Farming the Wind. Size, Scale, and Ownership Opportunities Comparison for Rural Minnesota. Steve Wagner, Dave Archer USDA-ARS

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1 Farming the Wind Size, Scale, and Ownership Opportunities Comparison for Rural Minnesota West Central CERTs Meeting Feb. 15 th 2006 Steve Wagner, Dave Archer USDA-ARS ARS Soils Lab Morris, MN

2 Farming the Wind - Opportunities Minnesota Department of Commerce Releases New Wind Maps! State's wind power potential is greater than first thought A new study finds that taller turbines can take advantage of higher wind speeds at greater elevations. Star Tribune Jan

3 Farming the Wind - Compare Opportunities.. Green Power Net Metering Scale Utility Scale - What s a Watt? - Wind Opportunity Hassle Meter - Back of the Napkin Calculations - Conclusions

4 What s a Watt? 50 watt bulb * 20 hours = 1000 watt-hours = 1 kilowatt-hour Example: A 10-kW wind turbine can generate about 10,000 kwh annually at a site with wind speeds averaging 12 miles per hour, or about enough to power a typical household. A 2-MW turbine can produce more than 6.5 million kwh in a year--enough to power more than 600 households. There are 4100 households in Stevens County. A wind farm with 7 2 MW turbines would produce about enough electricity for all the households in Stevens County.

5 What s Green Power? Minnesota law ( 216B.169) requires that utilities offer green power to their customers. Interested consumers will make an additional payment for each "block" of renewable energy they wish to purchase. Agralite Wellspring Ottertail Tailwinds Minnesota Valley Electric Green Energy Programs 100 Kwhr $2 $ Kwhr $2.60 $ Kwhr $1.87 $0.0187

6 Comparison Investment, Risk Wind Opportunity Hassle Meter Green Power Net Metering Scale KW Utility Scale MW

7 Comparison Complexity Wind Opportunity Hassle Meter Green Power Net Metering Scale KW Utility Scale MW

8 Comparison Community Potential Return to the local community. Green Power Net Metering Scale KW Utility Scale MW

9 Comparison Community Potential Financial Benefits (Reward) to the local community Utility Scale Options. Land Lease only Utility Scale MW Land Lease + Local Investment

10 Back of the Napkin Economics Net Metering Scale Utility Scale Tower Height 30 m 30 m 80 m Nameplate Production (kw) Estimated Project Cost $46,000 $80,000 $2,500,000 $/Name Plate Production ($/kw) $2,300 $2,286 $1,250 Lease ($/turbine/yr)?? $3,000-$5000/turbine/year hrs/year Nameplate Production (MWhr/yr) ,520 Capacity Factor "Actual" Production (MWhr/yr) Annual Production (kwhr/yr) 39,289 77,000 6,657,600 Production Revenue ($/year) $2,357 $4,620 $179,755 PTC (assume $.017/kWhr) $668 $1,309 $113,179 Depreciation $1,223 $2,128 $66,504 Interest expense $ $ $17, assume rate = $.06/KWhr assume rate = $.027/KWhr assume 13 mph NPER Break Even (yrs) 6% rate, depr.,interest Rate of Return assume 20 year life 8% 9% 14% NPER Break Even (yrs) 6% interest, assume Rate of Return assume 20 year life 9% 10% 14% assume $300 annual green credit for small systems Equipment: 20 kw Jacobs 31-20, 35 kw EMS E15 Note: These figures are provided to show a relative comparison. Before investing one should do his/her own financial analysis.

11 Environmental Benefits Net Metering Scale Utility Scale Tower Height 30 m 30 m 80 m Nameplate Production (kw) Estimated Project Cost $46,000 $80,000 $2,500,000 $/Name Plate Production ($/kw) $2,300 $2,286 $1,250 Lease ($/turbine/yr)?? $3,000-$5000/turbine/year hrs/year Nameplate Production (MWhr/yr) ,520 Capacity Factor "Actual" Production (MWhr/yr) Annual Production (kwhr/yr) 39,289 77,000 6,657,600 Production Revenue ($/year) $2,357 $4,620 $179,755 PTC (assume $.017/kWhr) $668 $1,309 $113,179 Depreciation & Other Benefits??? CO2 Prevented (tons each year) ,394 SOx Prevented (lbs each year) ,940 NOx Prevented (lbs each year) ,630 assume rate = $.06/KWhr assume rate = $.027/KWhr assume 13 mph

12 Conclusions Environmentally It s All Good! Net Metering Scale Medium to High investment, good for community, longer payback Utility Scale High investment, Complex Economy of scale Lease only > OK Lease + Community Ownership > Best Investment requires due diligence

13 Wind Resources American Wind Energy Assotiation Minnesotans for Energy Efficient Economy Environmental Law Policy Minnesota Dept. of Commerce

14 ADVANCED WIND ENERGY WORKSHOP 10 am- 6 pm February 27, 2006 HOME GROWN ENERGY CONFERENCE 8 am - 3:30 pm February 28, 2006 Location: WCROC Office - Morris Registration: $60 (Includes lunch & materials) 9:30 am Registration and Refreshments 10:00 am Welcome and Introductions 10:10 am Wind Farm Development Basics Overview -Michael Reese, WCROC 10:30 am Siting Wind Farms Best Bet Locations -Steve Wagner, USDA-ARS Wind Resource Assessment -Lee Alnes, Wind Logics Wind Farm Siting: Choosing the Right Location -Jay Haley, EAPC Architects & Engineers Noon Lunch (Included in registration) 1:00 pm The Bottom Line: Developing a Pro forma -Dr. Ed Persons, Prof. Emeritus, U of MN 1:30 pm The MISO Process - Midwest ISO 2:00 pm Financing Wind Farms -Mike Hansen,!stFarmers & Merchants Bank 2:45 pm Break 3:00 pm Successful Locally-Owned Business Structures Minnesota Flip and CBED -Dan Juhl, Dan Mar and Associates Local Investment Model -Mark Willers, MinWind Energy LLC 4:00 pm Q and A Session 4:30 pm Legal Considerations for Wind Farms -Jeff Paulson, Jeffrey C. Paulson & Associates 5:30 pm Maintenance and Operation -Greg Flobeck, Vestas North America 6:00 pm End of Workshop Pre-registration is requested prior to February 20th.

15 Source: Everybody s Weather, odysweather.com /Static_Media/Pol ar_ice_cap_melt er/index.htm