Topics addressed:

(1)uncertainly over future natural gas prices

(2)the value of long-term fixed-price contracts for renewable energy

(3)what impact do renewables have on gas prices?

(4)what impact do high gas prices have on renewables?

Government agencies and the wind industry have successfully portrayed wind-generated electricity as "green" and as a price-competitive, potentially significant alternative source of power which could reduce dependence on 'dirty' fuels. While wind generated electricity may make sense in some circumstances, industry and government claims for its widespread use are not currently supported by sound science or economic analysis of costs v. benefits.

This document prepared by Gamesa contains the specifications for building access roads to service the wind facility as well as the platform areas where each turbine will be sited. Wind developers often cite in their marketing literature that access roads will be 16-feet in width following construction. According to the document, the minimum width of an access road between wind turbines must be 10 meters (33-feet). This width does not include side slopes or additional clearing for culverts.

Hundreds of thousands of acres spanning 34 states in the US have already been impacted by industrial wind power development. As we speak, thousands of giant turbines grind away, and TOGETHER they'll take the next 25 years to generate electricity that may last for a total of 19 days.

A review of the issues related to wind farm development.

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.

Many people accept the well-publicized claim that windmills will be able to supply a significant share of our country’s growing requirements for electricity. They also believe that wind energy is environmentally benign and a way to avoid emissions from other sources of energy for electric generation. Political leaders in windy states have even been persuaded that “wind farms” will provide economic benefits, principally through rental payments to landowners.

As proposals to build “wind farms” have proliferated, however, the adverse impacts of wind energy are becoming clear to a growing number of citizens, consumers and taxpayers. They are learning that “wind energy” has adverse environmental, ecological, scenic and property value impacts. They are learning that many of the claimed benefits of wind energy are misleading or false, and that the true costs of wind energy are higher than advertised -- with those higher costs falling on taxpayers and electric customers.

Note that this paper focuses on the true cost of producing and delivering electricity from wind and not on the price paid when a utility buys electricity from a "wind farm." This latter number will often have no relationship to the true cost because of the extensive subsidies available to “wind farm” developers and owners. In fact, in the early years of a “wind farm’s” operation the value of tax breaks and subsidies generally will exceed substantially the income that a “wind farm” owner will receive from the sale of electricity!

Responsive load is the most underutilized reliability resource available to the power system today. It is currently not used at all to provide spinning reserve. Historically there were good reasons for this, but recent technological advances in communications and controls have provided new capabilities and eliminated many of the old obstacles. North American Electric Reliability Council (NERC), Federal Energy Regulatory Commission (FERC), Northeast Power Coordinating Council (NPCC), New York State Reliability Council (NYSRC), and New York Independent System Operator (NYISO) rules are beginning to recognize these changes and are starting to encourage responsive load provision of reliability services.
The Carrier ComfortChoice responsive thermostats provide an example of these technological advances. This is a technology aimed at reducing summer peak demand through central control of residential and small commercial air-conditioning loads..........

Editor's Note:This paper provides insight into how grids operate.