Transcript Communities Benefit from Wind Energy

Wind Energy:
Landowner Options
Lisa Daniels,
Windustry Executive Director
Great Lakes Regional Wind Institute
Webinar
October 11th, 2007
“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
Outline





About Windustry
Levels of involvement in wind
Community Wind in the US
Why are Minnesota and Iowa leading in
community wind development?
A few success stories
Landowner Options for Wind
Development
Landowner Options

Lease your land to a wind
project




Local project
External developer
Be a partner in a
community wind project
Own a residential/farm size
turbine for your own power
Wind Development Options:
Risk vs. Reward
Lower Risk &
Responsibility
Intermediate Risk
& Responsibility
Greater Risk &
Responsibility
Leasing Land to a
Wind Company or
Utility
Cooperative,
Investment Pool,
Partnership
Individual
Ownership
Easements and Leases
are typical components
of most wind energy
projects, large and
small.
Windustry’s Package of
Lease/Easement Resources
Wind Easement Work Group - team of wind
industry and landowner experts:







Lisa Daniels, Executive Director of Windustry
Ed DeMeo, President, Renewable Energy Consulting Services,
Inc., California
Van Jamison, POWAIR, Montana, consultant and small wind
project developer
Joe Richardson, North Dakota landowner
Steve Wegman, South Dakota Public Utilities Commission
Fred Zalcman, Executive Director, Pace Law School Energy
Project, New York
Windustry staff and consultants
Wind Energy Leases and
Easements



Most common way that landowners are participating 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

knowledge level of landowner
and many other factors.
Long term commitments – usually last 20 to 40 years.



Best results when landowners make
informed decisions.
Sustainable Wind Energy
Development
Windustry’s Lease/Easement Resources Goals:
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.
Windustry’s Package of
Lease/Easement Resources
1) 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.”
2) Compensation – Compilation of compensation
packages from real wind projects.
3) Policy and Best Practices – Recommendations
and Proposals to facilitate sustainable wind
development.
4) Bibliography of additional resources.
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.
Types of Compensation Packages

Fixed payments



Royalty or Percentage of Revenue



Preferably includes an escalator
Advantage: stable income for landowners, low risk
Need to have access to relevant information about
power sales.
Advantage: Landowner has a vested interested in the
success of the project.
Combination



Fixed payment plus a percentage of revenue
Fixed payment OR a percentage of revenue (usually,
whichever is greater)
Equity partnership
Compensation Packages
How much can you expect?




Old: $2,000 per turbine year.
 Based on turbines in the 600-750 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.
Compensation Packages: Examples
Project
State Year Size
Turbine
Per turbine*
Per MW*
Lake
MN
Benton I
Storm Lake IA
1998
107 MW 750 kW
$1,500
$2,000
1999
193 MW 750 kW
$2,000
$2,667
Vancycle OR
Ridge
Top of
IA
Iowa
Wood-wardOK
1999
25 MW
660 kW
$1,500- $2,000
2002
80 MW
900 kW
$2,400
$1,200$2,400
$2,667
2003
102 MW 1,500 kW
$4,000
$2,667
High WindsCA
2003
162 MW 1,800 kW
$9,500
$5,185
Trimont
MN
2005
100 MW 1,500 kW
$3,500- $4,500
Crescent
Ridge
IL
2005
55 MW
$5,000
$2,500$3,000
$3,030
1,650 kW
($750 + 2 % rev)
(minimum)
*Several figures are based on estimates and averages. Payments to individual landowners may vary.
Recent Articles

Wall St. Journal, March 13, 2007
Texas Wind Powers - A Big Energy Gamble
“In this pancake-flat country…Royal Dutch Shell Group, BP PLC and a wind-development
company owned by Goldman Sachs Group Inc. are racing to lease vast expanses of
ranchland. In a bet on wind power's long-term viability, they're planning to erect what
would be some of the biggest wind farms in the world, with thousands of wind turbines
costing some $2 million apiece.”
 The Amarillo Globe-News, March 25, 2007
Companies outline details of wind power projects
“A blizzard of paper blew into Austin on Wednesday and Thursday as wind power
companies filed details on their plans in the Panhandle…. From the eight companies that
include details of land deals, at least 477,000 acres, or 745 square miles, are leased for the
right to use them for wind farms or are the subject of negotiations.”
Recommendations




Always consult a qualified attorney before
signing a contract.
Consider how a wind easement/lease will
impact how you use your land (farming,
ranching, hunting, recreation etc.). Contracts
should be clear on this point.
Consider negotiating for non-monetary
compensation, such as access to wind resource
data.
Learn as much as you can about wind energy
and the specific project and company in
question.
Recommendations
(continued)




For royalty based compensation packages,
consider what it would take to exercise your
audit rights.
Carefully weigh your alternatives, expectations
and goals. You don’t have to sign the first
contract you see.
Work together. Whether you’re negotiating with a
wind developer or trying to market your land
with neighbors.
Worth Repeating: Always consult a qualified
attorney before signing a contract.
Additional Wind Energy Legal
References

Farmers’ Guide to Wind Energy: Legal Issues in Farming the Wind
Farmers Legal Action Group
http://www.flaginc.org/topics/pubs/index.php

