Transcript Document

Hardin Hilltop Wind Farm……
An Example of Community Wind in Iowa
Kansas Community Wind Workshop
Cloud County Community College
Concordia, Kansas
October 31, 2006
Thomas A. Wind
Wind Utility Consulting
Jefferson, Iowa
Topics I Will Cover
• Initial formation of
project
• Electrical
Interconnection
• Need for Incentives
• Key Issues
• Economic
Feasibility
• Benefits of the
Project
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Initial Formation of Project
• All wind projects start
with one person…. the
one who has the “crazy
idea”
• It was a crazy idea for
many reasons
• He pesters the others
who then reluctantly
buy into the “crazy idea”
• He becomes the
“champion” for the
project.
Local Land Owners and Farmers who Own the
Wind Turbine Project
3
Hardin Township
Greene County
4
7.35
7.20
7.05
6.90
6.75
6.60
6.45
6.30
6.15
5
Meteorological Test Tower Installed
November 2003 Cost $11,000
6
HHW
Hardin Township
Farmer-Owned
Wind Farm
Proposed in
Greene County,
Iowa
Greene County
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Interconnection
Photo by GE Wind -
High Voltage Transmission System for the Upper Midwest
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High Voltage Transmission System for Iowa
Little generation in this area…
This helps with getting transmission access!
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Interconnecting the Project to the Grid
Point of
Interconnection
The main
interconnection
issues for this
project are the
power factor and
operating voltage
levels at the Point
of Interconnection
There will be a 4month period of
reduced output due
New 34.5 kV
to substation
Underground Line equipment delays.
The wind farm will
Existing 34.5 kV OH also be subject to
Transmission System occasional
curtailments over
its lifetime
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Buffalo Ridge Minnesota this Morning from 10,000 feet
About half of the wind turbines were turned off due to
insufficient transmission capacity
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Key Issues
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Photo by GE Wind -
The Major Challenge for This Project:
--- Wind turbine procurement --• It is a Seller’s Market!
• Most major manufacturers have no wind turbines available
for 2006 or 2007
– Large wind farm developers have purchased most wind
turbines
– Earliest delivery for major new projects may be in 2008
– A few turbines become available as construction
schedules slip
– Three years ago, delivery time was 20-25 weeks
• Manufacturers favor larger orders rather than smaller orders
since they make more money
– In many cases, no manufacturers may even bid on
supplying a single wind turbine
• To get a turbine in the near future you may have to work
through a larger developer
• Avoid single turbine projects unless you have a lot of
money!
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Power Purchase Agreement
• Local utility (Alliant Energy) was required by
PURPA to purchase power
• All power will be sold to the local investor-owned
utility serving in the area
– Fifteen year term contract
– Power sold at utility’s long term avoided cost
(about 3 ¢ per kWh) as required by PURPA
– Green tags are separately valued and sold
• Wind power will be integrated in with the utility’s
other power supply resources
– Alliant likes wind power, one of the largest
purchasers of wind power
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Financial Structure is LLC Flip Model
• Ownership structure based on Minnesota LLC Flip model
– Outside Investor for utilizing income tax benefits (“Tax
Investor”) becomes a partner in your LLC and provides
the majority of the capital
– Ownership flips sometime after 10 years from Tax
Investor to local owner when the tax benefits lapse and
when the Tax Investor achieves his target rate of return
• Seven USDA grants were obtained averaging $247,000
each
– Reduces Production Tax Credit and depreciation basis
for Tax Investor
• Iowa Energy Center $250,000 nine-year zero interest loan
• Local owners will have modest down payment
• Long-term debt partially from local bank and partially from
outside debt sources
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Need for
Incentives to be
Economically
Feasibility
Photo by GE Wind -
The Overall Economics of Wind Generation
is Determined by a Balance of Factors
Cost of
Money
Financial
Incentives
Cost to
Interconnect
Price
of Electricity
Cost of
Turbine
Wind
Speed
Higher Values
DISCOURAGE
Wind
Generation
Higher Values
FAVOR
Wind
Generation
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Selecting Specific Sites
Mean Annual
Wind Speed
In Meters per Second
at 50 Meters
0.02
Mps per
Color
Change
7
1
2
3
4 M
5
6
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1
Wind Turbine #1
M
Met Tower
N
1
2 3
4
5
6
7
Hardin Hilltop
Wind Farm
Turbine 1
Turbine 2
Turbine 3
Turbine 4
Turbine 5
Turbine 6
Turbine 7
Zontos Wind, LLC
Sutton Wind Energy, LLC
Hardin Wind Energy, LLC
Wind Family Turbine, LLC
Poverty Ridge
Cy-Hawk Wind Energy, LLC
Greene Wind Energy, LLC
3.6 Mile 34.5 kV Line
to Center of Wind Farm
34.5 kV
Point of Interconnection
(West Side of WW Sub)
To Jefferson &
Scranton
161/34.5 Sub
To Grand Jct.
