For example, a variation of one of the most common financing arrangements in the U.S. wind market, the special allocation partnership flip structure, was first developed by community wind projects in Minnesota more than a decade ago before being adopted by the broader wind market. More recently, a handful of community wind projects built over the past year have been financed via new and creative structures that push the envelope of wind project finance in the U.S. In many cases, they have moved beyond the now-standard partnership flip structures involving strategic tax equity investors. The report explains this past year has seen a wave of financial innovation in the community wind sector.

Schematic of strategic investor flip structure using the PTC. Forward slashes distinguish between pre- and post-flip allocations of distributable benefits. -Berkley National Lab

The partnership flip structure was first devised in response to the specific nature of federal policy support for wind power projects, specifically the inability of most individuals to make efficient use of the production tax credit (PTC) and accelerated depreciation. Likewise, so too has this new wave of financial innovation in the community wind sector been driven by policy changes, most of them recent. For example, as the report describes, for a limited time the American Recovery and Reinvestment Act of 2009 enables wind power (and other types of) projects to elect either the 30% investment tax credit (ITC) or a 30% cash grant in lieu of the PTC. This flexibility, in turn, enables wind power projects to pursue lease financing for the first time. Neither the ITC nor the cash grant is subject to the PTC’s requirement that the project owner also operate the project in order to be eligible for the incentive. The ITC and Section 1603 grant also reduce performance risk relative to the PTC, and (unlike the PTC) neither the ITC nor the grant is penalized for the use of subsidized energy financing. Finally, by providing a cash rather than tax incentive, the cash grant alone reduces, but does not eliminate, the need for tax appetite among project owners. All of these policy driven changes can be particularly useful to community wind projects.

Another policy-related enabler of some of the financial innovation profiled in the report include New Markets Tax Credits, which are not new but have only recently been tapped to help finance solar projects and, for the first time, in 2010 have been part of a community wind project financing. Also, Section 6108 of the 2008 Farm Bill expands the USDA’s authority to loan to renewable generation projects even if those projects are not serving traditional rural markets.

The collective experiences of the five community wind projects profiled in report can be distilled into the following common observations or lessons learned regarding the development and financing process. These include how the Recovery act was critical in the project, working with nearby projects can help ease the burden, partnering with experienced professionals pay of, take advantage of tax credits, and more highlighted in the report.

-www.lbl.gov

Renewable Energy Solutions www.renewablesolutions.com

The sector emerged in the late 1990s. “In the big picture, this industry is only about ten years old,” Kruse said, “It is evolving. Last year, half our revenue was towards grid-tied and half of it was battery charging. We still do a lot of work with telecoms, sail boats, offshore platforms and things like that. But that is changing very rapidly, and we expect this year the grid-tied market will be a much larger part of our business.” However, unlike solar panels, small wind turbines rely on moving parts, and moving parts break down. Maintenance will inevitably loom as a larger issue. Also, wind is a more variable resource than solar. To top it off, neighborhood wind advocates have to face off against neighbors afraid of turbine noise and accidents.

Before the introduction of the Skystream 600, Southwest Windpower’s newest machine, the Skystream 3.7 was its machine. “For the newest Skystream, what we’ve done is increase the swept area by one meter. When we do that, we essentially double the swept area. That’s resulting in a performance improvement of approximately 70 percent,” Kruse said. The 600’s list price is approximately $17,500, installed. “We’re seeing just a phenomenal amount more energy in a machine that costs maybe fifteen percent more.” With certain modest assumptions about siting and wind speeds the 600 can produce electricity “that would be equivalent to about eleven cents per kilowatt-hour,” a rate that matches “the standard cost of electricity in the United States. And if you add the 30 percent ITC and state incentives, that number could be far lower depending on what state you live in.”

The American Wind Energy Association (AWEA) estimates the cost of electricity generated by an “average” well-sited small turbine at fifteen to twenty cents per kilowatt-hour. “It’s all how we get this more cost-effective. We love incentives,” says Kruse. “Even though the fossil fuel industry has had incentives for almost a century, we realize that in the long term, our resources are the sun and the wind and we want to be able to get there with just technology.” Of the new turbine, “the basic look of the 600 is the same as the 3.7, but a lot of things have evolved over the last five years.” In the new turbine, he explained, there is a web-based monitoring system. “You hook up the Skystream and you plug in this little box,” he said, “and you can see your turbine anywhere. Or, if you allow us to, we can see it and provide updates to the machine for performance.”