Harvesting the Wind: A Legal Guidebook for Landowners
NYSERDA Wind Energy Tool Kit
www.powernaturally.org

The Law of Wind: A Guide to Business and Legal Issues
Stoel Rives LLP
www.stoel.com/resources/articles/renewableenergy/LawOfWind.pdf

Minnesota Model Wind Ordinance (2005)
The Minnesota Project, Lyon County (MN), Southwest Regional Development Commission,
Pipestone County (MN), Nicollet County (MN)
http://www.mnproject.org/e-windresources-tech.html

Wind Energy Guide for County Commissioners
Mike Costanti, Peggy Beltrone, U.S. Department of Energy, National Renewable Energy
Laboratory, Wind Powering America, National Association of Counties
http://www.eere.energy.gov/windandhydro/windpoweringamerica/pdfs/wpa/county_commissi
oners.pdf
Wind Project Ownership
Levels of Local Involvement
Varying Degrees of local
Involvement/Value-added
•
Some local organizing, equity and
investment
•
May or may not be locally owned
Lower Levels of local
Involvement
•
•
Conventional Developer
Owned Wind Projects
Local involvement limited
to taxes, land leases, and
indirect economic benefits
High Local Involvement



Public Projects
Community or Farmer
Owned Projects
Examples: Minwind
Energy, Spirit Lake
Schools, Municipal
Utility or REC
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 has a significant direct
financial stake in the project other than
through land lease payments, tax revenue, or
other payments in lieu of taxes.
Local/Community
Ownership Options

Municipalities & Municipal Utilities
Palmdale, CA; Algona, IA; Moorhead, MN

Rural Electric Cooperatives
Farmer/Local Investors

Schools

Tribal Communities

LLCs, Investors Pools, Cooperatives; Kas
Brothers • Minwind Energy
Spirit Lake, Iowa • Carleton College, Northfield,
MN
Example: Rosebud, SD
Spirit Lake, Iowa
Key Incentives in leading
Community Wind States

Minnesota:



Iowa:



Production payment for projects under 2 MW.
Standard tariff and power purchase contract for wind
projects under 2 MW.
Iowa Energy Bank- low interest loans.
Net metering- unlimited for matched loads.
Successful incentives address financing issues,
provide access to capital, and/or strengthen
the market for community wind.
Recent Support for Community Wind in
Minnesota and Iowa: 2005, 2006, & 2007

Minnesota: Community-Based Wind Energy
Development (C-BED Tariff)



MN utilities required to establish a C-BED tariff based on
the net present value of the energy.
Provides a framework for negotiating power purchase
agreements between utilities and qualifying community
projects.
Iowa: Personal Tax Credit for Small Renewable
Energy Projects




For wind projects up to 2.5 MW owned by an Iowa
resident, a farm operation or an electric cooperative.
1.5¢ per kilowatt-hour tax credit for 10 years.
Available for 90 MW starting in July ‘06.
Expanded and extended in 2006
Policy Resources

Reaching Community Wind’s Potential
Windustry
http://www.windustry.org/sites/windustry.org/files/FLAG_Report.pdf

Community Wind: A Review of Select State and Federal Policy Incentives
Farmers’ Legal Action Group
http://www.flaginc.org/topics/pubs/arts/CommWindAug06.pdf

The Farm Bill
Environmental Law and Policy Center
www.farmenergy.org

Community vs. Corporate Wind: Does it Matter Who Developes the Wind
in Big Stone County, MN?
University of Minnesota, Morris: Arne Kildegaard Ph.D. and Josephine MyersKuykindall
http://cda.mrs.umn.edu/~kildegac/CV/Papers/IREE.pdf

The Debate over Fixed Price Incentives for Renewable Electricity in
Europe and the United States: Fallout and Future Directions
Wilson Rickerson and Robert Grace
http://www.boell.org/Pubs_read.cfm?read=161
Wind Energy – An Economic
Opportunity for Rural Communities

Benefits of Conventional Wind Projects



Wind easements and land owner payments
($3,000-$6,000 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.
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.
Additional Community Wind
References

Community Wind Energy Toolbox
Windustry
http://www.windustry.org/CommunityWindToolbox

NYSERDA Wind Energy Tool Kit
New York State Energy Research and Development Authority
http://www.powernaturally.org/Programs/Wind/toolkit.asp

Community Wind: An Oregon Guidebook
Energy Trust of Oregon
http://www.energytrust.org/RR/wind/community/forms_request.html

A Comparative Analysis Business Structures Suitable for
Farmer-Owned Wind Power Projects in the United States
Mark Bolinger and Ryan Wiser, Lawrence Berkeley National Laboratory
http://www-library.lbl.gov/docs/LBNL/567/03/PDF/LBNL-56703.pdf
In closing

Community Involvement


Benefits reach across many sectors.
Leadership

Policymakers, utilities and local communities can help lead
the way by
•
•

Supporting policy that establishes a market for wind
Creating this economic development opportunity
Building new industry in the rural economy


Equipment, Contractors, Materials suppliers, Bankers,
Fabricators, Technical Training Programs, and potential for
manufacturers
Keeps added value of wind projects local.
Contact Info:
(800) 946-3640
Lisa’s phone (612) 870-3462
e-mail [email protected]
toll free
www.windustry.org