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infinite energy


Thar She Blows
Originally published in IE Issue #39, Volume 7, July-August 2001
by Bennett Daviss

A wind energy boom promises to confer wealth on those whom it has eluded for so long-North America's small farmers and native tribes.
Charles Goodman is sitting atop an energy bonanza longer-lived and ultimately richer than Saudi Arabia's. The energy is pollution-free, less than half the cost of solar power, poised to edge out natural gas in head-to-head price competition, and inexhaustible.

Goodman farms 100 acres of seed corn and soybeans outside of Alta, Iowa.

In a typical year, he'll make $100 to $200 from every acre except one-the acre where three wind turbines stand, just 600 feet from his porch. The energy developer that put up the turbines has guaranteed Goodman a minimum $750 annual royalty from each turbine on the electricity that winds blowing across Goodman's land generates. He can even farm right up to the 40-foot-square base of each tower, which takes a little more than 10% of the acre out of production. Last year, his one-acre wind farm earned him more than $6,000.

cows
Minnesota Buffalo Ridge
Wind may be the last untapped resource of the North American heartland. The buffalo are few and fenced, the topsoil has been tilled, the oil is long gone, and the water rights have been sold. But the wind that sweeps from the Rockies to the Appalachians renews itself hour by hour. No one owns it and no one can deplete it.

That endless, unclaimed resource has sparked a new kind of land rush. A California-based division of Enron, the natural gas giant, is leasing land and building wind farms from Washington state through the American south. Renewable Energy Systems, based in Austin, is starting to spin turbines across Texas. FPL Energy, a spinoff of Florida Power and Light, has entered the market along with dozens of smaller entrepreneurs whose turbines churn out electricity for power-hungry utilities in a market clamoring for clean energy.

But the opportunity is particularly rich for Goodman and his neighbors. Goodman's land sits at the southeastern end of Buffalo Ridge, a welt of glacial rubble running more than 65 miles from northwestern Iowa up across the corner of Minnesota to the South Dakota border. The ridge, rising as high as 1,900 feet above the surrounding plains, is not only the second-highest point in Minnesota, it's also just about the only geologic feature that rises into the winds blowing from Canada and the central Rocky Mountains on their way to Chicago. According to estimates based on U.S. Department of Energy figures, the winds in Wyoming, the Dakotas, Iowa, and Minnesota could generate enough electricity, using existing technology, to supply today's entire U.S. demand. North Dakota's breezes alone could feed 36% of the nation's appetite.

Topography funnels a good share of that potential through the area around Lake Benton, Minnesota, a town that sits at the other end of Buffalo Ridge from Alta. This hamlet of 703, located in the state's poorest county, is the hub of what is now the world's largest single wind farm. "I'd guess that the wind blows here 325 days out of every 365," says mayor Marlin Thompson, "and the average wind speed has been measured at 18 miles an hour. Everyone complained about the dust and the blizzards-until wind power came along."

The gusts became fair winds in 1994. In that year, the Minnesota legislature passed a law entitling Excel Energy, the state's biggest utility monopoly, to build a nuclear power plant and store the waste on its property. In return, Excel was obliged to invest in renewable energy.

The result: 281 wind turbines at last count, spread over more than 50 farms around Lake Benton. The turbines crank out just under 300 megawatts of electricity-on a good windy day, about enough to meet the average demand of Minneapolis and St. Paul-at a cost of 3.2 cents per kilowatt hour. "That's right about what electricity costs from gas-fired generating plants," says local farmer Jim Nichols, a former state senator and twice Minnesota's commissioner of agriculture. "The next generation of turbines will bring that down to around 2.8 cents, making wind power the cheapest electricity you can generate."

Farmers earn an average royalty of 2 to 4%, which fetches them about $1,500 to $2,000 a year from each turbine. The project plan calls for about another 100 turbines, and several smaller projects have sprung up locally to cash in on state tax incentives offered to investors in wind power projects of fewer than 2 megawatts.

One of the chief beneficiaries of the windfall (other than the farmer who has 17 turbines on a half-section of land) has been Lake Benton itself. The project brought 150 construction jobs to the area and 26 openings for permanent, high-skilled technical workers to repair and maintain the turbines. The city has completed a $2.5-million street improvement project, the county has added $715,000 in property taxes to support its schools (nearly a 50% increase), and the region has undergone an ancillary economic boomlet: tourism.

"We had eight or ten tour buses coming here every year to see the plays put on in Lake Benton's historic opera house," Thompson says. "Last year, we had more than 40 busloads, most of them to see the wind farm." Downtown, Lake Benton has built a 5,670-square-foot "Heritage Wind Power Learning Center of Southwest Minnesota," complete with a six-foot working model of a wind turbine and interactive displays. Each fall, the town also hosts an annual "Wind Fest" to promote the area and its contribution to the national energy solution.

"It's amazing the number of people who'd stop along the highway to see the turbines, then drive into town and say, 'What is that out there?'," Thompson says. "Since the wind project was built, we have an additional four specialty shops in town that weren't here, and wouldn't be here now except for tourism brought by the wind project."

The shops are a symbol of a brighter future, many believe. "Each megawatt costs about $1 million to build," Nichols says, "which makes this a $300-million project built without government money other than tax incentives. We have a lot of construction jobs, higher farm incomes, and new property taxes to improve our schools. We can educate our kids and provide them with a chance for good, well-paid jobs when they graduate. Our county has been losing population, struggling to survive. Keeping money here will help us keep our young people here."

Having sniffed potential wealth in the wind, some farmers have begun to take steps to eliminate middle-man developers. A few farm communities, such as Worthington, Minnesota, on the Iowa border, have begun to put together municipal utilities to buy and distribute wind-generated electricity from nearby farms. Several groups of farmers are pooling their savings to form limited liability corporations and build wind farms that they'll own themselves.

"This is a chance for us to keep this money in our local communities for additional economic development," says Tom Arends, who raises corn, soybeans, and hogs on 2,000 acres near Luverne, Minnesota, about 50 miles south of Lake Benton. Arends is part of a 30-member LLC hoping to raise capital to build a 1.9-megawatt wind farm. "Right now, that money waves bye-bye to us as it travels down the transmission line."

To cash in, farmers are abandoning the legal structure of the rural electric and producers' cooperatives that have shaped much rural development in the past. Corporations not only avoid some of the regulatory obstacles that cooperatives pose to farmers planning wind projects, but also put more money in shareholders' pockets. "Structuring our venture as an LLC lets us take advantage of tax credits available to investors in small wind projects, which wouldn't be available to co-op members," Arends explains. "Without the credits, we'd make about a 10% annual return. With them, we'll make about 17%."

The group is negotiating with area utilities that might purchase the power from the planned project. With a power purchase contract in hand, the LLC expects to be able to collateralize a construction loan. "A royalty of $1,500 or $2,000 is peanuts compared to what we can earn if we own it ourselves," Arends adds. "We already have farmers knocking down the door to get into the next LLC. After that one, we'll keep putting together as many as we can."

They won't be working any faster than the continent's native tribes. Indian country is home to some of the gustiest spots on the plains.

Montana's Blackfeet have been looking for a way to turn those breezes into cash for more than five years. The tribe negotiated with a few developers, but found them reluctant: Indian lands are owned by the tribe but held in trust by the federal Bureau of Indian Affairs. Any leases or other kinds of land-based deals have to be walked through, and approved by, the Washington agency. In 1999, the tribe talked with SeaWest WindPower, Inc., a private San Diego wind developer that has built projects on three continents.

"The company was open-minded about our needs and willing to work through some of the regulatory aspects," says Dennis Fitzpatrick, general manager of Siyeh Development Corp., the tribal organization managing the wind project.

No turbines are spinning yet, but already the project has expanded its scale. Originally, the Bonneville Power Administration agreed to buy about 25 megawatts from the project. But with regional demand rising, and after discovering more unused capacity than it thought in nearby transmission lines, the BPA is ready to take from 36 to 66 megawatts.

At first, the tribe will collect lease payments and a royalty-but it's not willing to settle for that. "Under current tax law, it's hard for any tribe to be an equity owner in a project like this," Fitzpatrick explains. "Because the tribe is a sovereign government, it's not able to take advantage of IRS tax credits for renewable energy. Those credits are a large part of what makes a wind project work economically today in our area." The tribe is talking to the U.S. Department of Agriculture's rural utility service about low-cost, guaranteed financing. Also, the Blackfeet's contract with SeaWest includes the right to buy into the project in the future.

But that's only the beginning. SeaWest will train tribal members to repair and maintain the turbines, and the tribe is working to include some of the technical courses in the local community college's curriculum. With Glacier National Park next door to the reservation, the tribe also expects the wind farm to attract tourists-who, in turn, will need places to eat and stay.

"We're looking at the project as a way to attract businesses to the reservation, such as electronic assembly, that use a lot of electricity and need a steady, reasonably-priced supply," Fitzpatrick says. "This is an economic development tool."

Farther north, the Piegan tribe in southern Alberta has done the Blackfeet one better. It's created the Piegan Indian Utility Corporation, the continent's first Indian-owned utility.
"We want to be assured that our needs are being met," says William Big Bull. "The only way we can do that is if we have the control we need to make decisions."

Big Bull is coordinating the tribe's Weather Dancer wind project, a partnership with Epcor Energy Services, an Alberta utility. The project put up the first of an expected 100 turbines in August, with the partners planning to install as many as 200 more over the next several years. Epcor will buy the electricity under a ten-year contract, renewable for an additional ten The company also is financing Weather Dancer, of which the Piegan nation will own half.

The partners estimate that a 100-megawatt wind farm would spin out about $15 million in annual revenue, with $7.5 million going to the tribe and its 3,025 members. "We also have the right of first refusal if our partner decides to sell its share," Big Bull adds, "so at some point we could own 100% of the project."

Even before the first turbine is in place, the project has delivered benefits. The economic value of the tribe's 2,027 acres slated to host the turbines has doubled, from about $40 an acre under agricultural use to more than $75 as a wind site. (Because the land is owned by the tribe, no private landowners' interests have been displaced.) The joint venture also has broken legal and regulatory ground that other Canadian tribes can use to set up their own wind partnerships and utilities.

The tribe hopes to use its newfound power-financial as well as electrical-to build smaller, tribally-owned wind farms to supply electricity to the reservation. "Our goal is to have at least 50% of our own power supplied by the wind," Big Bull says. Those projects also could attract industry, perhaps even a plant to make turbines and the towers that support them. "There are jobs tied to this," Big Bull says. "There's tourism, possibly manufacturing. We won't know what all the potential benefits are until the project is farther along."

An early benefit, however, is a new sense of the tribe's power. "We aren't depending on the government to make this happen," Big Bull points out. "We're using our own resources to become independent. This proves that we have the ability to become a player in a market driven by private corporations."

Those who live in North America's windy places have earned the chance. "We've been in the right place for wind for a long time," Big Bull says. "Now, thanks to improved technology, it's also finally the right time."



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