The Minnesota Flip business model was developed in response to a unique combination of federal incentives for wind development and state policies that encouraged development of community-owned wind projects. The structure has proven a successful model for landowners and equity investors interested in partnering in the development of wind projects. This partnership allows the equity investor to take advantage of federal tax credits, while providing local owners the economic benefits of ownership.
Community Wind - Resources
In order to be financially competitive, most wind projects need to take advantage of federal and, where available, state tax incentives. It is critical to understand the role and mechanics of tax incentives while developing a commercial-scale community wind project because these incentives can represent one-half to two thirds of the total revenue stream over the first 10 years of operation due to the Federal Production Tax Credit (PTC) and Modified Accelerated Cost-Recovery System (MACRS) or other type of depreciation that can be applied to wind energy assets. You will need to consult a tax professional in the early stages of project planning to ensure that your financial projections are valid and accurately take into account the project’s tax burden and benefits.
Most commercial-scale community wind projects are multi-million dollar investment endeavors that require outside financing assistance. This section will give you some background on how to approach a bank or other financing entity. Loan terms will affect the bottom line of your wind energy project revenue, so understanding the requirements and options for financing your wind development are critical. Getting organized in the beginning will put your project in a much better negotiating position for acquiring favorable financing. With enough due diligence documentation, your project will be less risky and more attractive to a financing entity.
The cost of wind energy fell dramatically from the 1980s through 2003, then increased for most of the remainder of the decade. Then, as the recession hit, turbine orders declined and prices with them. Meanwhile turbine technology has significantly improved, so that they are producing energy more efficiently than ever, which is the real bottom line.
In the United States, leasing land to wind energy developers continues to be the most common way rural landowners are participating in wind energy. As the wind industry grows, wind developers are increasing the amount of land they are leasing to keep their future market share from slipping away. Because of this, landowners in windy areas need solid advice about wind energy and what signing a wind energy lease or easement means to both them and future generations who will inherit the land.
If you have a good wind resource and land that is well-suited for wind turbines, you still must consider how your community views and regulates wind power. Communities around the country are working to find the best ways to permit and tax wind generation facilities. Their decisions are vital to windy areas because they determine the impacts and benefits of wind energy projects for the broader community. Some states, like Minnesota, have developed statewide policies but still involve local agencies in the process, while most states leave it to the counties or other local permitting agencies to create regulations and issue permits.