Wind Energy: Landowner Options
Lisa Daniels,Windustry Executive Director
Great Lakes Regional Wind InstituteWebinar
October 11th, 2007
“Yep, they make some noise, but it’s the soothing sound of money being made.”
Louis Woodward, Texas Rancher,Landowner
Prepared by Virtus Energy Research for Public Citizen and the SEED Coaltion
Outline About Windustry Levels of involvement in wind Community Wind in the US Why are Minnesota and Iowa
leading in community wind development?
A few success stories
Landowner Options for Wind Development
Landowner Options Lease your land to a
wind project Local project External developer
Be a partner in a community wind project
Own a residential/farm size turbine for your own power
Wind Development Options:Risk vs. Reward
Lower Risk & Responsibility
Intermediate Risk &
Responsibility
Greater Risk &
Responsibility
Leasing Land to a Wind
Company or Utility
Cooperative, Investment Pool,
Partnership
Individual Ownership
Easements and Leases are typical components of most wind energy projects, large and small.
Windustry’s Package of Lease/Easement Resources
Lisa Daniels, Executive Director of Windustry Ed DeMeo, President, Renewable Energy Consulting
Services, Inc., California Van Jamison, POWAIR, Montana, consultant and small
wind project developer Joe Richardson, North Dakota landowner Steve Wegman, South Dakota Public Utilities
Commission Fred Zalcman, Executive Director, Pace Law School
Energy Project, New York Windustry staff and consultants
Wind Easement Work Group - team of wind industry and landowner experts:
Wind Energy Leases and Easements Most common way that landowners are participating
in wind energy development No cash outlay Low financial risk
Few standards: range from good to bad to ugly. Compensation varies widely based on:
turbine size wind resource price of energy knowledge level of landowner and many other factors.
Long term commitments – usually last 20 to 40 years. Best results when landowners make
informed decisions.
Sustainable Wind Energy Development
Windustry’s Lease/Easement Resources Goals:1) To help landowners make informed decisions about
their land.2) To promote land agreement practices that are
mutually beneficial to landowners and project developers.
Motivation: Wind development must be an asset for both the
owners of windy land and their local communities for the industry to thrive long term.
Wind energy is a significant economic opportunity for rural communities if windy landowners and communities are well informed partners in the development process.
Windustry’s Package of Lease/Easement Resources1) Easements and Lease Agreements – What
might appear in these contracts and what to watch out for. An updated version of Windustry’s original “Wind Energy Easements: Legal Issues.”
2) Compensation – Compilation of compensation packages from real wind projects.
3) Policy and Best Practices – Recommendations and Proposals to facilitate sustainable wind development.
4) Bibliography of additional resources.
Before you sign on the dotted line…
How much of my land will be tied up and for how long?
How much will I be paid and how will I receive payments?
Are the proposed payments adequate now and will they be adequate in the future?
How will a wind project impact my other land uses? Have I considered all of my other options and is this
the best one for me?More questions listed in the Outline.
Types of Compensation Packages Fixed payments
Preferably includes an escalator Advantage: stable income for landowners, low
risk Royalty or Percentage of Revenue
Need to have access to relevant information about power sales.
Advantage: Landowner has a vested interested in the success of the project.
Combination Fixed payment plus a percentage of revenue Fixed payment OR a percentage of revenue
(usually, whichever is greater) Equity partnership
Old: $2,000 per turbine year. Based on turbines in the 600-750 kW range. “Average” figure popularized in late 1990s.
New: bigger turbines (1,500-2,500 kW) usually mean bigger payments.
Price of energy is another key factor (especially in contracts that offer a % of revenue)
Other factors to consider: wind resource, transmission access, competition, value of alternative land uses, geographic region.
Compensation Packages How much can you expect?
Compensation Packages: Examples Project State Year Size Turbine Per turbine* Per MW*Lake Benton I
MN 1998 107 MW 750 kW $1,500 $2,000
Storm Lake
IA 1999 193 MW 750 kW $2,000 ($750 + 2 % rev)
$2,667
Vancycle Ridge
OR 1999 25 MW 660 kW $1,500- $2,000$1,200-$2,400
Top of Iowa
IA 2002 80 MW 900 kW $2,400 $2,667
Wood-ward
OK 2003 102 MW 1,500 kW $4,000 $2,667
High Winds
CA 2003 162 MW 1,800 kW $9,500 $5,185
Trimont MN 2005 100 MW 1,500 kW $3,500- $4,500$2,500-$3,000
Crescent Ridge
IL 2005 55 MW 1,650 kW $5,000 (minimum)
$3,030
*Several figures are based on estimates and averages. Payments to individual landowners may vary.
Recent Articles Wall St. Journal, March 13, 2007Texas Wind Powers - A Big Energy Gamble
“In this pancake-flat country…Royal Dutch Shell Group, BP PLC and a wind-development company owned by Goldman Sachs Group Inc. are racing to lease vast expanses of ranchland. In a bet on wind power's long-term viability, they're planning to erect what would be some of the biggest wind farms in the world, with thousands of wind turbines costing some $2 million apiece.”
The Amarillo Globe-News, March 25, 2007Companies outline details of wind power projects
“A blizzard of paper blew into Austin on Wednesday and Thursday as wind power companies filed details on their plans in the Panhandle…. From the eight companies that include details of land deals, at least 477,000 acres, or 745 square miles, are leased for the right to use them for wind farms or are the subject of negotiations.”
Always consult a qualified attorney before signing a contract.
Consider how a wind easement/lease will impact how you use your land (farming, ranching, hunting, recreation etc.). Contracts should be clear on this point.
Consider negotiating for non-monetary compensation, such as access to wind resource data.
Learn as much as you can about wind energy and the specific project and company in question.
Recommendations
For royalty based compensation packages, consider what it would take to exercise your audit rights.
Carefully weigh your alternatives, expectations and goals. You don’t have to sign the first contract you see.
Work together. Whether you’re negotiating with a wind developer or trying to market your land with neighbors.
Worth Repeating: Always consult a qualified attorney before signing a contract.
Recommendations(continued)
Additional Wind Energy Legal References
Farmers’ Guide to Wind Energy: Legal Issues in Farming the Wind Farmers Legal Action Group http://www.flaginc.org/topics/pubs/index.php
Harvesting the Wind: A Legal Guidebook for LandownersNYSERDA Wind Energy Tool Kit www.powernaturally.org
The Law of Wind: A Guide to Business and Legal IssuesStoel Rives LLPwww.stoel.com/resources/articles/renewableenergy/LawOfWind.pdf
Minnesota Model Wind Ordinance (2005)The Minnesota Project, Lyon County (MN), Southwest Regional Development Commission, Pipestone County (MN), Nicollet County (MN)http://www.mnproject.org/e-windresources-tech.html
Wind Energy Guide for County CommissionersMike Costanti, Peggy Beltrone, U.S. Department of Energy, National Renewable Energy Laboratory, Wind Powering America, National Association of Counties
http://www.eere.energy.gov/windandhydro/windpoweringamerica/pdfs/wpa/county_commissioners.pdf
Wind Project OwnershipLevels of Local Involvement
High Local Involvement Public Projects Community or Farmer
Owned Projects Examples: Minwind
Energy, Spirit Lake Schools, Municipal Utility or REC
Lower Levels of local Involvement
• Conventional Developer Owned Wind Projects
• Local involvement limited to taxes, land leases, and indirect economic benefits
Varying Degrees of local Involvement/Value-added
• Some local organizing, equity and investment
• May or may not be locally owned
What is Community Wind?
Working Definition: Locally owned, commercial-scale
wind projects that optimize local benefits.
- Locally owned means that members of the local community has a significant direct financial stake in the project other than through land lease payments, tax revenue, or other payments in lieu of taxes.
