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Led by Lynn Billman of the National Renewable Energy Lab (NREL), a consortium of six individuals from the fields of energy, financing and engineering presented Greensburg’s City Council last Wednesday with recommendations for how the City can pursue a wind energy project to supply the community’s electrical needs in the not-too-distant future.
The proposed project calls for at least two wind turbine generators to supply up to four megawatts of electrical power, an amount that would have met the community’s typical energy needs prior to last year’s tornado. The recommendation also calls for the project to be connected to the area’s power grid; meaning excess energy produced by the turbines could be sold back to the wholesale power provider. That provider, in turn, would be obligated to supply all of Greensburg’s power needs when not being met by the turbines.
After dialing up Tom Wind of Wind Utility Consulting on speakerphone, Billman proceeded to tell the Council Work Session the group expects the electrical rate charged Greensburg customers to remain at or near pre-tornado levels, which was 12 cents per KWH, once the project is completed.
Following Billman’s recounting of a timeline by which NREL began working on Greensburg’s future energy needs last June 8, Tom Rath of Maxon Holdings took over the conversation, laying out a scenario by which the City would seek to bankroll the entire project, which is expected to carry a total cost of $8 to $10 million.
By this arrangement the City’s wind project would send its electrical generation to a wholesale power provider, which in turn would then parcel out to the community its energy needs at any given time. If more energy were being produced by the turbines on a particular day than was being consumed by the community, the excess would be purchased by the provider. But if, as on a calm day, the turbines could not meet the town’s electrical needs, the provider would make up the shortfall through its other resources—such a give-and-take arrangement being possible because of the wind project being connected to the grid.
As for benefits of the City owning the project from the start, Rath listed:
nThe project being a revenue source from the very beginning;
nThe scope of the project would be such that the City could rebuild the tornado-destroyed power plant and use the diesel-powered generators as a backup;
nThe green/sustainable benefits of the wind project would dovetail with the community’s other green initiatives.
The one major drawback, however, would be the daunting task of the municipality raising up to $10 million with limited funding resources available. Being a new project unlike anything it had before the storm, there would, for instance, be no 75 percent paid by FEMA to cover three-fourths of the expense. The City would also hold all the technical, operational and financial risk.
A second, more feasible option, according to Rath and Dale Osborn of Distributed Generation Systems, would involve a joint ownership of the project by the City and a private investor who would provide the financial backing in return for reaping tax credit benefits for what would likely be the first 10 years of the project’s operation. According to Rath, that investor would “bring in the capital and assume the debt financing to fully fund the project.” The group recommended the joint project as the preferred route for the City to pursue.
Such an approach would, according to Osborn, have the advantage of” supplying Greensburg with cost effective power while mitigating the City’s risk. He described the City as the developer and long-term owner of the project, meaning the private investor would typically receive up to 99 percent of the financial benefits—in the form of the tax credits—the first decade or so of the project’s operation, after which the ratio would “flip,” meaning the City would assume ownership status. “This would give the City the most insulation from economic risk,” Osborn said.
The relationship with the grid would be practically identical to that under the City having funded the project on its own. Specifically, the project, likely known as “Greensburg Wind, LLC” would still send its wind-generated electricity to the wholesale power supplier, which would then provide wholesale power to the City, which would, in turn, provide retail power to its utility customers. The one difference would be the City and yet-to-be-determined private investor jointly owning the wind project at the outset.
Near the conclusion of the presentation Osborne asked the council to authorize City Administrator Steve Hewitt to “proceed with this public/private structure. We need to get on with this as soon as possible to find a tax investor and get started on loan guarantees from USDA.” Osborne, however, was informed such a move would have to wait at least until the May 19 council meeting, in view of Wednesday’s gathering being only a work session and not a special meeting.
Osborne added that with “proper maintenance”, turbines can “run 30 to 40 years”, meaning the machines could continue to produce electricity for up to 30 years after Greensburg would assume full ownership of the project under the provisions of joint ownership with a private investor.
