This is Community Wind Lisa Daniels Executive Director of Windustry Financing Wind Power July 25, 2007.

This is Community Wind

Lisa DanielsExecutive Director of Windustry

Financing Wind Power July 25, 2007

Outline

About Windustry Community Wind Energy Structure of Private/Farmer

Owned Community Wind Projects

Challenges for Community Development

What’s Next

Windustry Increasing wind energy opportunities

for rural landowners and communities. Non-profit organization based in

Minneapolis, MN www.windustry.org The Windustry Newsletter Wind Easement Agreements National Community Wind Conference Wind Farmers Network

“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

Community Wind Energy Defined

Simple and flexible concept Any number of turbines Connected either side of the meter one or more members of the local

community has a significant direct financial stake

KEY: Local ownership and local benefits

Benefits of Community Wind

All the benefits of large wind development, plus:

Greater stimulation of local economies

Increased local energy independence Delayed need for new transmission

lines Increased competition in energy

markets Greater acceptance of wind power

Community Wind Energy Success Stories

Farmer/Local Investors Local Utilities: Municipal Utilities

and Rural Electric Cooperatives Schools Tribal Communities Community Institutions New Models for Wind Industry and

Community Partnerships

Moorhead Public ServiceMoorhead, Minnesota

Two 750 kW turbines, installed in 1999 and 2001.

Public utility- used their own funds to purchase the machine.

Among the highest subscription rates in the nation and one of the early successful municipal projects.

Several good Iowa examples as well, including Waverly, IA.

Illinois Rural Electric Cooperative Pike County, Illinois

Planning a spring 2005 ribbon cutting for a 1.65 MW turbine.

Inspired by new IL wind maps that show some of the best wind in the state to be in IREC territory.

Turbine will generate about 4% of IREC’s power needs, close to the 5% limit in wholesale power contract.

Project supported by 3 grants (USDA, IL state grant, and IL Clean Energy Foundation) IREC Engineering

Manager and project leader Sean Middleton.

School Wind Projects: K-12Wind turbines can supply schools with clean

energy, new revenue, and learning opportunities.

8 school districts in Iowa have wind turbine from 50 to 750 kW

Spirit Lake Schools pioneered the idea in 1993 with a 250 kW turbine, followed by a 750 kW turbine in 2003.

Other school projects in MN, IL, CO, PA, VT, MA, MI, tribal communities

Spirit Lake, Iowa

Rosebud Sioux TribeRosebud, South Dakota

Dedicated a 750 kW turbine in May 2003.

Helped by DOE Tribal grant program and USDA RUS loan.

“Breaking Trail” First step for the ambitious wind

power goals of Great Plains tribes.

Project leaders Pat Spears and Bob Gough

Photo courtesy of Intertribal COUP

Lamar, Colorado Local project piggybacked on large wind project. Four 1.5 MW GE turbines less than 25 miles from CO

Green, a 162 MW project in Lamar Municipal Utilities (Lamar Light & Power and

Arkansas River Power Authority) timed their project to coincide with Colorado Green.

Coordinated with CO Green to lower development, construction and maintenance costs.

Minwind EnergyRock County, Minnesota

Minwind I and II: Two LLCs owned by 66 local

investors. Installed 4 950 kW turbines in

late 2002. Goals: local economic dev.,

maximize return on investment, diversify local economy Tom Arends and Mark

Willers, Presidents of Minwind I and II

Minwind EnergyRock County, Minnesota

Minwind III-IX: Seven more LLCs

owned by local investors.

Installed 7 1.65 MW turbines in late 2004.

Supported by USDA and Minnesota incentives.

December 2004 Open House at new Minwind turbines.

Developer

State EnergyOffice

Bankers

Minwind Board

Equipment Suppliers Minwind

CEO

Contractors

Investors

Accountants

Accountants

Lawyers USDAElected Officials

SMI & Hydraulics, Inc.Porter, Minnesota Photos courtesy www.smihyd.com

Federal Community Wind Incentives

PTC Hard to use it directly, need equity partner IRS Letter ruling

CREBS (Community Renewable Energy Bonds)

USDA Farm Bill Energy Title

Community Wind Incentives in Leading Midwest States

Minnesota: Production payment for projects under 2 MW. Standard tariff and power purchase contract for wind

projects under 2 MW. Iowa:

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.

More policy in 2005…2006…2007

New Community Wind Incentives in Minnesota and Iowa (2005 & 2006)

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 long-term stable incentive for community wind projects.

Iowa: Tax Credit for Small Renewable Energy Projects(and expanded in 06)

For projects up to 2.5 MW owned by an Iowa resident, a farm operation or an electric cooperative.

Provides 1.5¢ per kilowatt-hour for 10 years for wind. Available for up to 90 MW of wind starting in July ‘06.

New Community Wind Incentives in Minnesota and Nebraska (2007)

Minnesota: Community-Based Wind Energy Development (C-BED Tariff) Refined No cap on the PPA rate

New Legislation for Nebraska C-BED

What do Community Projects Need?

Access to equipment New and innovative ownership

models Low cost financing Incentives that level the playing

field Market for energy Pathway to market

Project Cost Escalation Construction and equipment

costs up 30-40% in last 2 years Booming industry

• Turbines and towers, construction teams and expertise are scarce

Rise of price for copper, steel and other materials

Higher transportation costs Warranty contracts

Factors Driving the Market MN - Political pressure on utilities

Renewable Energy Objective (not a mandate) 800 MW goal of community projects from Governor’s

office IA – Incentives helping community projects

compete with large wind projects and other resources

State Renewable Energy PTC Low cost financing Project owns Green Tags

General Regulatory compliance (RES, REO, RPS, etc) Utilities beginning to see wind as stable long term

energy resource and a good investment Maturing of wind industry Familiarity with technology and industry players

New Transmission and Wind Resource Maps = New Planning Approach

Find maps and study report at:

www.windustry.org/dg

Study performed by CapX 2020 Utilities

Policy Opportunities

Energy topics are hot at both the state and federal level

Now is the time to open dialogue with elected

officials

Next Steps: New Legislation

One Example: US Senator Ken Salazar (CO) introduced s672 -

Tax Exempt Bonds for Community Renewables Letters of Support to Congress to urge:

Support of S.672 Consider sponsoring it as well

Addressed to Members of : Senate Finance Committee House Ways & Means Committee

On your own letterhead cc: : your own Senator and Salazar More info (www.refcoalition.com)

Today Wind energy is a huge business

opportunity With increasing constraints on regional

transmission systems Requires new thinking for bringing

about a new clean energy system Engaging local support is critical to

almost every aspect of this business Community wind has a vital

role.

Contact Windustry2105 First Avenue South

Minneapolis, Minnesota 55105

toll free (800) 946-3640  Lisa’s phone (612) 870-3462

fax (612) 813-5612  Lisa’s e-mail [email protected]

www.windustry.orgwww.windustry.org