161/115/34.5 Sub
Jefferson Water Works Sub
Legend
Wind Turbine
Alliant Substation
Jefferson, IA
Underground 34.5 kV
Alliant OH 34.5 kV
1.0 Mile
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Economic Feasibility
• A small project usually
cannot be cost
competitive on a per
kWh basis with a 100
MW wind project
• Small projects need
something extra to
make them feasible:
– Higher selling price
for the power
AND / OR
– Financial
incentives.
Foundation under construction for 2.1
MW wind turbine near Jefferson, Iowa
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Need for Financial Incentives
• Iowa provides a 1.5 ¢
per kWh tradable state
tax credit for 10 years
• Each local owner
applied for a USDA
Section 9006 grant,
which averaged
$247,000 each
• Each local owner
received a $250,000
nine year zero interest
loan
• All of these were
necessary to be
competitive in this
lower wind speed
area.
Completed foundation for large 2.1
MW wind turbine near Jefferson,
Iowa
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Benefits from
the Project
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Photo by GE Wind -
Locally Generated Power
• Reduces high voltage
transmission grid
losses since power is
generated where it is
used
• Tends to reduce
congestion on the
high voltage grid if the
wind generation is in
an area with little
generation.
Plowing in underground high
voltage cables for wind turbines
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Local Property Taxes
• Iowa allows the
county board of
supervisors to phase
in and abate property
taxes for privatelyowned wind
generation projects
• The Hardin Hilltop
project will pay about
$25,000 per turbine
per year after the 7
year phase-in period.
The view from top of one farmerowned wind turbine in Iowa
(235 feet high)
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Electrical Infrastructure
• The construction of
the turbines, electric
lines and substations
adds to the electrical
infrastructure
• The established wind
site and equipment
will have value after
the normal wind
turbine lifetime of 2025 years
• This value is often
ignored, but it may be
very significant in the
long term.
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• The proposed
wind farm
would generate
about 47,000
megawatt-hours
per year
Paton
Proposed
Locally-Owned
15 MW
Wind Farm
Churdan
• Jefferson uses
about that same
amount of
energy per year
• The Proposed
Wind Farm Will
Be a Significant
Supplier of
Electricity to the
County
Grand Jct.
Scranton
Jefferson
Rippey
• The whole
county uses
about 100,000
MWH per year
• Along with a
second
hypothetical
wind farm about
the same size,
the two wind
farms would
generate enough
energy on
average to
provide all of the
county’s
electricity needs.
Paton
Hypothetical
Second
Wind Farm
Churdan
Grand Jct.
Scranton
Jefferson
Rippey
•
The 15 MW
Locally-Owned
Wind Farm Will
Save the
Equivalent of
Enough Coal To
Fill a Train 3
Miles Long Every
Year
Paton
Churdan
Proposed
Locally-Owned
15 MW
Wind Farm
Grand Jct.
Scranton
Jefferson
Rippey
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