The Interview: Dan Juhl

Today, the development of large-scale wind farms–containing dozens or even hundreds of wind turbines spread over many square miles–has brought a new breed of wind-driven machine to rural landscapes. They have not always been welcomed. Billboards along I-70 in Kansas in 2007 protested against the "industrialization" of rural parts of the state as large-scale wind farm development advanced.

Such opposition to wind farm development–and related transmission–threatens to slow growth in parts of the country where populations are small, viewsheds are wide and wind resources are robust.

Dan Juhl understands the depth of feeling that motivates opponents to large-scale wind farms. But he also recognizes the long-term benefits that can come to rural areas by developing such resources.

"Creating jobs in rural America is a big deal," says the 60-year-old Juhl, who is chairman of the board and CEO of the company that bears his name. As a comparatively small-scale wind developer based in Woodstock, Minn., Juhl Wind has championed the idea of community-based wind project ownership since the 1980s when Juhl returned to his home state after spending some time in California. He based his community ownership ideas on approaches used by the Dutch and the Germans, who kept project ownership in the hands of local landowners. During the 1990s Juhl worked to encourage policymakers in Minnesota and Nebraska to adopt rules encouraging similar types of local ownership. And since 1999 his company–whose stock trades over the counter using the symbol "Juhl.OB"–has developed 130 MW of community-owned wind power in both midwestern states.

"The genesis was no big thing," says Juhl. "Just a bunch of folks trying to make things happen." Having spent his childhood on a farm, Juhl grew up with wind technology. Now his focus is on using development tools to "help people who own the wind benefit from it."

The company has fewer than two dozen employees and the corporate office has been off the grid for 10 years. Electricity for the office comes from a hybrid wind/solar system and heat comes from a corncob burner. Juhl drives an electric car to and from work.

The essence of Juhl Wind's approach is to exploit wind resources for electricity generation while keeping the economic benefits as close to home as possible.

Through the community wind approach, the company involves land owners and the local community by establishing a limited liability company. This structure extends ownership to participants along with an initial equity investor. Once the equity investor receives its targeted rate of return, long-term project ownership flips to the community. As project developer, Juhl Wind helps in finding financing, secures utility power purchase agreements, negotiates with turbine suppliers for equipment and operates the wind farm once it's completed.

"We want economic development and to keep jobs in our communities," says Juhl. "The revenue stream stays in the community."

To the extent possible, the company uses local contractors, including electricians, engineers, installers and maintenance workers.

"When we build these projects we are small enough that we can utilize local talent," he says.

To date, the company's work has focused on the Buffalo Ridge area of southwestern Minnesota. At an elevation of around 2,000 feet, this 60-mile-long expanse of rolling hills offers good wind resources. To date, Juhl Wind has developed 14 wind farms with a total of 117 MW installed capacity. The company has another two dozen projects under development with a potential total capacity of 425 MW.

Much of the developed wind capacity connects to the grid via 69kV lines, which means the projects generally remain at the sub-transmission level. As a result, most of the electricity never makes it to the broader grid but is consumed locally. Juhl Wind prefers to develop projects sized between 5 MW to 20 MW and that represent a capital investment of $10 million to $40 million. That leaves them nowhere near mega-project size, but of a dollar and megawatt scale that's "still big to me," Juhl says.

Since the company went public in June 2008 it's attracted more attention and opened new sources of capital. Retired General Wesley Clark joined the board of directors in January 2009, having contacted the company to express an interest in its development approach. And Juhl Wind is investigating setting up an equity fund with the backing of "socially responsible firms" to develop more opportunities.

Community wind is a relatively small part of the larger wind development industry, representing roughly 2 percent of U.S. wind power capacity, according to one study. Projects are concentrated in a handful of states, including Minnesota, Iowa and Texas. (One Massachusetts community-owned wind project is profiled on page 67.)

A 2009 conference paper written by two researchers at the National Renewable Energy Laboratory said that while all wind energy projects offer an economic development component, local communities may see only a small benefit from the investment. The researchers said it is not uncommon for less than 15 percent of project-related construction spending to remain in the state where the project is built.

Community wind projects such as those developed by Juhl Wind can boost local economic benefits in three principal ways, according to the authors. First, more local labor and materials may be used during development and operations. Second, profitable projects with local ownership provide dividends to local shareholders. Third, community wind projects often depend on local banks for construction financing and operating loans.

Comparing community wind to a fictional "absentee" project, the authors found that construction employment effects can be 1.1 to 1.3 times higher and operations-period impacts 1.1 to 2.8 times higher for community wind.

The NREL researchers concluded that community wind projects have "greater economic development impacts than absentee-owned projects" and recommended that policies prioritizing higher levels of local ownership are "likely to result in increased economic development impacts."

Community ownership may help ease the sort of opposition to large-scale wind development that led to anti-wind billboards being posted along I-70 in Kansas.

Large-scale wind farms and transmission lines are becoming a major issue in rural America, Juhl says. "You just can't plop huge amounts of power" on rural areas, he says. "At some point the people who own the land become upset."

The NREL-written conference paper said that as wind penetration levels approach 20 percent, the likelihood rises that more people will encounter wind projects and infrastructure. While increased exposure will be a welcome change to some, the risk exists that people living in a wind project's footprint may resist project development. This may be especially true if "outsiders" or "corporate interests" are seen as benefiting more than local residents, the paper suggested.

Community wind can counteract opposition by increasing the amount of economic development benefits that remain local. At the same time, community wind may ease perceptions that "outsiders" are benefiting from wind projects.

Juhl admits his projects generate electricity that may cost more than what larger developers can offer, primarily because of differences in scale and scope. But he argues the difference "vaporizes" when amortized across the rate base and after accounting for other economic development benefits. State regulators, however, often need to be reminded of the benefits community wind can offer.

"Regulators don't care about anything but the cost of energy," he says. "But we're the ratepayer; we create all these jobs and keep revenue in the community."

Juhl Wind receives a steady flow of inquiries from communities intent on developing their own wind resources. The company's small scale limits the extent to which it can join even the most interesting projects. "I have to be honest with them," Juhl says. "It's difficult being a small player."

Difficulties aside, Juhl remains committed to the goals of community-based wind that first inspired him 30 years ago.

"If we can use this to help rural economies prosper that's the thing," he says. "It makes a huge difference in the larger economy."