Kruse said the 600 is essentially a smarter turbine. Through its interactive Skyview system, “We can look at the power curve that’s being generated,” he said. “The turbine can also tell us what the wind speed is, from about four meters per second to about seventeen meters per second. Knowing what the wind speed is, we can correlate it to performance. Given that data, we can actually change the software to optimize the performance of the machine” according to prevailing weather patterns. Such prevailing patterns also determine whether a site is best suited for rooftop solar panels, a wind turbine or both.

Southwest Windpower

Plans for a Purdue wind farm go back to 2005 when a meteorological tower was installed at the site.

The idea was discussed during a Purdue Board of Trustees physical facilities committee meeting. The meeting was held to give committee members a jump-start investigating the project before they are asked to vote on it Feb. 3 and prior to asking for full board approval Feb. 4.

“The research description and benefits that would come out of something like this fit perfectly with the whole Purdue mission,” says trustee Michael Berghoff, committee chairman. “This is something concrete and specific. You talk about turbine design — that is a classic Purdue topic.”

But the trustees were hesitant to fully back the plan until they saw a financial impact analysis and understood how ongoing university research could be affected, among other questions. ”There needs to be some strong discussion about this,” says trustee Mamon Powers. “I’d like to see some kind of finance modeling to see what kind of cost will come to Purdue.”

Ken Sandel, Purdue director of physical and capital planning, described the project as a joint effort among Purdue, Purdue Research Foundation, General Electric and Performance Services, an Indianapolis-based engineering and construction company. The focus would be opening up new research and teaching areas, such as wind energy technology, turbine load management, environmental, agricultural, and social impacts of turbines, and more.

The proposed Purdue Energy Park would be made up of 30 GE turbines across the 1,600 acres at the Purdue Animal Sciences Research and Education Center — mostly agriculture land 10 mi northwest of campus off U.S. 213 South between county Roads 500 North and 750 North. Purdue Energy Park would also encompass Performance Park, a 30-turbine wind energy farm being developed on more than 2,400 acres of private land by Performance Services’ as the first wind farm in Tippecanoe County. Current plans show Performance Park sitting on an area bound by North County Line Road and County Road 750 North, U.S. 231 and County Road 300 West.

Performance Services is the design-builder of both parks and is in negotiations with a major financial investor for the commercial venture, according to Purdue. The 100 megawatts of electricity the 60 turbines has a potential to produce would be sold to a utility, Sandel said, but Purdue would not receive that money. The university would get land lease payments, however. Performance Services is in discussions over which utility company would purchase the power, said Scott Zigmond, the company’s vice president of sales and marketing.

It is unclear how much, if any, of the energy produced at the park could be funneled back to Purdue to offset energy costs. Also unknown is how much cost and revenue Purdue would see from the park, a topic trustees asked about repeatedly. At the least, the university would receive $300,000 per year, or $10,000 per turbine, on Purdue-owned land.

Jay Akridge, dean of the College of Agriculture, said some of that money would go to Animal Sciences Research and Education Center to account for lost crop production and or increased operating costs. About 20 acres of land would be needed for turbines and access roads at the center. Some faculty are worried about how ongoing projects at the center could be affected by the turbines, Akridge says. Answers to those concerns are being sought before the trustees meet on Feb. 3.

Sandel wants to bring a resolution to the trustees next month that would allow Purdue Research Foundation to manage a leasing agreement for Purdue land at the Animal Sciences Research and Education Center. That would be the first step in the planning the park. Final approval of the lease of land to a private company would rest with the state. ”There is a lot of opportunity here but there is also a lot to overcome,” Berghoff says. “All of these little parties will have to get along for the research to be conducted in a way that is beneficial to the university. It is a big idea and those things comes with associated problems.”

-www.jconline.com

Equipment installed at the site will send data to Cleco via ethernet, and the power generated will offset energy used at the Northshore Toll Plaza. ”The information we gather will help us determine if wind power is a practical option for Cleco customers,” said George Bausewine, president and COO of Cleco Power.  Over the next two years the test project will document the average wind speed and the energy produced by a wind turbine rated at a capacity of 2.4 kW. A weather station mounted near the structure also will transmit weather information to Cleco.

