with the utility early in the process was very important to the success of the projects.
One other key to the success of the Minwind projects was that in both phases, they were able to find and purchase turbines with relative ease. With the recent rapid expansion of the larger wind energy market, many wind turbine manufacturers are sold out two years in advance, which can be challenging for smaller projects to plan around.
In the end, the Minwind projects involved enormous investments of time and energy from project participants, but those involved believe their efforts have been worthwhile. “We’ve spent an incredible amount of time on this, but we needed to do it for our community and our friends who are farmers,” said Willers.
In 2000, a group of farmers in Luverne, Minnesota began to hatch a plan to build farmer-owned wind turbines in Rock County. Their goal was to find an investment that would generate new income for farmers and have economic benefits for the local community. The rapid growth of the wind industry around the country and the great success of wind farming on the nearby Buffalo Ridge made developing wind energy a natural choice. “We wanted a farmer-owned project that would bring economic development, get farmers a return on their investment, and could use local businesses and contractors to do the work,” said Mark Willers, a project leader and farmer from Beaver Creek, Minnesota.
“We are trying to get farmer ownership of wind projects to the forefront and it has been a challenge, but with dedicated people like Mark Willers and Tom Arends we’re making great strides.” –Dave Kolsrud, Corn-er Stone Farmers Cooperative.
Read the full in the Fall 2002 Windustry Newsletter.
Mackinaw City's Wind Turbines
In 2001, Mackinaw City leased Village-owned land for the construction of two wind turbines by a private developer. Along with generating energy, the turbines are currently used to train new professional wind turbine technicians from Michigan’s Kalamazoo Valley Community College as part of their curriculum.
Read more about this project on the Mackinaw City web site.