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AES Wind letter to Indiana landowners: Leases will lapse

AES Wind vice president Paul Burdick sent this letter to leaseholders in Clinton County, Indiana informing them that their leases will be permitted to expire. The letter affirms that AES Wind has no near-term plans to proceed with wind development in the area due to current market conditions, a lack of demand for their product, and new requirements imposed by the US Fish and Wildlife Service pertaining to the endangered Indiana bat.

Re: Update on AES's Clinton County Wind Farm

Dear Clinton County Landowners:

We at AES Wind have been making good progress advancing our wind farm development on Clinton County and we have been extremely gratified at the high level of interest and support of Clinton County landowners. Throughout the development process we continually review the market prospects and probability of success for all of our projects. Reluctantly, we have come to the conclusion that for the foreseeable future, at least through the limited life of our wind leases, the prospects for completing a wind project in Clinton County are extremely limited. In that light, we have been forced to conclude that, barring an abrupt change in market conditions, we must begin to let our wind leases lapse as their renewal dates occur. This doesn't mean that the conditions won't ever be right, it simply means that we need to be realistic about the timing and the likelihood of the broader market events that will be needed for ultimate success.

The following discussion will give you some more detailed information on the hurdles we face and how this is driving our decisions.

Eventual success of wind energy projects in the US relies to a great extent on some form of renewable energy legislation, either at the state or federal level. An important part of our development effort is to forecast the timing and amount of demand for our product. You may be aware that several US Senators have recently proposed legislation calling for a national renewable energy mandate, although it remains unclear as to when such legislation might be passed and whether it would clear both houses of Congress. We are all keenly aware that this is a political issue that has a great deal of uncertainty and is the subject of great debate. In general, we remain optimistic that over time our nation's demand for renewable energy will grow. However, even if there were to be renewable legislation sometime in 2011 we do not believe the resulting mandates and demand would grow rapidly enough to levels where we could build much, or perhaps any of the capacity that our leased land can accommodate within the limited life span of our lease options.

An additional and significant new hurdle facing all wind farms in the region is the possible presence of the endangered Indiana bat. New rules issued by the US Fish and Wildlife Service require that all operating and proposed wind farms within 23 eastern states in the Indiana bat range go through a special review process to confirm and ensure that the bat populations will not be harmed. This process is expected to take approximately 2-1/2 years. This position of the USFWS has been in the works for a while, however the process is only now being fully defined. While not necessarily fatal to wind farm development, these new lengthy and uncertain environmental review requirements only compound the timing problems we face.

It is the combination of these conditions that has led us reluctantly to the conclusion that we must reduce the size of our near term wind farm plans, which is turn means that for now we will be reducing the amount of land kept under lease. To that end our current plan is to let leases lapse as their renewal dates occur.

Although we are scaling back our effort, there are a few things we will continue to do in the hopes that the market comes around. One is that we will continue to pursue our ongoing interconnection application in order to determine how much wind capacity could be installed and the cost. Another is that we will continue to operate our installed wind monitoring towers in order to maintain the long term continuity of the data we have collected to date. And, of course, we will continue to monitor the market to see if the future holds any renewed prospects.

While the stalled growth in demand for renewables energy adversely affects our near term plans, we still believe that Clinton County is a great place for a wind farm and it's really only a matter of time before the full potential can one day be realized.

As always, if you have questions or concerns, please feel free to contact me directly and thank you again for your patience and enthusiasm.

Paul Burdick
Vice President
AES Wind, LLC

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Aeswindgenerationletter

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OCT 28 2010
http://www.windaction.org/posts/28989-aes-wind-letter-to-indiana-landowners-leases-will-lapse
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