Category: Montana Renewable Energy

Great Falls Tribune – Construction back on track at WINData’s Greenfield Wind farm after delay over taxes

IMG_0778IMG_0877

March 30, 2016

Construction of a 25-megawatt, 13-turbine wind farm seven miles north of Fairfield is back on track, according to the developer.

Martin Wilde, principal engineer at WINData LLC, said Wednesday that foundations are being poured at Greenfield wind farm.

“We’re moving ahead,” Wilde said.

Wilde is partnering with Foundation Wind Power of San Francisco in developing the project.

Dick Anderson Construction of Great Falls is the general contractor.

Towers and turbines will be erected this summer, Wilde said. The goal is to have construction completed by September.

“Our goal has been to keep money in Montana to help Montana communities leverage the wind power opportunities to the full extent,” Wilde said.

Greenfield wind farm is located next to the six-turbine, 10-megawatt Fairfield wind farm, which was completed in 2014.

Construction was halted at Greenfield last summer over property taxes.

At the time, Foundation Windpower said the first property tax bill for the existing Fairfield wind farm came in higher than expected.

Foundation Windpower then applied for tax abatements seeking tax breaks for both the operating Fairfield wind farm and the proposed Glacier wind farm.

An abatement means that the developer will receive a 50 percent tax cut over the first five years with taxes gradually increasing to 100 percent at the end of the 10th year.

Jim Hodgskiss, Teton County commissioner, said commissioners granted a tax abatement for the Glacier project because it still hadn’t been constructed, but denied the abatement for the Fairfield project because it already was completed.

About half of the total tax reduction for the Fairfield wind farm, or about $2 million, would have been shifted onto the rest of the tax rolls if commissioners would have approved the abatement after the wind farm already had been constructed, Hodgskiss said.

“We didn’t feel it was right to shift it back to the rest of the taxpayers after it was built,” Hodgskiss said.

Follow Karl Puckett on Twitter @GFTrib_KPuckett.

Wind farm is planned near existing wind farm north of Fairfield.

Source: Construction back on track at Greenfield wind farm after delay over taxes

North American Windpower: Report: U.S., Mexico Winds Continued Below Normal Trend During Q2

Wind production during the second quarter was below normal across most of the western U.S. and Mexico, according to Albany, N.Y.-based AWS Truepower’s quarterly wind bulletin.According to AWS, winds were below normal across most of the western U.S., Mexico, India and the Philippines but above normal across most of Central and South America, Europe, and the Pacific Ocean and vicinity.Overall wind speeds across much of the U.S. rounded out the quarter well below normal – continuing the pattern from the previous winter, according to AWS, which notes that the Northeast through Midwestern and Appalachian states experienced higher-than-normal wind speeds through the quarter.As for Mexico, AWS notes that most of northern Mexico experienced winds less than 10% to 20% below the norm. Strongly above-normal wind speeds persisted to the south from the Yucatan Peninsula down through South America and into northern Brazil as well as the extreme south of the continent.

Source: North American Windpower: Report: U.S., Mexico Winds Continued Below Normal Trend During Q2

Second wind farm going up near Fairfield « WINData LLC

(Photo: Tribune photo/Karl Puckett)

FAIRFIELD – Construction of a 25-megawatt, 15-tower wind farm is expected to begin Monday seven miles north of here, following difficult negotiations between the developer and NorthWestern Energy, which will purchase the power.

It’s called Greenfield Wind LLC.

The Montana Public Service Commission, which had rejected a settlement agreement on the power purchase price between NorthWestern and WINData LLC on Dec. 16, reconsidered and approved the 25-year contract March 4.

Now construction can proceed.

“Getting the power contract has been the biggest challenge here,” WINData CEO Martin Wilde said at the Greenfield site.

On Thursday, stakes marked the locations where towers will begin rising in August and September. A strong breeze was blowing 18 mph, which is typical.

“This is perfect wind,” Wilde said.

The Greenfield wind farm is 1.5 miles to the east of the 10-megawatt Fairfield wind farm, which Wilde completed a year ago.

Wilde, an early pioneer of wind development in Montana, would like to see more projects like the Fairfield and Greenfield wind farms constructed by Montana-based, independent power producers, but it isn’t easy, he says.

“In this case, they kind of had it out with us, and we sort of held our own and settled,” Wilde said of negotiations with NorthWestern.