The one drawback to the joint venture, according to Rath, is that the scope of the project would be limited to the wind generation project itself, meaning the resurrection of the power plant could not be part of the package. The private investor would receive no tax benefits from providing the estimated $500,000 to $2 million it would take to again bring the diesel-powered generators to a position of providing backup power.
Osborne, however, pointed out the benefits of the joint venture would far outweigh that limitation, saying, “Under our vision of this private/public arrangement, Greensburg will not pay anything for developing this project. And by the flip period—11 to 13 years at the most—Greensburg will solely own this project.”
Joining Billman, Rath, Wind and Osborne in developing Greensburg’s near-term energy strategy were Mark O’Conner, also of Maxon and Professional Engineering Consultants’ Tim Lenz—a strategy that encompasses more than a wind project to supply the City’s future energy needs. Because of the need to quickly find a private investor, however, that project was the sole focus of the group’s presentation Wednesday evening. (Two booklets, containing over 500 summary pages of recommendations for the town’s energy strategy were handed to council members for future reference.)
A tentative timeline presented by Billman calls for the City to decide on an ownership structure by June 15, as well as determining by July 1 who the wholesale power provider will actually be—a date by which the City also is expected to commit to a definite ownership structure. By August 1 the timeline calls for the City to have selected a turbine manufacturer to supply the hardware.
Rath closed the comments by pointing out that while still new, development of small community wind farms is not unprecedented, citing such projects having already been completed in such communities as Lamar and Springfield Colorado, as well as Lenox and Wall Lake, Iowa. Of those, Lenox (1,402) and Springfield (1,562) had 2000 census populations similar to that of Greensburg, which was just under 1,400 at the time. Wall Lake, at 841, is smaller while Lamar (8,869) is the largest of the four. Greensburg Utilities Superintendent Mick Kendall is among those connected to the City’s energy concerns having recently visited the wind projects of both cities in Colorado, Rath saying nothing was revealed in either trip that would auger against Greensburg developing a similar resource.
Led by Lynn Billman of the National Renewable Energy Lab (NREL), a consortium of six individuals from the fields of energy, financing and engineering presented Greensburg’s City Council last Wednesday with recommendations for how the City can pursue a wind energy project to supply the community’s electrical needs in the not-too-distant future.
The proposed project calls for at least two wind turbine generators to supply up to four megawatts of electrical power, an amount that would have met the community’s typical energy needs prior to last year’s tornado. The recommendation also calls for the project to be connected to the area’s power grid; meaning excess energy produced by the turbines could be sold back to the wholesale power provider. That provider, in turn, would be obligated to supply all of Greensburg’s power needs when not being met by the turbines.
After dialing up Tom Wind of Wind Utility Consulting on speakerphone, Billman proceeded to tell the Council Work Session the group expects the electrical rate charged Greensburg customers to remain at or near pre-tornado levels, which was 12 cents per KWH, once the project is completed.
Following Billman’s recounting of a timeline by which NREL began working on Greensburg’s future energy needs last June 8, Tom Rath of Maxon Holdings took over the conversation, laying out a scenario by which the City would seek to bankroll the entire project, which is expected to carry a total cost of $8 to $10 million.
By this arrangement the City’s wind project would send its electrical generation to a wholesale power provider, which in turn would then parcel out to the community its energy needs at any given time. If more energy were being produced by the turbines on a particular day than was being consumed by the community, the excess would be purchased by the provider. But if, as on a calm day, the turbines could not meet the town’s electrical needs, the provider would make up the shortfall through its other resources—such a give-and-take arrangement being possible because of the wind project being connected to the grid.
As for benefits of the City owning the project from the start, Rath listed:
nThe project being a revenue source from the very beginning;
nThe scope of the project would be such that the City could rebuild the tornado-destroyed power plant and use the diesel-powered generators as a backup;
nThe green/sustainable benefits of the wind project would dovetail with the community’s other green initiatives.
