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Hardin Hilltop Wind Farm…… An Example of Community Wind in Iowa Kansas Community Wind Workshop Cloud County Community College Concordia, Kansas October 31, 2006. Thomas A. Wind Wind Utility Consulting Jefferson, Iowa. Topics I Will Cover. Initial formation of project

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thomas a wind wind utility consulting jefferson iowa

Hardin Hilltop Wind Farm……An Example of Community Wind in IowaKansas Community Wind WorkshopCloud County Community CollegeConcordia, KansasOctober 31, 2006

Thomas A. Wind

Wind Utility Consulting

Jefferson, Iowa

topics i will cover
Topics I Will Cover
  • Initial formation of project
  • Electrical Interconnection
  • Need for Incentives
  • Key Issues
  • Economic Feasibility
  • Benefits of the Project
initial formation of project

Local Land Owners and Farmers who Own the Wind Turbine Project

Initial Formation of Project
  • All wind projects start with one person…. the one who has the “crazy idea”
  • It was a crazy idea for many reasons
  • He pesters the others who then reluctantly buy into the “crazy idea”
  • He becomes the “champion” for the project.
slide4

Greene County

Hardin Township

slide5

7.35

7.20

7.05

6.90

6.75

6.60

6.45

6.30

6.15

slide7

HHW

Hardin Township

Greene County

Farmer-Owned Wind Farm Proposed in Greene County, Iowa

slide8

Interconnection

Photo by GE Wind -

slide10

High Voltage Transmission System for Iowa

Little generation in this area…

This helps with getting transmission access!

interconnecting the project to the grid
Interconnecting the Project to the Grid

The main interconnection issues for this project are the power factor and operating voltage levels at the Point of Interconnection

There will be a 4- month period of reduced output due to substation equipment delays.

The wind farm will also be subject to occasional curtailments over its lifetime

New 34.5 kV Underground Line

Existing 34.5 kV OH

Transmission System

Point of Interconnection

about half of the wind turbines were turned off due to insufficient transmission capacity
About half of the wind turbines were turned off due to insufficient transmission capacity

Buffalo Ridge Minnesota this Morning from 10,000 feet

slide13

Key Issues

Photo by GE Wind -

the major challenge for this project wind turbine procurement
The Major Challenge for This Project:--- Wind turbine procurement ---
  • It is a Seller’s Market!
  • Most major manufacturers have no wind turbines available for 2006 or 2007
    • Large wind farm developers have purchased most wind turbines
    • Earliest delivery for major new projects may be in 2008
    • A few turbines become available as construction schedules slip
    • Three years ago, delivery time was 20-25 weeks
  • Manufacturers favor larger orders rather than smaller orders since they make more money
    • In many cases, no manufacturers may even bid on supplying a single wind turbine
  • To get a turbine in the near future you may have to work through a larger developer
  • Avoid single turbine projects unless you have a lot of money!
power purchase agreement
Power Purchase Agreement
  • Local utility (Alliant Energy) was required by PURPA to purchase power
  • All power will be sold to the local investor-owned utility serving in the area
    • Fifteen year term contract
    • Power sold at utility’s long term avoided cost (about 3 ¢ per kWh) as required by PURPA
    • Green tags are separately valued and sold
  • Wind power will be integrated in with the utility’s other power supply resources
    • Alliant likes wind power, one of the largest purchasers of wind power
financial structure is llc flip model
Financial Structure is LLC Flip Model
  • Ownership structure based on Minnesota LLC Flip model
    • Outside Investor for utilizing income tax benefits (“Tax Investor”) becomes a partner in your LLC and provides the majority of the capital
    • Ownership flips sometime after 10 years from Tax Investor to local owner when the tax benefits lapse and when the Tax Investor achieves his target rate of return
  • Seven USDA grants were obtained averaging $247,000 each
    • Reduces Production Tax Credit and depreciation basis for Tax Investor
  • Iowa Energy Center $250,000 nine-year zero interest loan
  • Local owners will have modest down payment
  • Long-term debt partially from local bank and partially from outside debt sources
slide17