Cleco www.cleco.com

The Mid Atlantic Region Conference in State College, Pennsylvania will bring together state and local economic development and policy makers with members of the agriculture and wind energy industries to advance opportunities for locally-owned clean energy production. Speakers will share experiences and information to harness the growing momentum for new models, new policies and projects.

The Community and Small Wind Energy Conference is for farmers, ranchers, rural landowners, economic development professionals, elected officials, business leaders, tribal representatives, investors, bankers, town planners, community leaders and any other interested individuals

Register here

The Skystream 600 small wind turbine is suitable for business and home use.

A new turbine could put wind energy in thousands of homes and businesses worldwide. Unveiled at the 2011 International Consumer Electronics Show, the Skystream 600 produces 74% percent more energy for commercial and residential use than its predecessor. It’s manufacturer says it’s the most efficient power grid-connected turbine in its class, providing an average of 7,400 kWh of clean, low-cost energy per year per household in 12 mph average annual wind speeds.

Depending on the wind resource, siting, and energy efficiency, a Skystream 600 could provide up to 60% of an average home’s energy requirements. Skystream 600 will be a fully smart grid-enabled wind turbine when available to the public in April 2011, making it easy for consumers to connect their homes or businesses to wind-generated electricity. With its interactive Skyview system, users can monitor how much energy the turbine is producing from anywhere internet access is available.

Skystream 600 is part of GE’s “home of the future” exhibit at the Consumer Electronics Show, which showcases innovative products designed to help consumers manage home energy generation, cost, and consumption. GE invested in Southwest Windpower, a supplier of small wind systems, in early 2009 through GE Energy Financial Services.

Southwest Windpower www.windenergy.com

“While the industry saw the all-too-real impacts of having no long-term U.S. policies toward renewable energy, the industry nevertheless made significant advances in 2010,” said Denise Bode, CEO of the American Wind Energy Association. She explains that wind power supply chain manufacturers continued to announce new U.S. plants despite an uncertain economic climate. The industry also reached over 50% domestic content for turbines installed in the U.S. In addition, advances were made in regional transmission plans, the market for smaller turbines grew 15%, and offshore wind took major steps on the path to the first U.S. installations.

Utility-scale wind energy achieved the milestone of supplying 20% of the electricity in Iowa-an achievement reached right in America’s heartland. That shows how large amounts of wind power can be integrated into the nation’s energy mix. “We continue to work toward the goal of supplying 20% of electricity nationwide by 2030, the target set under the administration of President George W. Bush,” she says.

The year 2010 closed out with Congress extending by one more year the Section 1603 Investment Tax Credit for renewable energy, a policy which helped the industry emerge as a bright spot in the U.S. economy and keep 85,000 Americans working even at the depth of the recession. Bode also pointed out, however, that wind power’s growing stature within the group of mainstream electricity sources has drawn fire from other industries. “In 2010, fossil fuel-funded attacks put U.S. incentives for wind power at risk,” she said. “Rupert Murdoch’s Wall Street Journal editorial page has been running a series of one-sided challenges to renewable energy, while overlooking all the negative effects of conventional sources, including their enormous costs to taxpayers. And America fell to third place in wind installations behind China and the European Union, both of which have implemented long-term policies to provide a stable environment for wind power to operate.”

Here is the year in U.S. wind energy in more detail:

America ebbs as China flows. The numbers posted by the U.S. wind industry in the third quarter of 2010 made for its slowest quarter since 2007. Once the year’s final numbers are tallied, they are expected to show that China installed approximately three times as much wind-powered electricity as the U.S. in 2010, and Europe twice as much, as U.S. installations fell to just over half of 2009. Factors in the U.S. decline included an absence of long-term U.S. energy policies (such as a Renewable Electricity Standard), resulting in an unstable business environment, and utilities being less eager to enter wind energy power purchase agreements.

Manufacturing fires up. In 2010, URV USA began work on what is believed to be the first foundry to be built in the U.S. in 40 years. The foundry’s customer: the wind power industry. A new Siemens nacelle assembly facility in Hutchinson, Kan., was also announced; that plant will employ close to 500 Americans. (The nacelle includes the turbine itself, and is the most valuable part of wind installations, which also require towers and blades.) A new Nordex nacelle assembly facility came online in Little Rock, Ark., and Alstom announced an assembly plant in Amarillo, Texas. Those are just a few of the wind energy manufacturing announcements in 2010. Over 400 U.S. plants now serve the industry, and they are located in every region of the country, from the Midwest to the Southeast.

