Harnessing the Winds at Spanish Fork Canyon: Four –Year Struggle and Economic Analysis

1. Harnessing the Winds at Spanish Fork Canyon: Four –Year Struggle and Economic Analysis Cathy L. Hartman, Ph.D. and Edwin R. Stafford, Ph.D. Co-Directors Center for the Market Diffusion of Renewable Energy and Clean Technology Western Extension Directors Conference Thanksgiving Point, Utah April 1, 2009

2. Proposed Spanish Fork Canyon Wind Project– Virtual composite (2004)

3. November 2004 • Dean Davis, Windward Engineering -- “small turbine” test site • Class 6 – “outstanding” wind resources

4. Evidence of Spanish Fork’s wind resource Davis contacts Tracy Livingston of Wasatch Wind

5. Wasatch Wind • Wind Project Development • Space frame towers • Crane-free “Hi-Jack” system

6. Utah Wind Map (2003) Spanish Fork is not on the map!

7. Tracy’s five year journey!Key barriers facing the Spanish Fork Project • Municipal, state, and federal policies • Siting issues • Market uncertainties • Turbine shortage • Procuring investors • NIMBY – Community concerns

8. First Hurdle: Gaining Local Approval • April 2005 – Wasatch Wind distributes 3000 flyers to residents within one mile of site • Only 50 residents attend meeting • Livingston presents plan

9. Siting Studies • Noise level at 50 decibels = traffic noise on nearby Highway 6 between 1 a.m. and 4 a.m. • Avian study – no threat identified

10. Community and Environmental Benefits • Land leases • Property tax revenues • Dividends to investors • Reduced coal-fired power pollution

11. Citizen response is mixed… “… the ugliest and most ungodly thing you’ve ever seen.”

12. Citizen response is mixed… “… the ugliest and most ungodly thing you’ve ever seen.” “… with windmills, I can see the mountains. With haze from coal plants, I can’t see the mountains.”

13. Zone application with City CouncilJune 2005 • Wasatch Wind applies for re-zoning • Residents, again, divided: “It’s going to detract from our mountains” “It will be an improvement as the gravel pit is already an eyesore” “It is a better alternative to mass suburban development”

14. City Council approves zone changeunanimously

15. Spanish Fork Wind Project is a go! Destined to become the nation’s most urbanized wind project!

16. Second Hurdle: Negotiating Financial Agreement and Investors • Negotiation of power purchase agreement (PPA) with Rocky Mountain Power (2004-06) • Procurement of equity investors

17. Negotiating with Rocky Mountain Power • Monopoly utility for most of Utah – Not a free market! • Key issues: • No established cost-determination method • Needed to set Utah pricing policy

18. Negotiating with Rocky Mountain Power • Avoided cost – “old coal versus new wind” • Livingston’s breakeven 6 cents per kWh

19. Negotiating with Rocky Mountain Power • Avoided cost – “old coal versus new wind” • Livingston’s breakeven 6 cents per kWh Rocky Mountain Power offers only 4.7 cents per kWh Public Service Commission steps in

20. Public Service Commission • Least Cost/Least Risk Mandate • Oldcoalwas cheaper than newwind– but is it less risky? • Livingston argued that “least cost” mandate emphasized “plan for today, but not for the future”

21. Contract settled June 2006 • Livingston procures 5 to 6 cent per kWh deal with RMP • Delay results in loss of key investor, John Deere

22. Third Hurdle: Re-gaining local approval (2006-07) • January 2006, local TV channel re-broadcasts the April 2005 zoning approval meeting…

23. Third Hurdle: Re-gaining local approval • January 2006, local TV channel re-broadcasts the April 2005 zoning approval meeting… • Re-broadcast sparks public outcry – citizens demand moratorium

24. Citizens aired their concerns… “Monstrous, colossal, shocking…” Property values “will plummet … if turbines are erected” “I’m not against ‘green energy,’ but we’ve been poorly informed”

25. Citizens aired their concerns… “Monstrous, colossal, shocking” Property values “will plummet … if turbines are erected” “I’m not against ‘green energy,’ but we’ve been poorly informed” Livingston caught completely off-guard!

26. Joe Thomas, new Mayor • Spanish Fork wind project – his first order of business! • Mayor Thomas asks residents to: • “Open your mind up and let one word in … think – options!” • Appoints a three-member resident board

27. Joe Thomas, new Mayor • Spanish Fork wind project – his first order of business! • Mayor Thomas asks residents to: • “Open your mind up and let one word in … think – options!” • Appoints a three-member resident representative board March 2006, compromise reached – wind park to move up the canyon !

28. New compromise plan • City had to annex new project location • New land leases had to be signed • Water well issue had to be approved

29. Outcomes of compromise Time delay cost Wasatch Wind an additional $300,000 , but … The process brought greater trust between Wasatch Wind and the residents of Spanish Fork

30. Fourth Hurdle: Re-negotiating with Investors • In 2006, legislature fails to renew the sales tax credit • Legislature eventually renewed the credit in 2007… however…

31. Turbine shortage/increased production costs in 2007 • Falling dollar drives up costs (increased 17% in 2006 and another 14% in 2007) • Turbine shortage due to booming growth – 18 month back-order (imported from outside U.S.)

32. Turbine shortage/increased production costs in 2007 • Spanish Fork offers 70 percent property tax reduction “We’re going to rebate something we never would have gotten in our lives, and we get to keep a big chunk of it, so it was a no-brainer.” Mayor Joe Thomas

33. Edison Mission Energy has turbines! • Takes over project • Tracy Livingston and Wasatch Wind continue to be advisors

34. Spanish Fork Sky Spectacular September 2008

35. Lessons learned • Outreach and engagement – policymakers and citizens within the “view shed” of the project

36. Lessons learned • Outreach and engagement – policymakers and citizens within the “view shed” of the project • Build relationships with local champions – Dean Davis, Mayor Joe Thomas, ex-foes

37. Lessons learned • Outreach and engagement – policymakers and citizens within the “view shed” of the project • Build relationships with local champions – Dean Davis, Mayor Joe Thomas, ex-foes • Explore compromises

38. Lessons learned • Outreach and engagement – policymakers and citizens within the “view shed” of the project • Build relationships with local champions – Dean Davis, Mayor Joe Thomas • Explore compromises • Persistence

39. Economic outcomes(Reategui, Stafford and Hartman 2009) • Construction • $4 million in economic output during construction • Supported 38 jobs, totaling $1.4 million • Operations in 2009 • $74,000 land lease payments • $112,000 local property taxes* • $84,000 for Nebo School District* • Supports 7 jobs total (2 on-site) • $576,000 in economic output * Reflect 70% revenue reduction incentive

40. Center for the Market Diffusion of Renewable Energy and Clean Technology Cathy L. Hartman Edwin R. Stafford Energy Transportation Marketing & Public Policy Buildings