Community Wind Development August 10, 2006 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 Thomas A. Wind

Community Wind Development August 10, 2006 Topics I Will Cover Initial formation of project Electrical Interconnection Need for Incentives Key Issues Economic Feasibility Benefits of the Project Thomas A. Wind

Initial Formation of Project Community Wind Development August 10, 2006 Initial Formation of Project Local Land Owners and Farmers who Own the Wind Turbine 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. Thomas A. Wind

Community Wind Development August 10, 2006 Greene County Hardin Township Thomas A. Wind

Community Wind Development August 10, 2006 7.35 7.20 7.05 6.90 6.75 6.60 6.45 6.30 6.15 Thomas A. Wind

Meteorological Test Tower Installed November 2003 Cost $11,000 Community Wind Development Meteorological Test Tower Installed November 2003 Cost $11,000 August 10, 2006 Thomas A. Wind

Community Wind Development August 10, 2006 Hardin Township HHW Greene County Farmer-Owned Wind Farm Proposed in Greene County, Iowa Thomas A. Wind

Community Wind Development August 10, 2006 Interconnection Photo by GE Wind - Thomas A. Wind

Community Wind Development High Voltage Transmission System for the Upper Midwest August 10, 2006 Thomas A. Wind

Community Wind Development High Voltage Transmission System for Iowa August 10, 2006 Little generation in this area… This helps with getting transmission access! Thomas A. Wind

Interconnecting the Project to the Grid Community Wind Development Interconnecting the Project to the Grid August 10, 2006 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 Thomas A. Wind

Community Wind Development Buffalo Ridge Minnesota this Morning from 10,000 feet Community Wind Development August 10, 2006 About half of the wind turbines were turned off due to insufficient transmission capacity Thomas A. Wind

Community Wind Development August 10, 2006 Key Issues Photo by GE Wind - Thomas A. Wind

The Major Challenge for This Project: --- Wind turbine procurement --- Community Wind Development August 10, 2006 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! Thomas A. Wind

Power Purchase Agreement Community Wind Development August 10, 2006 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 Thomas A. Wind

Financial Structure is LLC Flip Model Community Wind Development August 10, 2006 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 Thomas A. Wind

Community Wind Development August 10, 2006 Need for Incentives to be Economically Feasibility Photo by GE Wind - Thomas A. Wind

Community Wind Development August 10, 2006 The Overall Economics of Wind Generation is Determined by a Balance of Factors Cost of Money Financial Incentives Cost to Interconnect Price of Electricity Cost of Turbine Wind Speed Higher Values DISCOURAGE Wind Generation Higher Values FAVOR Wind Generation Thomas A. Wind

Community Wind Development Selecting Specific Sites Community Wind Development August 10, 2006 Mean Annual Wind Speed In Meters per Second at 50 Meters 0.02 Mps per Color Change 1 2 3 4 5 6 7 M Wind Turbine #1 Met Tower M 1 Thomas A. Wind

Community Wind Development August 10, 2006 N 7 5 6 4 2 3 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 Thomas A. Wind

Community Wind Development August 10, 2006 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 Thomas A. Wind

Need for Financial Incentives Community Wind Development August 10, 2006 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 Thomas A. Wind

Community Wind Development August 10, 2006 Benefits from the Project Photo by GE Wind - Thomas A. Wind

Locally Generated Power Community Wind Development August 10, 2006 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. Plowing in underground high voltage cables for wind turbines Thomas A. Wind

Community Wind Development August 10, 2006 Local Property Taxes The view from top of one farmer-owned wind turbine in Iowa (235 feet high) 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. Thomas A. Wind

Electrical Infrastructure Community Wind Development August 10, 2006 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. Thomas A. Wind

Community Wind Development August 10, 2006 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 Thomas A. Wind

Community Wind Development August 10, 2006 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. Hypothetical Second Wind Farm Churdan Grand Jct. Scranton Jefferson Rippey Thomas A. Wind

Community Wind Development August 10, 2006 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 Thomas A. Wind