States continue wind leadership. Driven by state renewable energy targets, as many as 14 states have installed over 1,000 MW of wind, and a total of 37 states now have at least some utility-scale wind power installed within their borders. Iowa, which passed one of the country’s earliest renewable generation laws, got an estimated 20 percent of its electricity from wind in 2010, an increase from 14 percent in 2009, and on Oct. 28, strong winds pushed wind power to 25 percent of the electrical generation in Texas. Meanwhile, Oregon took the lead in adding the most capacity in the third quarter, the spot historically filled by Texas, where the industry now awaits an impending transmission build-out. With 111 MW installed in the third quarter, Indiana moved into the top-10 bracket for leading wind power states.

Americans want wind. U.S. wind energy remained as popular as ever with the American voter in 2010. A Harris poll in October 2010 found 87% of Americans want more wind energy, bearing out results in April 2010 from a bipartisan team of pollsters who found 89 percent support for more wind energy, including 84 percent of Republicans. And every time a referendum has been held on renewable energy, voters resoundingly say they want more, not less. That was the case in California during the midterm elections this fall, when Proposition 23 went down to a lopsided defeat, as it was in Colorado, Missouri, and Washington before-wherever state Renewable Portfolio Standards have come up for votes.

Fed, regions lay groundwork for transmission. The Federal Energy Regulatory Commission (FERC) approved a proposal by the grid operator in the Midwest, the Midwest Independent System Operator (MISO), that creates a new regime for paying for needed transmission infrastructure. Building new transmission promises to not only foster wind energy development but improve reliability and reduce homeowners’ and businesses’ electric bills.

Offshore wind marches forward. After nearly a decade of red tape, Interior Secretary Ken Salazar gave the go-ahead to U.S.’s first offshore wind project in April. In October, at the North American Offshore Wind Conference & Exhibition, hosted by AWEA and the Canadian Wind Energy Association, Salazar and Cape Wind Associates, LLC, signed the nation’s first lease for commercial offshore wind energy development on the Outer Continental Shelf. Demonstrating the growing interest in offshore wind energy in the U.S, AWEA announced the formation of the Offshore Wind Development Coalition (OffshoreWindDC), which focuses on advocacy and education efforts to promote offshore wind development.

Trade association evolves with education seal. Unveiling a quality assurance mechanism that promises to help advance the wind power industry, AWEA established a “Seal of Approval” for job training for wind turbine service technicians. The AWEA Seal of Approval program assesses whether educational and training institutions with technician programs are teaching the skills that an entry-level service technician needs, as identified by experts among AWEA’s 2,500 company members.

Distributed wind and community wind grow. AWEA’s 2010 Small Wind Turbine Global Market Study found that despite an economic downturn, the U.S. market for small wind turbines-those with rated capacities of 100 kW and less-grew 15% in 2009 with 20.3 MW of new capacity and $82.4 million in sales. This growth equates to nearly 10,000 new units and pushes the total installed capacity in the U.S. to 100 MW. The industry is growing at a healthy rate and business prospects are improving.

AWEA conferences demonstrate broad support. President George W. Bush kicked off WINDPOWER 2010 in Dallas last May with a message of perseverance and determination, which rallied the crowd of over 20,000 to action and enthusiasm. The conference is now the largest energy show in the country and brought the “think tank” of the industry together, along with political leaders and corporate decision makers. General Colin Powell (Ret.) gave an impressive speech to over 700 attendees at AWEA’s Fall Symposium in Phoenix last month, on “Diplomacy: Persuasion, Trust, and Values,” elaborating on the symposium theme of building strong relationships.

Federal policy win. America and the wind energy industry achieved a major victory near the end of the year with the extension of the Section 1603 renewable energy tax credit program, which is projected to increase wind project installations by roughly 50 percent each year, in addition to fostering the continued growth of other clean energy industries. The program provides a way to use tax credits – something that oil and gas industries do through Master-Limited Partnerships, but those are not available to renewable energy. And while Congress did not succeed in passing a national Renewable Electricity Standard (RES), the policy proved its popularity by achieving strong bipartisan support. In 2011, AWEA will work to introduce new Members of Congress to the wind industry and the benefits and job creation possibilities of such a policy. A national RES will create the market certainty that manufacturers need to invest more resources in wind power, enabling the U.S. to become a wind turbine manufacturing powerhouse and creating hundreds of thousands of jobs.

