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Federal promotion of a Midwest model

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Development of wind energy plant in small groups or clusters -- often referred to as the European model of wind utilisation -- is now being promoted in the United States. Next month the Department of Energy (DOE) and the respected Electric Power Research Institute are expected to issue a request for cost shared proposals under their revamped Turbine Verification Programme (see previous story). As much as $2 million is being set aside for the initiative.

The solicitation will target smaller utilities and municipalities. Rural electric co-operatives, which predominate in the Great Plains from the Dakotas south to Texas, may also be sought out, although it is not clear how interested they will be in wind clusters. The 1000 or so utility co-ops in America serve some 10% of the population, but they are typically conservative, and often quite committed to coal and nuclear power.

The projects eligible will consist of a half dozen or fewer turbines, or some 5-10 MW, it appears. But there will be one striking difference from the European-style model -- there may well be a bottom limit on project size of "probably at least two turbines," says the DOE's Peter Goldman. This would preclude the funding of single wind turbines to serve farms or isolated industry, a model which started the Danish wind energy fairy tale. Goldman stresses, though, that this limitation is not yet final. "I don't think it makes sense to have one machineÉ [our] objective is to assess how the cluster approach works, and one machine would not give us the information we want," he continues. "We're not seeking the European approach."

Such a floor would be controversial in the US. Mike Bergey of Bergey Windpower, manufacturer of small wind turbines, has said he hopes there would be no minimum size on the individual turbines or project size. In discussions on the Windnet run by the American Wind Energy Association (AWEA), he notes that small individually or commercially owned turbines were also excluded in programmes funded under the DOE/White House Climate Challenge. In contrast, PV participants in the same funding have been primarily deploying smaller systems. "Why not let the market place decide what it is interested in deploying, rather than setting artificial limits?" he wonders.

For next fiscal year, President Bill Clinton's administration is seeking a total of $6.5 million for the Turbine Verification Programme (TVP) and what will be called the Wind Cluster programme, says Goldman. If that is approved and appropriated, $2.75 million would be for the TVP and $3.8 million for the wind cluster. The TVP funding, however, might or might not be for clusters, depending upon what response there is to the upcoming solicitation this summer.

Whether the DOE responds to demands for support of cluster developments or not there are indications that this niche market in the US could well have potential. Several one-turbine developments are already in the ground in the Midwest state of Iowa, which is immediately south of Minnesota. Most recently, a Windfarm Feasibility Study out in mid May for the Iowa Association of Municipal Utilities suggests that even if the electricity is wheeled 150 miles to the small town of Waverly, Iowa, a 10.5 MW to 20 MW wind farm of Z-46 turbines near Peterson, owned and operated by a small group of municipal utilities, would be economically feasible and in the best interests of customers, many of who want clean power.

Municipal brainchild

The possibility of a so-called "joint action agency" of a number of municipal utilities owning a smallish wind farm is the brainchild of Glenn Cannon, general manager of Waverly Light & Power. "This thing's hot, this thing's great!" said Cannon excitedly, just two days after receiving a copy of the report. The study concedes that the cost of power produced, about $0.09/kWh, is high, partly because of the small size of the project. But Cannon says residents still wanted locally produced and clean power. The state imports some 98% of its electricity, notes Cannon. And there are several hundred such small utilities in the Midwest. Waverly Light & Power itself, in the northeast of the state, has some 3800 customers.

For the wind farm, neither the manufacturer nor site has actually been selected, though a competitive solicitation is planned for a supplier. One wind company is already involved. The study uses wind data collected by Zond Systems to assume a 29% annual capacity factor and 3% wheeling losses. Fifteen 700 kW turbines in a row spread 1.5 miles along a ridge were also assumed by the study's author, Waverly's consulting engineer, appropriately named Thomas Wind.

The cost is estimated at $1000/kW installed and financing through the issue of bonds is envisaged, with the capital cost amortised over 25 years at a 5% interest rate. (Municipal financing is tax exempt, probably at least halving the cost of money and debt.) If the 1.5 cent renewable energy production incentive, offered by federal government under the 1992 Energy Policy Act, is forthcoming, the study estimates that the average delivered cost of wind would be just $0.032/kWh, but could range from $0.039 cents to $0.027/kWh depending upon the installed cost, interest rate, size of wind farm and output. Other considerations the study takes into account include the offsetting of 27,000 tons of coal usage per 700 kW turbine over 25 years, perhaps ten birds killed a year per turbine, the cost of transmission line and met towers and the creation of one to one-and-half full time jobs.

In addition to the co-operatively owned wind farm, Waverly also wants to install two Zond 700 kW turbines using a DOE $5 million set-aside "step grant" for sustainable technologies and energy prototypes. The community's recent Integrated Resource Plan had already indicated the plan would be feasible and in the best interests of the population even were the power wheeled in the 150 miles from windier sites in northwest Iowa.

The small municipal utility in fact had its first taste of wind when an 80 kW Zond turbine was installed back in 1993 partly with a $25,000 grant from the American Public Power Association. In addition Waverly, the first municipal utility after Marshall, Minnesota, to install a wind turbine, had already generated some of its power from hydro and even in 1993 was considered a leader in integrated resource planning and energy efficiency.