WINData has a 20-year contract to sell power generated at the 10-megawatt, six turbine Fairfield wind farm to regulated utility NorthWestern Energy.

It negotiated a 25-year deal with NorthWestern for the Greenfield energy.

NorthWestern argued that the price of the electricity, $50.49-per-megawatt hour, was too high, Wilde said, and “we fought back.”

NorthWestern always gives prime consideration to how a price will be reflected on the bills of NorthWestern’s 342,000 electricity customers in Montana, NorthWestern spokesman Butch Larcombe said.

“And a lot of times the developers have a different price in mind than we do,” Larcombe said.

The U.S. Public Utility Regulatory Policies Act of 1978 created a new class of generating facilities called “non-utility generators” or “qualifying facilities” that would receive special rate and regulatory treatment.

One of the goals was to encourage development of renewable energy.

Greenfield is a qualifying facility.

In Montana, the Public Service Commission has established two categories of qualifying facilities, Wilde said.

One is the standard size, which is a maximum of 3 megawatts. Those projects come with “standard offer” contracts, and negotiations are not required.

Qualifying facilities that are larger than the standard size require negotiations, and the Greenfield wind farm is the first large QF wind project negotiated and approved in Montana, Wilde said.

Instead of NorthWestern producing the power, Wilde said, it is purchasing green energy from an independent power producer, bringing diversity to its power mix, Wilde said. WINData carries the risk for generation, not NorthWestern’s ratepayers, he added.

When NorthWestern needs power the most is at times of peak demand, when it’s very cold or hot, Larcombe said.

“And unfortunately, a lot of times, that’s when the wind isn’t blowing,” Larcombe said. “We have concerns about the wind’s ability to meet the needs of our portfolio at this point.”

Wilde started out in the wind business in Montana in 1991. He’s owned his own companies and also worked for the U.S. Department of Energy.

He’s investigated many sites for wind potential in state. That leg work has attracted large wind developers, he said.

“We were trying to get commercial wind energy in Montana,” he said.

Today, Wilde owns WINData LLC based in Fairfield.

While Montana has seen some successes in wind development, Wilde says the development climate is poor compared to other states such as Texas.

“It’s like learning how to box in prison,” Wilde said. “It’s a difficult environment to do wind, period.”

The export of wind-generated electricity from Montana could be robust, but Wilde says the NorthWestern seems intent to stick with hydro and coal generation.

Larcombe, NorthWestern Energy’s spokesman, defended the utility’s efforts to own and purchase renewable power.

NorthWestern owns or has contracts with 17 different wind projects in Montana with a capacity of 282 megawatts, he said.

“To say we’re not interested or haven’t been involved in wind production really isn’t an accurate statement,” he said.

When NorthWestern purchased PPL Montana’s hydroelectric facilities in November, it changed the look of the utility’s energy portfolio, he said.

The dams are helping NorthWestern meet the typical needs for electricity in Montana, he said.

Wind in the Fairfield area doesn’t blow trains off the tracks, as it’s been known to do in locations such as Browning, Wilde said.

However, there is always a breeze.

General Electric turbines that produce 1.7 megawatts each will be erected at the Greenfield wind farm.

The distance from the ground to the tip of the blades will be 422 feet, or about 42 stories.

They are the largest wind turbines in the state, Wilde said.

“They lend themselves to calm but constant winds, which is the kind of wind we have here,” Wilde said.

The wind farm should be connected to the grid by November, Wilde said.

WINData is partnering with Wind Power of San Francisco, which will help to arrange financing through large investment banks, Wilde said.

It usually costs about $2 million per megawatt to build a wind farm, which would put the project in the $45 million to $50 million range.

Dick Anderson Construction out of Great Falls has been hired for the job. GE will assist in installing the turbines.

The 15 wind towers will stand on a ridge in two rows on a ridge overlooking wheat and hay fields.

The land is being leased from four property owners who will receive royalties based on production.

“So this is an additional crop for farmers,” Wilde said.

Reach Tribune Staff Writer Karl Puckett at 406-791-1471, 1-800-438-6600 or kpuckett@greatfallstribune.com.

via Second wind farm going up near Fairfield.

