Minwind III - IX, Luverne, MN: Community Wind Project

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.


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