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Cape towns generating wind projects

For now, towns like Falmouth and Orleans are taking their projects one step at a time and considering all their options.

Towns across the Cape are hopping on the wind power bandwagon.


Town meetings have accepted the idea. Sites have been identified. Experts have been recruited to test wind speeds.

But when it comes to the economics of land-based wind energy, trailblazing towns such as Orleans and Falmouth have discovered there's a complex set of hurdles to conquer to make wind turbines a reality.

Orleans is exploring a two-turbine system that calls for a developer to contribute $4.1 million and the Massachusetts Technology Collaborative to commit $3.2 million. In Falmouth, initial estimates by the technology collaborative show the town could earn $20,000 annually if a privately owned turbine is built at the town landfill to power the new wastewater treatment plant. If the system was owned by the town, collaborative data shows it could lose money.

Experts said recent changes in the federal Energy Policy Act and state legislation proposed by state Rep. Matthew Patrick, D-Falmouth, could change the fiscal picture and make it possible for municipalities to own onshore wind turbines. There also may be ways to group projects together to make them profitable for a private owner.

Falmouth and Orleans are among the first... more [truncated due to possible copyright]  

Towns across the Cape are hopping on the wind power bandwagon.


Town meetings have accepted the idea. Sites have been identified. Experts have been recruited to test wind speeds.

But when it comes to the economics of land-based wind energy, trailblazing towns such as Orleans and Falmouth have discovered there's a complex set of hurdles to conquer to make wind turbines a reality.

Orleans is exploring a two-turbine system that calls for a developer to contribute $4.1 million and the Massachusetts Technology Collaborative to commit $3.2 million. In Falmouth, initial estimates by the technology collaborative show the town could earn $20,000 annually if a privately owned turbine is built at the town landfill to power the new wastewater treatment plant. If the system was owned by the town, collaborative data shows it could lose money.

Experts said recent changes in the federal Energy Policy Act and state legislation proposed by state Rep. Matthew Patrick, D-Falmouth, could change the fiscal picture and make it possible for municipalities to own onshore wind turbines. There also may be ways to group projects together to make them profitable for a private owner.

Falmouth and Orleans are among the first communities in the state to move forward with plans for municipal turbines and could set a precedent for how other towns approach similar projects in the future.

''That is what we are finding out as we try to move forward with municipal wind is that there are a whole series of barriers and none of them are that easy to overcome,'' said Matt Palmer, executive director of the renewable energy advocacy group Clean Power Now. ''There is no road map. There is no model. It is all blazing new territory.''

Complicated process

Building wind turbines is an attractive option for towns seeking to offset the cost of electricity-hungry town buildings such as water treatment plants and to gain a measure of control over the local energy market, town officials and renewable energy experts said last month at a municipal wind workshop. The session was sponsored by Cape and Islands Self Reliance and the Waquoit Bay National Estuarine Research Reserve. But since municipalities have started to crunch the numbers, some town officials have started to question their assumption that wind turbines can generate revenue along with electricity.

''I think what everybody is learning now is the installation and ownership - and operation and maintenance - of these very complex machines is a lot more complicated than at first blush,'' said Greg Watson of the Massachusetts Technology Collaborative, a quasi-public agency that has spent $14.5 million to explore Cape Cod wind projects.
''The economics might not work as well if you don't have a third party private developer.''

Elusive earnings

Falmouth and Orleans aren't the first Bay State communities to explore the idea of having their own wind turbines.

Hull and Princeton already have wind turbines that benefit those towns. Both have municipal light plants - a town-run electrical company that provides power to a captive audience in their towns.

No Cape towns have their own light plants. That means if they own a turbine, they will have to sell any extra power they generate to the electrical company, which complicates the business of owning a turbine.

Under current state law, towns would be paid the wholesale rate - not the retail rate - for excess energy they can't use and must sell surplus electricity to an established utility company. In practice, that means towns must sell electricity to their local utility for about half the price of what the town would spend to buy electricity from the utility - limiting the ability to turn a profit on a municipal wind turbine.

The Massachusetts Technology Collaborative has been advocating for private developers to own small-scale projects such as those proposed in Falmouth and Orleans.

A private developer could take advantage of the federal production tax credit available to companies generating renewable energy. Towns cannot benefit from the credit because they do not pay taxes to the federal government.

A technology collaborative analysis for Falmouth and Orleans shows the towns could lose money if they owned the proposed wind projects outright. With a private developer owning the turbines, the technology collaborative estimates the towns could earn $20,000 to $40,000 annually.

'Devil in the details'

''The early suggestion is ''¦ a private sector ownership model may be a better option,'' said John Harper, of Harper Birch Tree Capital. ''But the devil is in the details.''

For one thing, if towns like Falmouth and Orleans want a private investor to build and own their turbines, they'll need to find a developer first.

''Municipal wind projects can be financially viable, but they are not huge winners,'' Palmer said. ''It becomes difficult to find developers who are willing to do this. Financing these projects can be fairly difficult.''

To sweeten the deal for a potential developer and help make the project financially possible, the technology collaborative has offered promises to purchase the renewable energy certificates generated by wind projects. A certificate is minted every time one megawatt hour of renewable energy is generated. The certificates can then be sold to retail suppliers of electricity such as NStar that are required to have a portion of their power generated by clean energy. Certificates can also be sold to consumers on a voluntary basis. It's an additional benefit for those generating energy through wind or other renewable sources.

Under a proposed agreement with Orleans, the Massachusetts Technology Collaborative would agree to purchase the certificates generated by two turbines over a 20-year period for $3.2 million - a sum that could be available to the developer once the turbines start spinning. That financial promise would amount to just less than half of the $7.3 million cost of the Orleans project.

The Massachusetts Technology Collaborative has discussed the possibility of a similar deal with Falmouth's Energy Committee as it explores siting one turbine at the town's wastewater treatment plant.

But even with the agreement to purchase the certificates, the Orleans project's economic projections assume only an 8 percent return on the developer's investment. Orleans Wind Energy Committee Chairman Kevin Galligan said he is uncertain that will be enough to attract a developer.

Changing landscape

Legislative changes at the state and federal level could be good news for communities eager to erect wind turbines.

Patrick has authored a bill that would change the rules that limit a town wind project's profitability. Every kilowatt hour a turbine generates saves the town from having to buy that energy from the electric company at the retail price. Under current law, towns would have to sell excess energy they don't use back to the electric company at the lower wholesale rate.

Patrick's legislation essentially allows unused kilowatt hours generated by the town to count toward future use. ''If I have excess kilowatt hours in November, then they will count toward my December bill,'' Patrick said. ''Instead of getting wholesale you are getting retail.''

Patrick's proposal - called ''true net metering'' - would make it more profitable for towns to have their own turbines.

A new addition to the federal Energy Policy Act, changed by Congress last summer, offers an incentive for municipal wind turbines. A tool in the act calls for $500 million in clean renewable energy bonds for public projects. The money would provide interest-free financing for projects such as the Falmouth and Orleans turbines.

Members of Falmouth's Energy Committee have asked the technology collaborative to go back and run its economic analysis again considering the bond option.

The Cape Light Compact, which negotiates electric rates for all 15 Cape towns, may also play a role in making turbine projects possible in the future.

At a recent meeting, board members considered the idea of creating a cooperative that would purchase the energy from municipal turbines.

Maggie Downey of the Cape Light Compact said the board needs to do more analysis to find out if that kind of a plan is feasible, and she said it makes sense for towns to work together to finance the projects.

''There is some logic behind putting them together - financing them, building them en masse,'' she said. ''You could have more clout.''

Brian Braginton-Smith, whose company Community Wind Power LLC is working on wind projects at other Massachusetts locations, is a developer who is interested in investing in Cape wind projects. He said working with multiple towns with multiple turbines may be the only way to make the projects feasible.

''What they are finding out is that one turbine doesn't work. One turbine is basically bleeding red ink all over the place,'' Braginton-Smith said. ''If we can make it work, the Cape becomes kind of a dynamo,'' he said.

For now, towns like Falmouth and Orleans are taking their projects one step at a time and considering all their options.

''We are going very slowly and gathering as much information as we can,'' Falmouth Energy Committee co-chairwoman Joan Muller said.

Source: http://www.capecodonline.co...

DEC 25 2005
https://www.windaction.org/posts/821-cape-towns-generating-wind-projects
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