Community Wind: Development Barriers and Solutions for Overcoming Challenges

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Community Wind Development Barriers and
Solutions for Overcoming Challenges

• Daniel D. Heagerty
• President, Momentum Renewable Energy
• Senior Vice President, David Evans and Associates

2
Momentum Overview

• Momentum a wholly-owned subsidiary of David
  Evans and Associates
• Established to develop, own and operate renewable
  energy projects (primarily West/Midwest)
• Seek value-chain integration

3
Momentum Growth

• In advanced development of 3 wind projects in
  Oregon
• Developing projects in Washington, North Dakota
  and Texas
• Building pipeline of community wind projects for
  2008-2010

4
Community Wind

• Smaller scale projects
• Landowner participation in rewards
• Community participation opportunities
• LEEDs appetite
• Renewable energy portfolio goals
• Institutions (universities, public agencies)
• Commercial/industrial companies
• Large residential developments

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Landowner Participation

• Standard lease fee
• Production-based fee
• Ownership options
• Early project/partial flip
• Full flip at investors term

6
Benefits to Local Economies

• Communities
• Construction jobs
• Operations support
• Tax revenues without public service increases
• No land use change
• Farmers
• Enhanced revenues per acre
• alfalfa yields 125/acre
• turbine yields 2,000 - 5,000/acre
• project participation creates long term asset
  value
• stable revenues hedge against weather/pricing
  fluctuations

7
Community Wind A Good Market

• Underserved niche
• Less than one percent of utility-scaled wind
  power capacity
• Growing quickly, with large-scale wind
• More known factors
• Often can qualify for PURPA treatment
• Work directly with one landowner per project
• Supplements large wind
• Wind resource sites that arent big enough for
  large development
• Low cost grid interconnection
• Normally connect to distribution line
• Only a tap with a switch required

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Community Wind Projects
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Project Criteria

• Known or reasonably expected wind resource
• Emerging development areas
• In-fill areas
• Good meteorological data
• Near transmission
• Distribution lines for smaller projects (10 MW)
• Transmission lines for larger projects (lt 50 MW)
• States with financial support for wind
• Sufficient land for project
• 10 MW minimum 640 acres
• 100 MW more than 5,000 acres

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Project Barriers

• Development
• Feasibilities studies (hit rates)
• Upfront capital costs
• Economies of scale
• Power Purchase Agreements
• Federal and local (tax) incentives uncertainty
• Land availability
• Finance
• Development capital
• Investors
• Turbine/Interconnection
• Turbine supply chain
• Construction site size limitations
• Transmission perennial wild card

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Overcome Development Barriers

• Focus on markets with good regulatory and tax
  support
• Public/tax support for projects can overcome wind
  limitations
• Oregon 15 year PURPA contracts for projects up
  to 10 MW
• BETC, SELP, Energy Trust, Climate Trust
• Look for edges of known wind resources
• Margins of wind resource areas can support small
  projects
• Work with landowner in a true partnership
• Identify common goals and build into project
• Pay fair rate for land lease
• Offer options for equity participation
• Leverage access to neighbors

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Overcome Investor Barriers

• PTCs attract a variety of financial parties
• Many financial players (choices)
• Who can bring more than money
• Flip structures are common
• Ownership options for landowner
• Ownership in project before flip
• Ownership in project at flip
• Mix of the two

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Overcome Turbine/ Interconnection Barriers

• Construction and Turbine Options
• Fully develop before committing to turbines and
  construction
• Partner with someone who has turbines
• Purchase turbines from new manufacturers
• Interconnection at low voltage, simple tap
• Small project small voltage hookup
• Voltage stepup, line upgrades can crush a small
  project
• Small projects cannot afford substations

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Case Study Threemile Canyon Wind

• Three separate 10 MW projects near Boardman,
  Oregon
• v Development Barriers Overcome
• 15 year PURPA-style PPA
• 64,000 acre Farm bordered by large wind farms
• Owner will be equity investor
• v Investor Barriers Overcome
• PTCs Expected commercial operations - Summer
  2007
• State incentives
• BETC Energy Trust
• Financial partner John Deere Wind Energy
• Flip structure planned
• v Turbine/Interconnection Barriers Overcome
• Turbines John Deere Wind Energy
• Interconnection distribution lines cross property

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Contact Us

• For more information, please visit
  www.momentumre.com
• You can also contact Momentum staff
• Peter Solomon Jessica Morrison
• Executive Vice President Business Development
  Manager
• [phone] [phone]
• peter_at_momentumre.com jessica_at_momentumre.com
• Daniel D. Heagerty
• President
• [phone]
• dan_at_momentumre.com