Posts tagged ‘wind farm payments’

National Wind Developing Wind Farms in Northwest Ohio

I had an opportunity to attend an invitation-only meeting on September 1, 2009 for Northwest Ohio Wind Energy. National Wind is the manager and developer of Northwest Ohio Wind Energy. The purpose of the meeting was to educate landowners in the footprint of Northwest Ohio Wind Energy (NWOWE) about: 1) NWOWE, 2) National Wind as a manager, and 3) to discuss the concept of community wind.  Community wind is is generated by turbines that are at least partially owned by local landowners and other members or entities (such as schools). NWOWE is currently in the process of securing land and hopes to secure 30,000 acres, with a projected construction date of 2011.

This model of wind power development is different from the model proposed by Iberdrola and Horizon Wind Energy, which are also both securing land contracts in Van Wert and Paulding Counties. Unlike Iberdrola or Horizon, the NWOWE plan allows for community ownership of the project and potentially higher payments to the landowners.  The proposed wind farm from NWOWE  will have an output of 300 MW. There are some similarities with all three companies. All have robust provisions for fixing drain tiles, which is a major concern for this part of Ohio where topography is very flat and subsurface drainage is critical. Disruptions are unavoidable during the burying of transmission lines. The lines are set four feet underground and sometimes drain tiles are cut as the lines are being buried. Again, all three companies, Horizon, Iberdrola, and NWOWE offer various ways to repair those cut drain tile.

NWOWE is using National Wind as the project manager. National Wind has developed a 50 MW Jeffers Wind Energy Center in western Minnesota that has been in operation since 2008. National Wind also has one project totaling 169.5 MW in eastern North Dakota operating as M-Power Luverne Wind Farm.

The success of this and other wind projects in Ohio hinges on the Ohio law enacted last year establishing an alternative energy portfolio standard.  This is a government mandate that by the year 2025 Ohio utilities must purchase at least 25% of their electricity from alternative sources. Of that 25%, half must come from renewable electricity sources, such as wind. Fufrthermore, over half the renewable energy (6.5% of all Ohio electricity purchased) must be generated in-state. So long as this law is not repealled, there is strong incentive and upside for wind development projects in Ohio.

Advertisements

September 3, 2009 at 8:15 am 3 comments

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.

January 27, 2009 at 8:00 am 4 comments

Legal Education Resources Related to the Emerging Wind Energy Industry

Van Wert County is receiving considerable attention form a few wind development companies. Specifically, Tully and Union townships are garnering most of the spotlight. Many individuals have asked me about legal resources that may be availble to them. Below is a compilation of Agricultural Legal Education resources on Wind Energy Development has been compiled by the new Community of Practice for Agricultural Law and its members.  Below are a few of the resources that I found most useful.  If you are going to read just one resource, I suggest the Iowa State University link.

Center for Agricultural Law and Taxation, Iowa State University (October 2008)

http://www.calt.iastate.edu/briefs/CALTLegalBrief-WindEnergyProduction-LegalIssues.pdf

Negotiating Wind Energy Property Agreements by Jessica A. Shoemaker (June 2007)

http://www.flaginc.org/topics/pubs/arts/WindPropertyAgrmnts2007.pdf

Albany Law Center – “Law of the Land” (blog on legal aspects of wind farm development)

http://lawoftheland.wordpress.com/category/wind-development/

January 19, 2009 at 6:47 pm 2 comments

Wind Lease Contracts for Landowners

In Van Wert County, Ohio we have several Wind Energy Companies shopping landowners for acres. I have seen lease and payment arrangement terms for two of these wind energy companies. I won’t give you specific details of each lease, but I’ll share some commonalities. Frankly, the leases and terms are similar for the most part. OK, here we go:

Phase I – Research

  • lasts 3-5 years
  • meteorlogical (referred to as ‘met’) tower(s) erected
  • payment can be as much as $2000 per year per landowner

Phase II – Construction and Operation

  • lasts 30 years with option to extend the contract for an additional 20 years
  • density of turbines and number of landowners involved varies per project
  • payments to an individual landowner are based primarily on number of turbines and/or electricity generated (note: other factors come in to determining payment, but to a lesser extent)
  • 80 acres with one turbine can provide $5,000+ per year to a landowner (this may or may not depend on power generation); assume 1.8-2 MW turbine
  • lease may or may not include payment adjustment based on Consumer Price Index; lease payments based on MW generation will likely not have CPI adjustment

Phase III – Renewal or Decommission

  • after 30-50 years the project will be renewed
  • if the project becomes obsolete, the project will be decommissioned

Summary

Wind energy development is definitely a hot issue in my locality. It is important to point out that the companies working in my area are interested in developing utility-scale wind farms, not wind farms for individual use. The projects are in the 100-300 MW range, which translates roughly into 100-200 wind turbines.

Speaking with the the companies that are interested in my area, the availability of utility grade transmission lines is a big asset. Van Wert County has a 345kV transmission line bisecting the county east to west. Now the question becomes, do we have the wind necessary to make wind farms feasible?

August 15, 2008 at 7:00 am 2 comments


Notice

This blog is no longer being maintained. Information on this blog may still be relevant, but for the latest agronomic information and farm management information please visit http://corn.osu.edu and http://ohioagmanager.osu.edu, respectively.

%d bloggers like this: