Presentation on theme: "Hardin Hilltop Wind Farm…… An Example of Community Wind in Iowa Kansas Community Wind Workshop Cloud County Community College Concordia, Kansas October."— Presentation transcript:
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
2 Topics I Will Cover Initial formation of project Electrical Interconnection Need for Incentives Key Issues Economic Feasibility Benefits of the Project
3 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. Local Land Owners and Farmers who Own the Wind Turbine Project
4 Greene County Hardin Township
6 Meteorological Test Tower Installed November 2003 Cost $11,000
7 Farmer-Owned Wind Farm Proposed in Greene County, Iowa Greene County Hardin Township HHW
Interconnection Photo by GE Wind -
9 High Voltage Transmission System for the Upper Midwest
10 High Voltage Transmission System for Iowa Little generation in this area… This helps with getting transmission access!
11 New 34.5 kV Underground Line Existing 34.5 kV OH Transmission System 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 Point of Interconnection
12 About half of the wind turbines were turned off due to insufficient transmission capacity Buffalo Ridge Minnesota this Morning from 10,000 feet
13 Key Issues Photo by GE Wind -
14 The Major Challenge for This Project: --- Wind turbine procurement --- It is a Sellers 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 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!
15 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 utilitys 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 utilitys other power supply resources –Alliant likes wind power, one of the largest purchasers of wind power
16 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
Need for Incentives to be Economically Feasibility Photo by GE Wind -
18 Cost of Money Wind Speed Price of Electricity Higher Values DISCOURAGE Wind Generation Higher Values FAVOR Wind Generation Cost of Turbine Cost to Interconnect Financial Incentives The Overall Economics of Wind Generation is Determined by a Balance of Factors
M Wind Turbine #1 Met Tower M Mps per Color Change Mean Annual Wind Speed In Meters per Second at 50 Meters Selecting Specific Sites
20 Wind Turbine Underground 34.5 kV Legend Alliant OH 34.5 kV Jefferson Water Works Sub Point of Interconnection (West Side of WW Sub) Alliant Substation To Grand Jct. 161/115/34.5 Sub To Jefferson & Scranton 161/34.5 Sub 1.0 Mile 3.6 Mile 34.5 kV Line to Center of Wind Farm Jefferson, IA N Hardin Hilltop Wind Farm kV
21 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. Foundation under construction for 2.1 MW wind turbine near Jefferson, Iowa
22 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. Completed foundation for large 2.1 MW wind turbine near Jefferson, Iowa
23 Benefits from the Project Photo by GE Wind -
24 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.
25 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.
26 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 years This value is often ignored, but it may be very significant in the long term.
Proposed Locally-Owned 15 MW Wind Farm Jefferson Scranton Churdan Grand Jct. Rippey Paton 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
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 countys electricity needs. Jefferson Scranton Churdan Grand Jct. Rippey Paton Hypothetical Second Wind Farm
29 Proposed Locally-Owned 15 MW Wind Farm Jefferson Scranton Churdan Grand Jct. Rippey Paton The 15 MW Locally-Owned Wind Farm Will Save the Equivalent of Enough Coal To Fill a Train 3 Miles Long Every Year