Glenn Schleede examines the financial incentives available to owners of industrial wind energy and how taxpayers and utility customers are picking up the tab.

This brief paper reviews and evaluates key aspects of energy policies and plans announced by New York State officials, and contrasts their electricity plans with those of the New York Independent System Operator (NYISO) which is responsible for the reliability of New York's electricity grid. Both sets of plans have major implications for the people of New York.

"This presentation will review financing of renewable projects based on available incentives:

••Benefits and challenges.

••Equity and debt structures.

••Sponsor/Investor issues.

••Debt/equity issues.

This report prepared by the U.S. House Energy and Commerce Committee examines how American taxpayers have paid out nearly $4 billion to foreign-owned companies as part of a stimulus program that pays cash grants to green-energy firms. Republicans on the Committee charged that the Treasury Department-administered program has "failed" in its goal of putting Americans to work.

The natural foods grocery chain, Whole Foods, failed to do its homework when it agreed to buy “wind energy” and, thereby, launch the nation’s largest demonstration to date of “ green energy” pseudo-environmentalism!

Three of the interesting conclusions from the analysis:

• “109 huge (32+ story, 350+ foot), low electricity producing wind turbines will be needed to produce the 458,000,000 kWh of “wind generated” electricity that Whole Foods has (in theory) purchased.”

• “$1 million spent for energy efficient light bulbs would avoid the use of 171,550,000 kWh of electricity over 5 years -- which is more than 3 times the 56,064,000 kWh of electricity that a $1,000,000 wind turbine might be able to produce over 20 years!”

• “Like the leaders in other organizations that have undertaken similar pseudo-environmental actions, it appears that Whole Foods executives thought only about the favorable PR benefits they would enjoy, while failing to consider the adverse impacts of their action.”

Editor's Note: According to the World Resources Institute and the U.S. Environmental Protection Agency the top 10 purchasers of 'wind energy' are:

Whole Foods Market Inc. 458,000 megawatts (a year)
Johnson & Johnson 295,000 MW
DuPont & Co. 170,000 MW
Starbucks Corp. 150,000 MW
IBM Corp. 110,000 MW
Safeway Inc. 78,000 MW
HSBC 66,000 MW
NatureWorks LLC 59,000 MW
Advanced Micro Devices Inc. 52,500 MW
WhiteWave Foods 49,500 MW

The Independent Energy Producers of Maine (IEPM) commissioned the Brattle Group to prepare an analysis on retail rate trends and on the economics of utility cost-based generation in Maine. Brattle Group’s white paper was submitted to Maine Public Utilities Commission in regard to Docket 2007-317, an inquiry on reentry of electric utilities into the energy supply business. Appendix A of the paper details the "Economics of wind power in Maine".

DOE released its first Annual Report on U.S. Wind Power Installation, Cost, and Performance Trends: 2006 on May 31st, providing an overview of developments and trends in the U.S. wind power market. The report analyzes trends in the marketplace, including wind power prices compared to wholesale electricity prices, project costs, turbine sizes, and developer consolidation. It also describes the increasing performance of wind projects, current ownership and financing structures, and trends among major wind power purchasers.
The report notes that U.S. wind power capacity increased by 27 percent in 2006 and that the United States had the fastest-growing wind power capacity in the world in 2005 and 2006. For the second straight year, the United States led the world by installing 2,454 megawatts of wind power capacity in 2006—16 percent of the capacity installed worldwide that year—followed by Germany, India, Spain, and China. Leading the way in annual growth capacity in the United States are Texas, Washington, and California.

Nearly 6,500 citizens from 25 participating states united in signing this letter urging Congress to oppose any extension of the wind energy production tax credit (“PTC”) due to expire at the end of 2012. More than 200 U.S. Senators and Members of Congress received the letter. The body of the letter is provided below. The full letter, without signatures included, can be accessed by clicking on the link at the bottom of this page.

Wind power is the fastest growing source of electricity generation in the United States. In 2003, the installed U.S. wind power capacity increased by 1,700 megawatts (MW) to a total of 6,374 MW.1 Most of this additional capacity came in large projects of 50 MW or more, typically owned by strategic investors who have developed or acquired a portfolio of projects. As wind power generation continues to grow, these large projects and experienced developers will likely continue to dominate wind power development. Because of their scale and access to capital, these large projects are the fastest way to move towards increasing renewable energy’s share of the generation mix—and they provide significant economic benefits to the communities where they are located, from payments to farmers for wind rights and turbine easements to construction-related spending to permanent operations and the maintenance staff at each project.

At the same time, there has been a growing interest in community wind power development. While the notion of community wind varies, these projects are generally smaller scale (less than 20 MW), and are locally initiated and owned. Projects range from single turbines erected by municipal utilities, school districts and tribal reservations to larger multi-turbine installations owned by one or more local investors and landowners. These projects may capture and retain more of the economic benefits locally (both construction-related and ongoing returns) and drive continued reinvestment in the communities. As a result, community wind projects often enjoy more favorable community support than large-scale commercial projects.

There have been numerous publications and conferences on community wind development, but less specific attention on options for project structuring and financing. The goal of this handbook is to identify critical financing issues and present several possible financing models that reflect the differing financial positions and investment goals of various project owners/developers.

The handbook includes six sections:

• Section I describes various models for community wind power ownership.

• Section II examines sources of equity and debt financing and the steps necessary to secure this financing.

• Section III identifies federal grant and loan programs and state incentives for wind power development.

• Section IV reviews the federal tax incentives supporting wind power projects, the impact of these incentives on project economics, and limitations on utilizing these incentives.

• Section V examines power purchase agreements and the value of green tags to community wind power projects.

• The Appendix contains a list of operating community wind projects in the United States and a list of project consultants and financing resources.