Source: Second wind farm going up near Fairfield « WINData LLC

MISSOULIAN EDITORIAL: PSC should approve wind power deal

MISSOULIAN EDITORIAL: PSC should approve wind power deal

December 28, 2014 7:00 am

Even as one of the biggest wind energy projects in Montana broke ground near Bridger this month, the state’s Public Service Commission was deciding to deny a contract between NorthWestern Energy and the developers of a new wind power project. That decision, if allowed to stand, bodes ill for new wind development in Montana in the immediate future.

Greenfield Wind is proposing a 25-megawatt wind-power project near Fairfield. The agreement between NorthWestern and Greenfield would allow the energy company to buy power from the wind farm for $54 per megawatt-hour for the next 25 years. That, as reports have pointed out, is less than the cost of power from the 11 hydroelectric dams NorthWestern bought earlier this year.

The PSC approved that purchase, which will provide power at a rate of about $57 to $58 per mWh — even though the deal could cost ratepayers as much as $800 million in excess costs, according to one expert analysis, and will mean a direct rate increase for NorthWestern’s electric customers of more than 5 percent.

With that recent history, it was perplexing to see the PSC get hung up on the wind power agreement on a 3-2 vote. Apparently, the three commissioners who voted against the deal have concerns that NorthWestern was putting itself on the hook to purchase energy it may not need. NorthWestern, not surprisingly, disagrees with the commissioners’ conclusion.

What is somewhat surprising is that the PSC’s own staff, after reviewing the agreement, noted that adding the wind energy from this contract to NorthWestern’s portfolio would actually result in lower costs for consumers. It’s also worth mentioning that even as the PSC was deciding against this deal, wind power developers across the nation were seizing an opportunity afforded by Congress in the final days of the session through a wind production tax credit. The credit applies only to new projects started this year, and with only a few days left in the year, developers are hurrying to get their shovels in the ground.

The developers of the 120-turbine Mud Springs Wind Ranch in Carbon County were among them. Thanks to the tax credit, the $550 million project stands to recoup 2.3 cents for every kilowatt hour of power it produces.

Meanwhile, U.S. Sen Jon Tester, D-Mont., was among those calling for a long-term extension of wind production tax credits starting in the new year. He seems to understand that such incentives help encourage new wind power development, and that Montana, as one of the places in the nation with the most wind potential, is in a prime position to gain from increased wind development.

This kind of activity at the state and federal level helps point which way the wind is blowing. But even setting all that aside, PSC Commissioners Bob Lake, who represents the region that includes Missoula, and Travis Kavulla found nothing in the duly negotiated contract between NorthWestern and Greenfield worth killing the deal; rather, they found that the mutually beneficial settlement to be in the best interests of NorthWestern’s 340,000 ratepayers in Montana.

Greenfield officials have said they plan to ask the PSC to reconsider its decision. This time, the three commissioners who voted to deny the deal — Roger Koopman, Kirk Bushman and commission chair Bill Gallagher — ought to pay closer attention to the information provided by their own staff and the arguments of their colleagues on the commission.

via MISSOULIAN EDITORIAL: PSC should approve wind power deal.

North American Windpower: The Year Of The Yieldco: How Last Year’s Top Finance Trend Impacts The U.S. Wind Market « WINData LLC

The calendar year 2014 saw a number of important developments in the U.S. wind industry – possibly some of the most important developments the industry has seen in a number of years. Below, we have focused on what we see as the most significant developments in capital raising, merger and acquisition activity, and the political arena.

Although the first publicly traded vehicles – commonly known as yieldcos in the renewable energy space – came to market in 2013, it was not until 2014 that the wind industry and other renewable energy industries came to appreciate the changes that yieldcos would offer in terms of reducing the cost of capital for projects.

There are a number of factors that go into determining the cost of producing a kilowatt-hour of wind energy: the cost, efficiency and reliability of equipment; the wind resource; transmission availability; development costs; and, of course, the cost of capital. Some could argue that, unlike power generated by burning fossil fuels, for wind power, where the “fuel” is free, the cost of capital is the most important of the cost factors.

Most projects will need capital from a number of sources: developer equity, which refers to the risk capital invested by the project owner (either from its own funds or through an arrangement with a private-equity source); debt (which can be bank or bond financing at either the project or the project company level); and tax equity.

The yieldcos offer the opportunity to replace some or all of the developer equity and debt with funds that require a relatively low return.

