This is a summary of Windustry's Leases and Easements Project. Click on the link below to read the summary.
Leases and Easements
This article from the Wind Powering America program is designed to assist in agricultural outreach efforts. The article gives a quick run down of things landowners should consider before entering into a lease or easement agreement with a wind developer.
Kas Brothers Plant 25-Year Cash Crop This Season: Wind Power
From one perspective, Richard and Roger Kas of Woodstock, Minnesota are typical Midwestern farmers who have grown up farming the family land with their father, William Kas. But this family has something unmistakably unique taking place on their farm. They have seventeen modern wind turbines on their land, generating enough electricity to power 4300 households, and they’re about to put up two more. What is even more unique is that the Kas brothers will own these two new commercial-scale wind turbines. This is the first project of its kind in Minnesota, and possibly in the whole Midwest. Kas Brothers Wind Farm
The wind development came about pretty quick in Southwest Minnesota when the legislature mandated that Northern States Power, now called Xcel Energy, contract 425 MW of wind generated electricity by 2002 in exchange for allowing nuclear waste to be stored outside the Prairie Island Nuclear Plant. Landowners signed leases giving the utility and wind development companies rights to put wind turbines on a portion of their land. The Kas family was part of this group of landowners. But they chose their developer carefully.
Roger thought, “I didn’t want my land tied up without a project going on it. Once you sign something you can’t do what you want. “ He felt that, “if someone comes to me and is ready to put a wind project on my land then let’s sit down and talk.” Otherwise he just felt it was a waste of time to tie his land up for two or three or five years on the option agreements. “I don’t know why someone would want to do that. If you have a good wind resource it’s good to be sure that a project will actually go up.”
The first 17 turbines on their land were developed by Dan Juhl of Danmar Associates, and have been up and running for two years. Roger said, “Dan Juhl was here the first. And we talked, but we had an agreement that if someone else came up with a project first and made us a good offer we would go with them. There were no exclusive agreements.”
While Juhl was working to put his project together he kept the Kas family up to date on the different aspects. The process took a long time. It was 1993 when Juhl installed an anemometer tower to measure the wind on the Kas farm. And it was 1999 when the 17 machines were completely installed and producing power. The machines take six acres out of crop production, on the 320 acres or half section. The life of the machines is expected to be about 25 years and power purchase agreement is 25 years.
If a Wind Developer knocks on your door, it's up to you to know the score...
*Consult an attorney on all contracts
*Consider all development options:
* get together with individual landowners and collectively negotiate wind rights for the broad area
* partner with a wind developer
* own and operate a wind farm
* form a value-added wind cooperative
* partner with the electric cooperative or municipal in your region
Roger stayed with it and paid attention to the how the project came together on his land. He may not have had an equity position in the Juhl project, but he certainly had an interest in its success since his wind easement annual payments are based on a percentage of the gross revenue from each machine. “Farming the wind is not right for everyone. We’re here everyday feeding the cattle and taking care of the farm, and we see the wind turbines as just a few more machines for us to take care of.” In that respect, you need to learn about the machines and take care of them just as you need to know how to take care of your crops and livestock. Roger has worked in construction on and off all his life. While Dan Juhl’s project was being installed on the Kas farm, the turbine manufacturer, Vestas hired Roger, for six months to work on construction and machine maintenance. Roger believes that, “If you want to farm the wind, you should have the knowledge of how it all works.”
Over time their business relationship grew and now the Kas brothers and Juhl have completed the planning and financing for a project which the Kas family will own. Juhl led the way on the key pieces to the Kas project like permitting, power purchase agreement, turbine selection and financing. In part because he had done it before and knew the path. But also, to help forge the way for a different type of project - one that is farmer owned and farmer built. Juhl said “This is possible on a small individual scale, but this is a commercial venture, it’s not a hobby.” There is no project without the power purchase agreement (PPA). This is what the capital financing is based on.
They had to give extra information and special attention to the local bankers to bring them along and get them interested in the wind project. It was all new to the lenders. They have put 20% down and 80% was financed with the PPA as the loan guarantee. The multiple years of wind data and Juhl’s project performance were evidence of for the strength of the wind resource. “Every place is going to be different and you have to work it out.” Says Kas. “Some land is better for raising corn and soybeans; some land is better for wheat and other places for rice. In the same way, some land is better for wind.” The wind resource has to justify the capital investment.
Kas knows he is forging the way with his project and knows that some things will be much easier for the next guy to put up a wind project. He insists that “I am not giving anyone any advice now. I can’t give any advice until mine is up and running.”
Wind Farmers Network
The purpose for the Wind Farmer Network is to bring together a broad range of landowners, farmers and ranchers to exchange their experiences in wind development and to educate others who would like to begin farming the wind. If you would like to join the network, please send your contact information and a brief sentence describing your wind energy interests to Windustry. Your information may be shared with other wind farmers within the network only.
Wind Farmers Network Online
The Windustry website now hosts a section called “Wind Farmer Feedback” in which wind farmers and potential wind farmers from around the country can share their ideas, questions, concerns, and advice. Please post your thoughts at www.windustry.org/farmer.
