Community Supported Wind Power
(Page 4 of 6)
June/July 2008
By Greg Pahl
The co-op model has been a major reason for the project’s success, according to Stewart Russell, former WindShare vice president. “It’s really brought a lot of people together, and I don’t think the project would have had the same support without the co-op; we would have been just another commercial entity building something on the lakeshore,” he says.
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In the United States, there are a growing number of successful community wind projects as well. Of all states, Minnesota has led the way in promoting and supporting locally owned wind projects. In 2000, a group of farmers in Luverne, Minn., developed a plan for farmer-owned wind turbines that would take advantage of state policies favoring local wind development. The group finally settled on forming two limited liability companies, Minwind I and Minwind II. This legal structure was the best option because it maximized the companies’ ability to use tax credits and other incentives, while maintaining some principles of cooperatives such as voluntary and open membership, democratic member control and concern for the greater community.
The two companies were formed to take advantage of a Minnesota renewable production incentive that provided a payment of 1.5 cents per kilowatt hour for wind projects up to 2 megawatts for the first 10 years of production. Seventy percent of the total $3.5 million cost of the project was financed by a local bank. The remaining 30 percent was equity-financed. Investors from the region surprised many observers when they quickly snapped up all the available stock (at $5,000 per share) for the $1.1 million equity share in both companies in just 12 days.
Both groups relied heavily on expertise from consultants to develop the actual wind project and negotiate the power-purchase agreement, and on a team of lawyers to determine the business structure. The biggest obstacle was negotiating the power-purchase agreement with a utility that would buy the wind-generated electricity at a fair price. Eventually, after months of negotiation, the wind farm promoters entered into a 15-year contract with Alliant Energy, which uses the power to satisfy renewable energy standards in other states.
“The key reason why Minwind was such a success was that they were able to organize their community around the power contract, and bring their community investment into it to make it work,” says Dan Juhl, of Woodstock, Minn., who played a significant role in developing the project.
Minwind I and II were so successful that, after a lot of hard work, Minwind Energy dedicated Minwind III-IX, seven new 1.65-megawatt wind turbines, on Dec. 3, 2004.
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