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Why Community Wind Should Be Part of a Utility's Portfolio

The production tax credit for renewable energy is set to expire at the end of 2012, which means that to take advantage of the incentive a project has to be "commercially operable" by that time. Since it can take two years or longer for a wind farm to be up and running, utilities that don't already have a project in development should be thinking about initiating one, and fast. But in their rush, utilities should not overlook the additional benefits in speed and local good will that can be had through Community Wind.

Now, there are a number of good reasons why wind energy should be part of a power utility’s portfolio - there are various incentives and mandates from both the Federal and local governments, there is the freedom from fuel-cost volatility – and those are generally well known.  But what many utility executives don’t know is that there are additional advantages that can be had by paying attention to the business model behind the wind farm.  In particular, by making use of a relatively new approach to wind energy called Community Wind.

The Community Wind model is based on a distributed network of smaller-scale wind farms (generally between 5 and 100MW) that are at least in-part, locally owned.  It’s been around for decades in Europe and for a few years in the U.S. 

For municipally owned utilities, for electricity co-ops, for those companies with a mandate to benefit the community, there are advantages to this model that cannot be ignored: bringing in more local investment, for the same cost; keeping the local natural resources under local control; building wind farms with the support of the community, not in spite of it.  And even for privately-held utilities, the advantages in good will and local cooperation will be felt not just during the construction phase, but for years to come.  

Now, because of the enthusiasm it has generated among landowners and community groups, Community Wind is the fastest growing segment of the utility-scale wind market.  Yet Community Wind is still well below the radar of many utility executives.  Why?  There is a widely held belief that, because of the size of the projects, Community Wind cannot possibly be as economical as the large developments built and run by huge absentee corporations. 

In fact, Community Wind can match or beat the economies of mega-wind in two of the three cost areas:

  • Equipment. Turbines account for 70% of the capital costs of a wind farm.  While no single Community Wind project has the purchasing power of a large wind energy corporation, it doesn’t have to.  If a project is developed in partnership with an organization like ours, that handles multiple developments, it can leverage the same economies of scale as the big fellas.
  • Construction. It’s true, the fixed construction costs are higher for a small project than for a giant wind farm on a per megawatt basis.  The inescapable fact is that it costs about the same to mobilize the construction equipment required to put up a hundred turbines as it does for twenty.  But this difference is offset by…
  • Transmission upgrades.  There is often very little required in the way of capital improvement to connect a small wind farm to the grid.  For a single mega-farm, though, there can be considerable work required.

In other words, a utility can get the same amount of power for the same amount of money from a Community Wind farm.  But it can get a lot more as well.

For one thing, there’s a lot of good will involved when the project is locally owned.  Everyone in the industry is aware of the NIMBY backlash that a lot of developers have faced – backlash that can hold up construction for years.  But when community members themselves are the developers, that opposition rarely materializes – these are our neighbors, after all.  We’ve been at any number of community meetings where the old question “how can I stop this?” has been replaced with “how can I build one?”  In location after location, Community Wind has proven to be a source of sophisticated and reliable energy partners to their local utilities.

And it’s not just about a hard to measure intangible benefit. Communities like Community Wind because more of the profits come back to them.  A series of studies by the National Renewable Energy Laboratory and others have shown that dollar for dollar, a Community Wind project tends to generate 2-3 times the economic impact on the community of absentee wind farms. 

The time is now to be planning your new wind energy needs.  The time is now to be thinking of Community Wind.

Cynthia Crooks has over 25 years experience working for utility companies. She is Chief Operating Officer of OwnEnergy and can be reached at cynthia.crooks@ownenergy.net

 

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