South Dakota has Wind Power
The Rosebud Sioux Tribe Wind Energy Project broke ground early this spring for a single 750 kW turbine expected to be on line by the end of the summer. The Rosebud Casino and Convention Center will be the main customer of the wind generated electricity. The excess power will be available through a "green tag" program which still has green power available for subscription. Contact: Bob Gough, ICOUP, 303-492-3125, Rpwgough@aol.com
East River Electric Coop offers the Prairie Winds program.
Members can choose to subscribe to wind generated electricity by paying a green premium. Basin Electric Power Cooperative will own the project and market any power that is not subscribed by East River. The project is expected to start producing power this October. The two 1.3MW Nordex turbines will be located two miles north of Chamberlain. Contact: Dan Ziebarth at East River Coop, 605-256-4536 or email@example.com
Amazing News from North Dakota
Congratulations go to North Dakotans for their grassroots support of wind power as three new bills supporting wind energy development were recently signed into law. This is a great comeback after the 1999 session, where there was not enough support for even a wind study. The bills are: 1) Personal Property Tax Reduction - puts wind farm owners on par with ND lignite-fired plants and with neighboring states. 2) Income Tax Incentive - a reduction on ND income tax of 3% per year for 5 years, of the installed cost of a wind farm. 3) Sales and Use Tax Exemption - applies to wind generating equipment installed in ND. Contact: Look at 2001 legislation, www.discoverND.com
Colorado PUC Points to Wind
In March, the Colorado Public Utilities Commission formally directed Xcel Energy to add a wind power project to its resource plan. After public hearings and testimony, the PUC decided that the wind plant was more cost-effective when compared to natural gas-fired generation. Wind energy beat natural gas on economics alone. The PUC ordered Xcel to enter negotiations for a 162 MW wind power plant to be located near Lamar, Colorado. Contact: Colorado PUC website, www.dora.state.co.us/puc/new.htm#dated .
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Spring 1999 Newsletter
Minnesota Wind Breakthrough
The future of wind in Minnesota became much brighter January 21, 1999, with the promise of 400 MW to be built by 2012. Rejecting Northern State Power's analysis, the Public Utilities Commission (PUC) decided with a vote of 4-0 that the development of an additional 400 MW of wind is in the public interest. "The public demand for clean, renewable energy was recognized in this decision," said Bill Grant, Director of the Midwest Chapter of the Izaak Walton League of America. The PUC deliberations had received substantial public attention, including unprecedented public hearings in St. Cloud, Moorhead, Winona, Pipestone, Mankato, and St. Paul. Citizen testimony was overwhelmingly in favor of moving forward with wind development, in which Minnesota is seen as a national leader in wind energy production and technology. John Dunlop, Great Plains Representative for American Wind Energy Association, said "With the completion of the initial 425 MW required by state law and the additional 400 MW ordered by the PUC, wind businesses will provide as much electricity as used by one out of every six Minnesota households."
NSP is currently contracting projects for the first 425 MW as defined by the 1994 Prairie Island legislative agreement. The agreement called for 400 additional MW to be built if wind power was deter-mined to be the least cost option and in the public interest. Dunlop said, "The PUC has affirmed the state’s leadership in a transition to clean, renewable energy."
Governor Ventura meets with citizens and students from SW Minnesota
Newly elected Governor Jesse Ventura and Government Relations staff Joe Bagnoli, sat down with concerned citizens and leadership from Southwest Minnesota, students from Lake Benton High School, and wind and environmental advocates with the SEED coalition, to hear concerns over the future of wind energy in Minnesota. On January 13, one week before the PUC wind decision, citizens and advocates appealed to the Governor to promote wind development in Minnesota, especially in counties hard hit by low agricultural prices. Ventura agreed that a deal was a deal and NSP should hold up their side of the bargain. Concerns were also raised regarding the Renewable Development Fund, specifically where the funds were and how they could be accessed. Afterwards, meeting participants lobbied various members of the Senate and House to favor and support increased wind development and clean environmental standards in Minnesota.
1999 Legislative Watch
A Renewable Development Fund is to be established as part of the Northern States Power (NSP) Prairie Island legislative agreement of 1994. According to the 1994 statute, $500,000 must be paid per dry cask per year, if the nuclear waste remained on the island beyond 1998. This means $3.5 million this year and probably $4.5 million next year. Who is going to administrate this fund and how are some of the questions to be answered this session. NSP is of the opinion that fund is an internal one that the company itself would control it. The SEED coalition (Sustainable Energy for Economic Development) is holding the positions that the process must be "publicly accountable" and that the fund must have a "strong preference" for projects in Minnesota.
On The Windustry Trail
Don't sign on the dotted line until...
In March, Windustry conducted a series of Town Meetings on Wind Rights. Landowners were presented with a outline of legal contract considerations to help them identify issues before signing wind easement contracts. Meetings were held in Pipestone, Lake Benton, Slayton, Moorhead and St. Charles. More town meetings, Harvesting the Wind: A Landowners Perspective are being held in early April in Lake Wilson. These meetings are intended to provide even more opportunities for landowners to discuss issues and gather information on the wind development that is taking place in Southwest Minnesota. We have wind energy experts, banking and economic development professionals as speakers to talk about the benefits of the various payment options, tax implications, long term value of the land, and different ways of developing wind projects that include local ownership. All the meetings are free and open to the public.
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