The Community-Based Energy Development (C-BED) law requires public utilities to negotiate for power from qualifying projects at a rate of up to $0.027/kWh net present value over the 20 year life of the power purchase agreement (PPA). But developers can negotiate for a higher rate in the first ten years of the contract, so long as the 20-year rate averages $0.027/kWh in present dollars.
C-BED supporters say the tariff will help individuals, school districts, communities and other small local investors compete for sites with large developers, typically headquartered out of state. By keeping ownership local, they argue, communities will benefit economically.
A 2004 report by the General Accounting Office, an arm of the US Congress charged with keeping an eye on use of public funds, shows that a single 40 MW project with out-of-state ownership will generate about $650,000 in income for the county a year. In contrast, 20 locally owned projects at 2 MW each will generate about $3.3 million a year in the same county. In addition, community wind projects require less transmission capacity, if any, since the power can be used locally.
A potential drawback to the new law is that while all utilities are required to negotiate community-based wind proposals, they are not required to buy power from them. Supporters hope developers will be able to secure PPAs by mobilising community support and convincing utilities that buying from local investors is good public relations.
The C-BED concept has been pushed by wind developer Dan Juhl and long-time renewables activist George Crocker, who have formed C-BED, an organisation which aims to "spread the C-BED concept throughout the land." Michael Noble, of Minnesotans for an Energy Efficient Economy, says Juhl's and Crocker's efforts were crucial in passing the legislation. "This will greatly increase the probability that some good projects can be financed," says Noble.
Crocker says he is proud of the egalitarian nature of the C-BED legislation. "This allows ordinary people to compete for capital to install wind generation projects. If we're going to do enough wind, the people have to have a direct stake in the economic development," he says. He believes about 160 MW of local projects are in the pipeline. "We can move forward quite quickly with some."