Waverly's leadership amongst Midwestern municipal utilities is seen as so strong, it gives the proposed wind farm as good a chance of success as anywhere. "If anyone can put a deal like that together, it's Glenn Cannon," says Ward Lenz, with the state Department of Natural Resources. Lenz notes that Iowa's typical winds are moderate and sweeping across great treeless areas -- which means clusters are even more likely to be cost-effective than in the high wind passes of hilly or mountainous areas such as California.

Sidestepping legislation

What is occurring in Iowa, however, is not as a direct result of the state's Alternative Energy Producers (AEP) law, on the books since 1992. The law is now under siege from Iowa investor-owned utilities claiming that the mandated 2% alternative energy -- or 105 average MW statewide -- would cost their customers tens of millions of dollars in higher rate costs (Windpower Monthly, October 1994). The law requires utilities to buy back the alternative power at a rate of $0.0602/kWh, set on a flat rate for 33 years. Three large wind farms, proposed some years ago in Iowa, by Zond Corp and Windtricity, which have yet to be built, would secure contracts under this law (Windpower Monthly, February 1994). But the state's investor-owned utilities are apparently resisting the AEP. No contracts have been signed with the wind companies first in the queue for projects, such as Zond Corp.

The utilities are apparently stalling all negotiations in the hopes the law will be repealed -- a move they are backing with well-funded lobbying -- before they are forced to commit. Opposing the repeal are selected farming interests, environmental groups, and of course wind companies. In contrast, the cluster installations that are being considered by the state's municipal utilities, which are currently exempted from the controversial AEP law, are somewhat seen as a hedge against the possibility that the municipal utilities lose their exemption.

Indeed officials at the Iowa Department of Natural Resources are pessimistic about large projects occurring under the AEP, but optimistic that some small cluster type installations will occur in the near term. Ward Lenz, for example, notes there are currently several Iowa school districts considering installing wind turbines, following the example of Spirit Lake School District in the northwestern part of the state, where a 250 kW Wind World turbine was installed in 1993 with about 50% funding from the DOE. Since then Middle Elementary School, in Spirit Lake, has saved some $29,000 yearly. Its physics pupils are also allowed to log on and watch the system work.

"I get calls every weeks from school districts," says Lenz, "but no more DOE money is available." He still predicts that six to seven other school districts in Iowa have become so enchanted they may install turbines within a few years. Most imminent among them, he says, is the district in Manson, Iowa. It may also well help, he says, that loan funds are available from the state's "energy bank" for energy improvements at school districts, municipal governments, hospitals and so on. The pay-back period must be eight years or less.

Some path finding projects are already in the ground. Among the pioneers is Vestas American Wind Technologies Inc, operating from an office in Ames, Iowa. Vestas' one-turbine developments in Iowa now include a Vestas V27 at the Nevada Wastewater Treatment Plan. The Story County Hospital that owns the turbine is reimbursed for power it produces, though the machine is actually installed adjacent to the waste water site. The turbine was bought by a local philanthropist, a retired banker. In a second project, near the city of Des Moines, Schafer Systems in Adair installed a V27 in 1994. The small plastics company is helping with maintenance of its turbine as well as the turbine near Nevada.

Minnesota joins in

In Minnesota too, more clusters of wind turbines are looking increasingly likely. Northern States Power (NSP) is most widely known for soliciting the first 25 MW phase of Kenetech turbines on Buffalo Ridge and for the stalled 100 MW second phase, which will consist of Zond Z-46 units. But the utility is also quietly negotiating with several companies for smaller developments, especially for under 12 MW, because it is not then required to solicit competitive bids.

One company that is negotiating with NSP -- for cluster development in and around the large wind developments on Buffalo Ridge -- is Northern Alternative Energy (NAE) of Minneapolis, says company president Greg Jaunich. The company had last year acquired the Marshall Wind Farm, which consists of five Wind World 120 kW turbines that have produced power for the local municipal utility since May 1992. NAE sees the future in the region as clusters of 1-3 MW, not because it prefers that size but because it is less risk for utilities. And the utilities are responding because there is a certain level of interest "rumbling through the customer base," and also because in some cases they want to test how wind interfaces with the rest of the system, says Jaunich.

NAE is also negotiating for power purchase agreements for what would likely be 10.8 MW of Micon turbines and 11.4 MW of German Tacke units in the Upper Midwest, he says. Financially, the projects would have to stand alone, most likely with front loaded contracts with a levelised rate of some $0.04/kWh without the production tax credit.

Furthermore, in Sibley on Buffalo Ridge, NAE was to have one Micon 600 operational in mid May, near five Windmatic 65 kW turbines, Iowa's first wind farm and originally installed in 1992. Power from the project is sold to IES Utilities, formerly Iowa Electric Light & Power. The company is also testing a site near St Cloud, northwest of Minneapolis, where a Tacke 600 or Micon 600 might be installed to sell power to St John's University, starting late this year or next spring. As with many of these small projects in the Midwest, a grant was used to help kick-start it. In this case it was for $10,800 from the Minnesota-based Lindbergh Foundation and was used for wind testing equipment.

Jaunich, like Paul White of Vestas, sees potential in the region for the European model of wind farming -- and for making money from long term sales of electricity. At one time, there were some six million small wind turbines for water-pumping and battery charging in the Great Plains, prior to rural electrification. "Most wind energy development started this way and I think we can take our lessons from Europe," he says. "We're doing this one or two turbines at a timeÉ"

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