AWEA www.awea.org

The wind that blows across the Grizzly Peak foothills northeast of Ashland is strong enough that Interstate drivers feel it buffeting against their cars. Three neighbors near Butler Creek Road are harnessing that power to generate electricity with 13 Windspire wind turbines on and below a nearby ridge.

The cylindrical turbines are quiet, and they don’t have the fan-like blades of more traditional windmills that can chop into birds. And unlike their 60-ft-tall cousins, the turbines can tap into slower-moving wind near the ground at 30 ft tall. Windspire turbines are known for being able to use “microclimate” winds. Wind, heat and moisture conditions can vary significantly among sites that are in close proximity, creating microclimates.

Will Prust, who had four Windspire turbines installed near his house in August, said the turbines have attracted the interest of people biking and walking by his rural home. ”We’ve had a lot of people stop by and ask about the windmills. I think it’s a measure of how important energy is as an issue in our daily lives,” he said.

Each windmill cost $11,000 to buy and install, but after federal and state tax credits and rebates, the out-of-pocket cost was $3,500 apiece, Prust said. If wind speeds are average, the windmills will pay for themselves in electricity savings in five years. They have the potential to generate all the electricity the house will need. However, this year, the wind has been light, so Prust estimated the turbines have generated 10 to 20 percent of his home’s electricity during the few months he’s had them. His decision to have the turbines installed was a matter of mathematics.

“There are 6.7 billion people competing for the same finite source of energy — fossil fuels. This century, demand will exceed supply. In the next 100 years, all of us will be preoccupied with finding new sources of energy,” he said. ”Historically, humans have always used the closest resources to improve their lives. We’re surrounded by energy in every ray of sunshine, in every wave and in every gust of wind” He plans to add solar panels to his house next summer.

Prust ordered his turbines back in January but didn’t receive them until August because of demand.Since then, the price per turbine has risen to $15,000, said Randy Warren, president of Green e-Technologies, which installed four Windspire turbines at Prust’s home, seven at his neighbor’s house and two at the nearby Alpha Beta Hops Farm.

Will Prust says the wind turbines he’s installed on his property near Ashland have generated 10 to 20 percent of the electricity for his home in the few months he’s had them.

Windspire turbines are made in the United States of recycled steel and aircraft aluminum. Their manufacture has put 400 people to work in Michigan, Warren said. A Rogue Valley native, he remembers visiting the Grizzly Peak foothills as a kid. ”It’s notoriously one of the windiest places in the whole valley. It was a prerequisite to bring your kite,” he said.

The fact that windmills are springing up in the area has renewed some residents’ curiosity about whether the technology could be used on the city of Ashland’s 829-acre Imperatrice Ranch land below Grizzly Peak. Located across I-5 from town, the land historically has been used for cattle grazing, although in August, the Ashland City Council agreed to let Standing Stone Brewing Co. use a portion of the land to raise chickens and other livestock. Warren said unfortunately, the city’s land is not a feasible location for wind turbines. Lines to carry electricity to the Ashland Electric Department would have to pass under I-5, a cost-prohibitive proposition.

The city could send electricity to Pacific Power lines near the land, but that electric company is buying electricity for 3 cents per kilowatt hour and wind generation costs 11 to 12 cents per kilowatt hour. ”I don’t see it as being financially feasible,” he said. City of Ashland Conservation Analyst Larry Giardina said 5 percent of Ashland’s electricity comes from wind energy — but indirectly. The city pays for distant wind energy, but that goes to support research and development of wind energy sources, rather than feeding electrons from a wind project directly into the city’s grid.

Ashland codes restrict the height of structures and neighbors can’t intrude on each other’s solar access with tall structures, making the construction of windmills very challenging in town, Giardina said. ”There’s a better wind resource on that side of the valley,” he said, referring to the hills below Grizzly Peak. “There’s less chance of conflict with neighboring properties.”

For his part, Prust is glad to be among the wind energy pioneers on the outskirts of Ashland. ”I think this issue spans the political spectrum — whether you’re interested in saving on your utility bills, or you’re concerned about climate change, or you believe energy independence is a matter of national security and part of the larger war on terrorism,” he said. “There are lots of reasons to conserve and produce energy.”

-Vickie Aldous, Ashland Daily Tidings