Local/Community Ownership Options
Municipalities & Municipal Utilities Palmdale, CA; Algona, IA; Moorhead, MN
Rural Electric Cooperatives Farmer/Local Investors
LLCs, Investors Pools, Cooperatives; Kas Brothers • Minwind Energy
Schools Spirit Lake, Iowa • Carleton College, Northfield, MN
Tribal Communities Example: Rosebud, SD
Spirit Lake, Iowa
Key Incentives in leading Community Wind States
Minnesota: Production payment for projects under 2 MW. Standard tariff and power purchase contract for wind
projects under 2 MW. Iowa:
Iowa Energy Bank- low interest loans. Net metering- unlimited for matched loads.
Successful incentives address financing issues, provide access to capital, and/or strengthen the market for community wind.
Recent Support for Community Wind in Minnesota and Iowa: 2005, 2006, & 2007
Minnesota: Community-Based Wind Energy Development (C-BED Tariff)
MN utilities required to establish a C-BED tariff based on the net present value of the energy.
Provides a framework for negotiating power purchase agreements between utilities and qualifying community projects.
Iowa: Personal Tax Credit for Small Renewable Energy Projects
For wind projects up to 2.5 MW owned by an Iowa resident, a farm operation or an electric cooperative.
1.5¢ per kilowatt-hour tax credit for 10 years. Available for 90 MW starting in July ‘06. Expanded and extended in 2006
Policy Resources Reaching Community Wind’s Potential
Windustryhttp://www.windustry.org/sites/windustry.org/files/FLAG_Report.pdf
Community Wind: A Review of Select State and Federal Policy IncentivesFarmers’ Legal Action Grouphttp://www.flaginc.org/topics/pubs/arts/CommWindAug06.pdf
The Farm Bill Environmental Law and Policy Center www.farmenergy.org
Community vs. Corporate Wind: Does it Matter Who Developes the Wind in Big Stone County, MN? University of Minnesota, Morris: Arne Kildegaard Ph.D. and Josephine Myers-Kuykindallhttp://cda.mrs.umn.edu/~kildegac/CV/Papers/IREE.pdf
The Debate over Fixed Price Incentives for Renewable Electricity in Europe and the United States: Fallout and Future DirectionsWilson Rickerson and Robert Grace http://www.boell.org/Pubs_read.cfm?read=161
Wind Energy – An Economic Opportunity for Rural Communities
Benefits of Conventional Wind Projects Wind easements and land owner payments
($3,000-$6,000 per year per MW) Local tax revenue
(Lincoln County, MN collected $471,822 from 156 MW in 2003)
New jobs and investment in rural communities.
Community Wind Energy –
A new economic opportunity
Benefits of Community Wind Projects Same benefits as conventional projects, PLUS: Creates bigger economic opportunity for
farmers, local investors, industry, and local businesses.
Keeps energy dollars local and electricity sales revenue local.
Builds more local support for wind energy by keeping more of the benefits local.
Additional Community Wind References
Community Wind Energy ToolboxWindustryhttp://www.windustry.org/CommunityWindToolbox
NYSERDA Wind Energy Tool KitNew York State Energy Research and Development Authorityhttp://www.powernaturally.org/Programs/Wind/toolkit.asp
Community Wind: An Oregon GuidebookEnergy Trust of Oregonhttp://www.energytrust.org/RR/wind/community/forms_request.html
A Comparative Analysis Business Structures Suitable for Farmer-Owned Wind Power Projects in the United StatesMark Bolinger and Ryan Wiser, Lawrence Berkeley National Laboratoryhttp://www-library.lbl.gov/docs/LBNL/567/03/PDF/LBNL-56703.pdf
In closing Community Involvement
Benefits reach across many sectors. Leadership
Policymakers, utilities and local communities can help lead the way by
• Supporting policy that establishes a market for wind • Creating this economic development opportunity
Building new industry in the rural economy Equipment, Contractors, Materials suppliers,
Bankers, Fabricators, Technical Training Programs, and potential for manufacturers
Keeps added value of wind projects local.
Contact Info:
toll free (800) 946-3640 Lisa’s phone (612) 870-3462
e-mail [email protected]
www.windustry.org
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