Local Ownership Optimizes Wind Benefits

Tue, 2012-12-18 15:07

According to a third quarter report by the American Wind Energy Association (AWEA), the U.S. surpassed 50,000 megawatts (MW) of total installed electrical generative capacity for the first time this past August.

community celebrates wind turbineThe strength of U.S. wind power is often attributed to large-scale commercial projects that have no local presence. However, there are signs of trends toward the contrary, with expanding and diversifying wind development projects that are optimally benefiting local economies. Drawing inspiration from the wind industries in Denmark and Germany, the U.S. is consistently increasing its focus on community wind projects. As a result, the domestic wind market is experiencing significant growth pattern alterations, as community wind projects continue to grow at a faster rate than commercial projects. The “buy local” mantra has finally found its way into the U.S. wind energy market.

What Is Community Wind?

Community wind projects effectively combine local financial participation with local control and ownership, giving the stakeholders a tangible interest in the planning and success of projects. Typically, local groups initiate projects, conduct research and planning, and offer investment opportunities to the local community early in the process. Potential owners of community wind projects include rural electric cooperatives, municipal utilities, schools, native tribes, or groups of local individuals.

Leading the Way

Minnesota and Iowa represented the first U.S. states dedicated to community wind projects. Farmers in Minnesota formed various limited liability companies (LLCs), known collectively as MinWind, in order to facilitate joint ownership of several small wind farms. The partnerships, which structurally included investments from community members, obtained 66 local investors on the first two projects.

Local individuals at the center of the Minwind projects made it a point to employ local contractors and consultants whenever possible in order to optimize local economic benefits. They forged positive relationships with utilities to secure a power purchase agreement and connection to the grid.

Additionally, established guidelines helped maintain diverse local ownership and ensured wider community benefits. As per shareholder requirements, participants were strictly Minnesota residents, with over 85% of shareholders coming from rural communities and ownership being limited to 15% per project for each investor.

Benefits of Local Ownership

  • Studies have shown that locally-owned wind projects provide a greater level of economic benefit to the community than absentee-owned projects as more revenue is reinvested in the community to spur local jobs and opportunities. . The National Renewable Energy Laboratory (NREL) reports that locally-owned wind projects double the number of local jobs and can significantly benefit local economies.
  • Local ownership allows community members to participate in the design and siting of wind power, gives them a more tangible interest in the success of the project, and fosters stronger support, which can help streamline development processes.
  • Community wind projects can help stabilize and lower energy prices in local areas. Energy produced by locally-owned projects can be used directly, or can be sold to local utilities at a fixed price based on power-purchase agreements.
  • Local ownership of wind projects can diversify the geographic locations of wind resources, making wind power more reliable and helping to stabilize the grid.
  • Many community wind projects are on a small enough scale that they can be connected to the grid without separate overhead transmission lines.

Moving Forward Without The PTC

With the impending expiration of the production tax credit at the end of this year, community wind can have an even greater impact on local economies as states continue to seek various ways of satisfying their renewable portfolio standards (RPS). Will states and local entities develop policies to increase support for growth in community-based projects? Given the potential benefits, how can they not?

Photo Credit: Hepburm Wind/Flickr

By Amy Malloy

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