The Great Plains of the U.S. – Minnesota, Wisconsin, North and South Dakota, Kansas – have often been referred to as the “Middle East” of wind. Many large utilities and corporate titans are well aware of the resources just waiting to be exploited through the plains and mid-west.
Infamous oil wildcatter T. Boone Pickens recently spoke of the “absolute madness” of continuing to largely ignore this vast resource in our age of dwindling and ever more complex sources of oil. But many living in this wind corridor are farmers, ranchers, and members of small, rural communities, not a Pickens or some large developer. How can communities and independent landowners in this mid-western “wind tunnel” take advantage of both the renewable energy resource and business opportunities inherent in the region?
That’s what Erin Edholm, communications director for National Wind based in Minneapolis, discussed with me in a recent phone conversation. Specifically, the unique business model for wind development that National Wind brings to the table for community wind development.
If you’re a landowner in a rural community, your options have usually been to secure a lease payment or production incentive payments for the one or two wind turbines that a large developer sites on your land. There is no opportunity for the landowner to share ownership in the wind project or have any influence in its management.
Small community-owned wind projects consisting of one to five turbines are not uncommon, but for community-based commercial scale wind projects of at least 50 megawatts (30 or more turbines) the options have been few.
National Wind represents a new way of “doing wind”, one that can help bring the benefits of the new energy economy to rural communities landowners.
A Farmer’s Friend
The cost and expertise required to assess feasibility and environmental impact, conduct wind surveys, obtain permits, site, build, and manage a wind project is well beyond the ability of all but the largest commercial developers and institutional investors. National Wind bridges the gap between the requirements of commercial-scale wind developments and landowners interested in bringing the full benefits of these projects into their communities.
By shepherding a project through feasibility, development, and management, and by creating a LLC partnership within the local community, National Wind’s business model is gaining wide acceptance with developers, utilities, and the communities that will reap the benefits of ownership in commercial scale wind projects.
Community Wind – It Starts With a Phone Call
According to Erin, projects often start off with a simple phone call or web form submission from an individual landowner interested in bringing a commercial wind project to their community. If the initial information warrants further investigation, a project proceeds through several phases to final completion. In a nutshell they are:
- Help secure at least 8–20 landowners to initially invest in the project.
- Conduct feasibility studies including transmission, environmental, and wind survey reports. Initial feasibility studies are done at National Wind’s expense.
- Form a Limited Liability Partnership with National Wind as a managing partner holding a minority stake in the project.
- Oversee all additional studies, development, construction, and management of the project.
Development time for a project is usually three to five years.
This model has a number of advantages for both the local community as well as utilities, institutional investors, vendors, and suppliers.
Dakota Wind Energy – A Case in Point
Dakota Wind Energy, LLC is the first locally-owned commercial scale wind project in South Dakota. The company was founded by nine local landowners with National Wind as the managing partner. The company has plans to develop at least 750 megawatts of wind energy in three South Dakota counties. By incorporating a community-based business structure, Dakota Wind Energy will maintain a board comprised of local landowners, encouraging community participation and influence throughout the life of the project, always with National Wind by their side.
Since Dakota Wind is locally owned, most of the development proceeds stay within the community. Utilities and institutional investors are favorable to this model because they anticipate more local support for the project and an easier road through the development process. National Wind will maintain a longterm commitment to the project – from “green field” throughout commercial operation.
Everyone wins and Dakota Wind will supply 750 megawatts of power to the region. Longterm benefits for the community come from project sale proceeds and power purchase agreements with a utility.
Dakota Wind Energy recently announced an intrastate offering for units in the company, open to residents of South Dakota participating in the project. Landowners living within the project’s footprint are eligible to receive ownership rights based on the assessed cash value of their land. This valuation determines the number of units a landowner may acquire.
This offering helps to further Dakota Wind’s phased plans to develop at least 750 megawatts of energy, while keeping the enterprise within the communities of South Dakota.
High Country Energy
High Country Energy, LLC in Minnesota is similar to Dakota Wind with a few key differences in its structure. National Wind partnered initially with seven local investors to form High Country Energy. With an early letter of intent from Wisconsin Public Service to co-develop and acquire the first 150 megawatt phase of the project, High Country Energy’s local investors already stand to reap the benefits of this acquisition.
Initial investors and local landowners involved in the project received ownership units when they signed wind rights to National Wind. To raise additional development capital, High Energy Wind recently announced the first intrastate public offering open to all residents of Minnesota. The $3.1 million offering will be available first to participants in the project, and then to the general public in Minnesota. This is the first intrastate public offering of its kind in the country.
A New Way of Doing Business
In these and all projects managed by National Wind (they currently have 15 projects in the works) the key point is to facilitate a locally-owned commercial scale wind project otherwise out of reach to landowners and rural communities. A landowner’s investment in a project is a fraction of the $4 million cost of even a single wind turbine. National Wind, as managing partner, oversees all feasibility studies, permitting, development, and operation of the project, remaining involved throughout the course of the enterprise.
Landowners form the LLC’s board of advisors and the local community participate in both short-term and long-term economic benefits such as power purchase agreements and acquisitions from utilities.
The community wind business model developed by National Wind is gaining momentum in the region as a way to bring renewable, decentralized power to a region rich in wind resources, and then share the economic benefits with the local communities that provide land, capital, and, of course, wind.
Who needs T. Boone Pickens?