Need for

Incentives to be

Economically

Feasibility

Photo by GE Wind -

the overall economics of wind generation is determined by a balance of factors
The Overall Economics of Wind Generation is Determined by a Balance of Factors

Financial Incentives

Cost of

Money

Cost to

Interconnect

Price

of Electricity

Cost of

Turbine

Wind

Speed

Higher Values

DISCOURAGE

Wind

Generation

Higher Values

FAVOR

Wind

Generation

slide19

Selecting Specific Sites

7

6

5

M

4

3

2

1

1

Wind Turbine #1

M

Met Tower

Mean Annual

Wind Speed

In Meters per Second at 50 Meters

0.02

Mps per

Color

Change

slide20

7

N

6

5

4

3

2

1

Hardin Hilltop

Wind Farm

3.6 Mile 34.5 kV Line

to Center of Wind Farm

34.5 kV

Point of Interconnection

(West Side of WW Sub)

To Jefferson &

Scranton

161/34.5 Sub

To Grand Jct.

161/115/34.5 Sub

Jefferson Water Works Sub

Legend

Wind Turbine

Alliant Substation

Underground 34.5 kV

Jefferson, IA

Alliant OH 34.5 kV

1.0 Mile

economic feasibility

Foundation under construction for 2.1 MW wind turbine near Jefferson, Iowa

Economic Feasibility
  • A small project usually cannot be cost competitive on a per kWh basis with a 100 MW wind project
  • Small projects need something extra to make them feasible:
    • Higher selling price for the power

AND / OR

    • Financial incentives.
need for financial incentives

Completed foundation for large 2.1 MW wind turbine near Jefferson, Iowa

Need for Financial Incentives
  • Iowa provides a 1.5 ¢ per kWh tradable state tax credit for 10 years
  • Each local owner applied for a USDA Section 9006 grant, which averaged $247,000 each
  • Each local owner received a $250,000 nine year zero interest loan
  • All of these were necessary to be competitive in this lower wind speed area.
slide23

Benefits from

the Project

Photo by GE Wind -

locally generated power

Plowing in underground high voltage cables for wind turbines

Locally Generated Power
  • Reduces high voltage transmission grid losses since power is generated where it is used
  • Tends to reduce congestion on the high voltage grid if the wind generation is in an area with little generation.
local property taxes

The view from top of one farmer-owned wind turbine in Iowa

(235 feet high)

Local Property Taxes
  • Iowa allows the county board of supervisors to phase in and abate property taxes for privately-owned wind generation projects
  • The Hardin Hilltop project will pay about $25,000 per turbine per year after the 7 year phase-in period.
electrical infrastructure
Electrical Infrastructure
  • The construction of the turbines, electric lines and substations adds to the electrical infrastructure
  • The established wind site and equipment will have value after the normal wind turbine lifetime of 20-25 years
  • This value is often ignored, but it may be very significant in the long term.
slide27

The proposed wind farm would generate about 47,000 megawatt-hours per year

  • Jefferson uses about that same amount of energy per year
  • The Proposed Wind Farm Will Be a Significant Supplier of Electricity to the County

Paton

Proposed

Locally-Owned

15 MW

Wind Farm

Churdan

Grand Jct.

Scranton

Jefferson

Rippey

slide28

Hypothetical

Second

Wind Farm

Paton

  • The whole county uses about 100,000 MWH per year
  • Along with a second hypothetical wind farm about the same size, the two wind farms would generate enough energy on average to provide all of the county’s electricity needs.

Churdan

Grand Jct.

Scranton

Jefferson

Rippey

slide29

Paton

  • The 15 MW Locally-Owned Wind Farm Will Save the Equivalent of Enough Coal To Fill a Train 3 Miles Long Every Year

Churdan

Proposed

Locally-Owned

15 MW

Wind Farm

Grand Jct.

Scranton

Jefferson

Rippey