Building a Community Wind Project: A Landowner's Perspective

We’ve had a long-term interest in wind energy.  We attended our very first American Wind Energy conference in 1982, and since then it has been our dream to be involved in wind energy.  We live about three hours north of Sweetwater, TX, where turbines have been installed. But while we probably have a better wind resource, the majority of turbines were built in Sweetwater because we didn’t have adequate transmission infrastructure.  Then in 2008, the Texas legislature allocated $4.93 billion for renewable energy development, and I realized that the time was right.

I visited several of the bigger wind energy companies and spoke with folks who’d developed some of the wind farms in Sweetwater.  They said they were interested in leasing some of our land to put up their own turbines.  Some people like the idea of leasing – the thought of a big wind company paying a steady rent for 20-25 years can be pretty attractive.  But we want to keep control of our land – we want to be a partner because our town needs the jobs and investments the project creates.  But those big companies aren’t interested.

I’m a researcher by nature and have read a lot about wind energy. I keep encountering an approach called community wind that involves small wind farms and local ownership.  Because they’re smaller, there are usually fewer issues when connecting to the grid, so they can go on-line faster and are cheaper than big projects.  Utilities like them – especially small municipals and co-ops – because more benefits go back to the community.  They also tend to be free of local opposition (unlike larger projects) because after all, your neighbors do the developing.  In our case, we don’t have problems with our neighbors and most of them are very excited about their involvement.

Of course, that doesn’t mean that we can enter the wind business alone.  So we are working with a community wind development company called OwnEnergy.  We decided to do this because there are too many hurdles - technical, financial, regulatory, etc. – for us to navigate on our own.  My motto in life is to find the very best people with the most expertise to help you. It’s rare for a company to offer an opportunity where we could be involved with the development and share the income stream from selling the power. We like the idea.  This way, we are able to keep a stake in the project without having to do it alone. 

The first stage of the project determines if we actually have an appropriate site.  We conduct a fair amount of research just to make sure that we are free from obvious problems.  And sure enough, it all looks good.  Of course, we have to know just how much wind we really have.  We had a met tower put up – a steel tower about 200 feet tall and eight inches wide, anchored to the ground by guy wires – for measuring the wind speed at the right height.  After about eight months, we have the readings to show that we are sitting in the middle of a powerful resource.

Well, it’s one thing to know that the wind is there, it’s another to make the numbers work out.  We had to figure out all of our expenses - costs for construction, costs for connecting to the grid and whatever upgrades might be needed to the transmission system, taxes and incentives, and then, based on our wind readings, balance our costs with the amount of electricity we could reasonably expect to generate.  Knowing that our costs were competitive with what our local utility was paying for power, we knew that we were ready to start the development.

There are permits to obtain and agreements to negotiate in order to connect to the grid, sell the power, buy the turbines, construct the wind farm, qualify for available incentives, and more.  Now we’re working on a power purchase agreement (PPA) to show that we have a buyer in place.  Once all of that is in order, we have to find financing. 

This isn’t an ordinary business improvement loan: a 50-MW project can cost around $100 million. If I had the resources to plan this project alone until now, this is where I would have hit a wall. My total cash outlay was for the met tower, feasibility studies, and interconnection fees. I had no idea we would need $500,000 to $700,000 for legal and technical advisors in the permitting and transmission processes. 

There are, however, corporate banks that specialize in renewable-energy project finance. If you can show a PPA and have someone on your team with credibility in community wind development, there is funding available.

I can see the site from here.  It will be another year or so before the electrons start flowing onto the grid.  That’s four years of my time, plus that initial investment, and a whole lot of work.  There’s no doubt that it would have been easier to lease the project to a big firm, but I haven’t thought twice about our community wind decision.  We’ll be making more money in the long run, and there’ll be more money and jobs for the community.  But most of all, when I look across our wind farm I’ll be looking at something that I helped build. I’ll be looking at my business, sitting on my land – part of my farm.

David, John and Ruth Hall are farmers based near Lubbock, TX, own a commercial fertilizer business, and with the help of Brooklyn, NY based OwnEnergy, are building a community wind farm on their land.