The one major drawback, however, would be the daunting task of the municipality raising up to $10 million with limited funding resources available. Being a new project unlike anything it had before the storm, there would, for instance, be no 75 percent paid by FEMA to cover three-fourths of the expense. The City would also hold all the technical, operational and financial risk.
A second, more feasible option, according to Rath and Dale Osborn of Distributed Generation Systems, would involve a joint ownership of the project by the City and a private investor who would provide the financial backing in return for reaping tax credit benefits for what would likely be the first 10 years of the project’s operation. According to Rath, that investor would “bring in the capital and assume the debt financing to fully fund the project.” The group recommended the joint project as the preferred route for the City to pursue.
Such an approach would, according to Osborn, have the advantage of” supplying Greensburg with cost effective power while mitigating the City’s risk. He described the City as the developer and long-term owner of the project, meaning the private investor would typically receive up to 99 percent of the financial benefits—in the form of the tax credits—the first decade or so of the project’s operation, after which the ratio would “flip,” meaning the City would assume ownership status. “This would give the City the most insulation from economic risk,” Osborn said.
The relationship with the grid would be practically identical to that under the City having funded the project on its own. Specifically, the project, likely known as “Greensburg Wind, LLC” would still send its wind-generated electricity to the wholesale power supplier, which would then provide wholesale power to the City, which would, in turn, provide retail power to its utility customers. The one difference would be the City and yet-to-be-determined private investor jointly owning the wind project at the outset.
Near the conclusion of the presentation Osborne asked the council to authorize City Administrator Steve Hewitt to “proceed with this public/private structure. We need to get on with this as soon as possible to find a tax investor and get started on loan guarantees from USDA.” Osborne, however, was informed such a move would have to wait at least until the May 19 council meeting, in view of Wednesday’s gathering being only a work session and not a special meeting.
Osborne added that with “proper maintenance”, turbines can “run 30 to 40 years”, meaning the machines could continue to produce electricity for up to 30 years after Greensburg would assume full ownership of the project under the provisions of joint ownership with a private investor.
The one drawback to the joint venture, according to Rath, is that the scope of the project would be limited to the wind generation project itself, meaning the resurrection of the power plant could not be part of the package. The private investor would receive no tax benefits from providing the estimated $500,000 to $2 million it would take to again bring the diesel-powered generators to a position of providing backup power.
Osborne, however, pointed out the benefits of the joint venture would far outweigh that limitation, saying, “Under our vision of this private/public arrangement, Greensburg will not pay anything for developing this project. And by the flip period—11 to 13 years at the most—Greensburg will solely own this project.”
Joining Billman, Rath, Wind and Osborne in developing Greensburg’s near-term energy strategy were Mark O’Conner, also of Maxon and Professional Engineering Consultants’ Tim Lenz—a strategy that encompasses more than a wind project to supply the City’s future energy needs. Because of the need to quickly find a private investor, however, that project was the sole focus of the group’s presentation Wednesday evening. (Two booklets, containing over 500 summary pages of recommendations for the town’s energy strategy were handed to council members for future reference.)
A tentative timeline presented by Billman calls for the City to decide on an ownership structure by June 15, as well as determining by July 1 who the wholesale power provider will actually be—a date by which the City also is expected to commit to a definite ownership structure. By August 1 the timeline calls for the City to have selected a turbine manufacturer to supply the hardware.
Rath closed the comments by pointing out that while still new, development of small community wind farms is not unprecedented, citing such projects having already been completed in such communities as Lamar and Springfield Colorado, as well as Lenox and Wall Lake, Iowa. Of those, Lenox (1,402) and Springfield (1,562) had 2000 census populations similar to that of Greensburg, which was just under 1,400 at the time. Wall Lake, at 841, is smaller while Lamar (8,869) is the largest of the four. Greensburg Utilities Superintendent Mick Kendall is among those connected to the City’s energy concerns having recently visited the wind projects of both cities in Colorado, Rath saying nothing was revealed in either trip that would auger against Greensburg developing a similar resource.