In a typical yieldco structure, a sponsor holding several completed wind projects or other power generating assets forms a separate company to hold these assets and then sells a minority ownership interest in the separate company to investors. The assets are typically selling power under long-term power purchase agreements and, therefore, offer a reasonably predictable annual production of income.

Yieldcos also offer growth potential. In a typical yieldco, only a portion of the revenues from the projects is distributed to the investors as a dividend. Most of the income is re-invested in other renewable energy projects so that the investment can grow. How much of the income from the projects is to be distributed, and how much can be devoted to growth, varies from yieldco to yieldco but is currently between 2% and 4% annually.

If the wind and other projects in the company are successful, this low-dividend requirement should leave quite a bit of money with which to acquire other projects.

To date, there are about five companies that might call themselves public yieldcos in the traditional sense of providing income and growth, although there are also several companies structured as real estate investment trusts that are similar in structure, but offer a slightly different balance between dividends and growth.

There are also a number of other companies that are rumored to be forming yieldcos or have publicly announced the intention to do so.

It may be going too far to say that the yieldco as a vehicle for raising capital for wind projects is transformative, but it is fair to suggest that it has been impactful: The industry saw the values of projects rise in 2014, even though there was very little change in interest rates or the underlying market in comparison to the prior year. Instead, we saw yieldcos competing for good projects, which, in turn, drove up values.

The “yieldco effect” on project values comes from a number of factors. The most obvious factor may be that yieldcos are able to raise capital at lower rates and, therefore, can be more competitive in purchasing wind farms when bidding against other buyers with a higher cost of capital. Just as important, however, is the fact that, in order to continue to grow, yieldcos must purchase additional projects.

As more and more yieldcos come to market and must find new high-quality projects, the demand for projects – even between and among yieldcos – will increase. This should result in driving returns down and prices up. In 2014, while this effect was felt, it did not predominate the market.

However, as more yieldcos enter the market, it would logically seem that competition for projects would continue to increase. A third, possibly less important factor is that yieldcos have the ability to purchase projects with stock rather than cash. Again, this should give yieldcos an edge when competing for some wind assets and further drive up values.

The so-called yieldco effect was prominent in the megadeal that saw TerraForm/SunEdison acquire First Wind. TerraForm is a SunEdison-sponsored yieldco that had its initial public offering in July 2014. TerraForm was used to acquire the operating assets of First Wind, assets that will offer the TerraForm shareholders an ongoing return. SunEdison simultaneously acquired the development business, which allows First Wind to continue its successful development platform and may provide TerraForm with additional projects in the future to help grow the TerraForm yieldco.

Politics as usual
The end of 2014 in Washington, D.C., saw two significant events for the wind industry: the Republican Party’s gaining the majority of both houses of Congress and what may possibly be the shortest extension ever of the federal production tax credit (PTC) for wind energy. It is still too early to know the impact on the industry of the Republican-controlled Congress.

The PTC extension, on the other hand, was an important event for a number of reasons.  The most obvious, of course, was the extension of the period in which to “commence construction” until the end of 2014. This caused a number of companies that had hoped for a one-year extension to scramble to start construction over the last three weeks of the year. While the industry awaits guidance from the Internal Revenue Service (IRS), the industry is hopeful that this extension, in effect, extended the safe harbor completion date for all of the projects started in 2013 and 2014 until Dec. 31, 2016. Currently, the industry is waiting on the IRS as to whether that will happen.

Equally important is the manner in which the “commencement of construction” extension until the end of 2014 occurred.

As the Republicans and Democrats negotiated over the “extenders bill” toward the end of 2014, the wind industry’s proponents appeared to have struck a deal with the PTC opponents for a longer-term extension in exchange for an agreement not to seek a further extension when the longer term reached completion.

Unfortunately, the White House indicated that for unrelated reasons, it would not accept the bill that included that compromise. In the end, the wind industry ended up with the short-term PTC extension. However, the fact that a deal was tentatively reached may be an indication of things to come, so stay tuned in 2015.

Author’s note: Edward Zaelke is partner at law firm Akin Gump Strauss Hauer & Feld. He can be reached at (213) 254-1234 or ezaelke©akingump.com.

via North American Windpower: The Year Of The Yieldco: How Last Year’s Top Finance Trend Impacts The U.S. Wind Market.

via North American Windpower: The Year Of The Yieldco: How Last Year’s Top Finance Trend Impacts The U.S. Wind Market « WINData LLC.

%d bloggers like this: