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City launches plan to go all wind -- New spin on an old model

Oregon's largest city, Portland, wants to get all of its municipal electricity by developing a 50 MW community wind project 160 kilometres to the east in Sherman County. The city, which fosters its West Coast reputation as a bastion of sustainability, pledged in 2001 to get 100% of its power from renewable sources before the end of 2010. But with less than two years to go, only 2% of the self-imposed goal has been reached.

The city's latest plan calls for the creation of five limited liability companies, each owning a 10 MW project that would qualify for pre-published prices under Oregon's Public Utility Regulatory Policies Act (PURPA) as well as the state's business energy tax credit (BETC), which caps out at $20 million. Use of the tested ownership flip model would gain access to wind's federal production tax credit (PTC) for the projects, while the City of Portland could sell bonds to raise capital -- and it could potentially collect profits once ownership flipped back to it after the first decade of operation, when the PTC no longer applies.

The entire project was hatched by Gary Thompson, a Sherman County judge and former county commissioner. "It was my idea to start with a community project eight to ten years ago when the first wind farms came into Sherman County," Thompson says. "Now we've gotten to the point where it looks like we might actually be able to do something.

The concept of locally owned wind power generation has spawned more than 350 MW of "community wind power" in Minnesota, but the grassroots ownership approach has failed to gain traction elsewhere in the US. "I wouldn't be surprised if we're the first western state that really develops the whole idea of community wind," Thompson says.

Even more comple

xTalks are underway with Midwest Wind Finance (MWF) out of Minneapolis to provide initial funding. MWF has helped spread the flip financing model for community wind projects by connecting equity players, tax liability and even turbine supplies with risk-bearing landowners who seek profits beyond ordinary land-lease payments. The company currently maintains agreements totalling more than $500 million, but MWF's Jeff Wright acknowledges that adding both a city and a county to the formula could add an extra level of difficulty to an already complex process.

"We try to help facilitate getting turbines for these projects and still put together a financing package that allows for some form of a flip to the local owners," Wright says. "But if it gets bogged down in the bureaucratic process we're not going to be at our best. I'm not aware of another city with Portland's all-out commitment. But at this point it's talk."

Happy dating stage

Similar cautious optimism is offered by all sides. "It's very promising but I would say we're at the happy dating stage," says Shannon Callahan, a lawyer in the office of city commissioner Dan Saltzman, a project proponent. "We'd really have to look at all the financials to make sure everything works for all the parties. And anything would have to come back to the city council for full approval."

The Sherman County project is actually Portland's plan B. In the fall the city rejected a wind power proposal from Portland-based PPM Energy that would have added $2 to $3 million to an annual electricity bill that reached $12.2 million in 2006. "Aside from buying green tags, which from very early on was seen as a less desirable option, there is no plan C," says Dave Tooze of Portland's Office of Sustainable Development.

"Sherman County has done some very good groundwork," Tooze says. "They have excellent relationships with the landowners and they've secured transmission rights. We've had some very good discussions and a desire to enter a formal agreement with them to pursue community wind development. But that's as far as we are."

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