John Deere Renewable Energy Activities. Running Gree

1
Rural Wind Energy Development
Opportunities and Challenges for
Community-Based Wind Dr. Karl-Heinz Mertins
Mgr, Business Development Deere Company
Moline, IL Windpower 2005
2
John Deere Facts

• Founded in 1837, Deere Company
• Stays focused on solutions for agriculture,
  construction and forestry, grounds care
• Employs over 45,000 people
• Does business in more than 160 countries
• Is known as one of the most valued and trusted
  brands in mobile equipment
• Has annual sales of 20 Billion

3
John Deere Renewable Energy Activities

• Running Green projects prove environmental
• considerations in business planning and
  decision-making
• Ethanol E-diesel RD
• Biodiesel 5 biodiesel in diesel engines
• Biomass
• Alholmens Kraft power plant, Finland / Timberjack
• Chariton Valley Biomass Project
• Hydrogen Fuel cell RD
• Wind Power . . . .

4
Wind A Cost Competitive Midwest Resource

• Wind energy is mature and cost effective
• Wind turbines are, and will continue to
  be, placed on farm land
• Well aligned with John Deeres market
  presence
• Can increase buying power of farmers

How can farmers get involved ? Again.
5
Five Success Factors Of Wind Projects
Regional differences must be considered
6
Wind Turbines Come In Many Sizes
And This Size Fits

• Utility Scale
• 600 kW to 2.0 MW nameplate capacity
• Provides lowest cost of energy
• Suitable for community wind
• Generally no net-metering

7
Room For Different Wind Farm Models

• Community - owned
• 2 - 20 MW Projects
• Dispersed clusters
• Aggregated

• Investor - owned
• 50 - 200 MW projects
• Concentrated

Peaceful Coexistence
8
Grouping Turbines Into Small Wind Farms

• Small defined as lt 20 MW per site
• Allows connection to distribution systems at or
  below 34.5 kV
• Opens up many locations for wind development
• Regulatory Support
• FERC NOPR for Small Generators
• Other Benefits
• Streamlined permitting
• Direct engagement of land owners
• Some economies-of-scale

9
Interconnection At Distribution System Level

• Minimizing substation efforts
• Feeding small load centers directly
• Avoiding ISO interconnection studies, fees, and
  queues

10
Compatible With Existing Power Grid

• Calhoun County, Iowa
• 69 kV lines
• 70 MW potential
• 10 Sites
• Over 140 local owners

Opportunities for many participants
Source Wind Utility Consulting
11
Examples To Learn From
Erkelenz, Germany
Jutland, Denmark
Brewster, MN
Schneebergerhof, Germany
12
Pilot Project On Buffalo Ridge

• Deere has become equity investor in farmer-owned
  turbines
• Objective proof of concept
• Model learning platform for future activities

Learning By Doing
13
Pilot Project On Buffalo Ridge

• Building partnerships
• Collaborating with local developers
• Need to work with turbine manufacturers,
  contractors, off-takers

Partners
14
Refining The John Deere Model

• Projects typically less than 20 MW
• Geographically distributed to accommodate power
  grid
• Aggregated where it makes sense
• Local owner(s)
• Receive annual land lease rent for first ten
  years
• Receive annual management service fee for first
  ten years
• Purchase the LLC or LP at the end of ten years
  for Fair Market Value
• Receive 100 of income for remaining life of
  project (10 years)
• John Deere works with qualified local partners
• Wind developers who initiate projects
• Experienced contractors who participate in BOP
  work

Gives local partners a fair share
15
Additional Economic Benefits

• Construction
• Creates one to two part-time jobs per MW
  installed
• 2.4 times more than required for coal
  natural gas power plants
• Routine OM
• One permanent local FTE job per 8-10 MW
  installed
• Many renewable energy jobs are high wage
  (38k-48K)
• Indirect and induced economic activities
• Restaurants, hotels, tourism
• others

Creates high local impact
16
The PTC Is Essential To Success

• Supports cash flow distribution to rural America
• Enables long-range planning and execution
• Helps deliver adequate returns to investors

Significant growth through long-term PTC extension
17
The Opportunity

• An historic opportunity exists to stimulate rural
  economic development through wind energy projects
• John Deere will continue to invest in distributed
  wind projects if given consistent and adequate
  Production Tax Credit policy

18
Wind Energy Can Turn Rural Decay
19
Through Active Participation Of Farmers

• Education
• Transparent project planning process
• Sincere consideration of environmental impacts
• Fair investment opportunities for local
  participants
• Saving the land for the next generation
• Direct and indirect benefits for local businesses
• Keeping the money in the State/Community
• Financial benefits to local tax districts

Community Owned Renewable Energy CORE
20
Into New Rural Development
"I think it's one of the greatest things that
ever happened. It's good for my pocketbook.
It's good for the environment. -- Chuck
Goodman, retired farmer near Alta, Iowa Has
three wind turbines on his land