Wind Energy in Van Wert County Part Deux: Challenges
On Monday, January 26, I attended another large-scale wind energy meeting in Van Wert. The meeting featured Ohio Farm Bureau’s Dale Arnold as well as Iberdrola Renewables Wind Land Consultant Dave Dickson. This post is more or less a followup to one of the first posts I did on wind energy (click here for that post).
There are essentially two major companies shopping wind leases in Van Wert, Iberdrola Renewables and Horizon Wind Energy. Since Horizon Wind Energy was not at this meeting (due to an unavoidable conflict) I’ll focus on Iberdrola Renewables. The company is based in Spain and has developed 29 windfarms in the U.S.
Iberdrola Renewables has one project in the area, “Blue Creek Wind Power Project”, with a stated goal to secure 40,000+ acres for wind energy turbines. Mr. Dickson provided a general overview of the project, which is very similar to the Horizon Wind Energy project. Both companies are looking to sign contracts with landowners in Tully and Union townships (northwest and northcentral Van Wert County), as well as parts of Paulding County and Allen County, Indiana.
If all conditions are met, Iberdrola Renewables has a timeline indicating that construction may start by 2010 with all turbines operational by 2011. Payments are similar to Horizon Wind Energy, providing $5,000+ per year to a landowner (assume one 1.8-2MW turbine for 80 acres). Lease period is 30 years with an option for an additional 20 years.
I see a few challenges, and I’m not quite clear how these challenges will be met. The issue of checkerboarding could present a significant obstacle to overcome. Checkerboarding is a term used in land development to describe what happens when two (or more) companies work independently and in competition to sign land contracts. For example, two side-by-side land parcels could each have a contract signed by a different wind energy company. From what I understand, if one wind energy company develops a large scale wind farm the competing company(ies) may leave the area and look eslewhere without building a single turbine. The problem is that leases are typically not exchanged or purchased between the wind energy companies. Therefore, if you sign a lease with the ‘wrong’ company you may not get any turbines. Checkerboarding has already occurred in Van Wert County. As I looked at the map provided by Iberdrola Renewables, I could identify areas of relatively close proximity where both Iberdrola Renewables and Horizon Wind Energy have lease contracts.
The current process seems to be lacking in community planning. In a community planned system, parcels could be identified and leased by a single entity. This single entity could represent one, two or more wind energy companies. The goal being to unify the land development process so that maximum financial benefit is achieved for all parties: landowners, neighbors, school systems, community and the wind turbine companies. A locally owned project may also alleviate the issue of checkerboarding.
ADDITION (February 2, 2009):
Dan Litchfield, Business Developer for Iberdrola Renewables provided some very helpful clarifications-
- Heartland Wind, LLC is 100% owned by Iberdrola Renewables, Inc.
- The LLC company form is used by us primarily to help organize our nationwide leasing efforts. We have separate legal entities for our west coast development and east coast development.
- Another major wind developer, NextEra Energy (fka FPL Energy) also has a leasing subsidiary called Heartland Wind, LLC, but it is registered in a different state and is a totally separate company
- If any landowners are uneasy about leasing to Heartland Wind, LLC, we are happy to add on their contract that Heartland Wind is a wholly-owned subsidiary of Iberdrola Renewables, Inc. Also, later this year we may prepare leases directly with Iberdrola Renewables, Inc.