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Small WindProject Planning

North Central Electrical League (NCEL)

Business Breakfast

MN Division of Energy ResourcesLise Trudeau, Engineer

November 10, 2011

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Project Economics

The rate of return on investment for renewables depends on:

–Site–Equipment–Operation & Maintenance cost–Financing–Available incentives

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Getting Started

Is there a good wind resource? MN wind speed verification toolwww.energy.mn.gov > Clean Energy > Wind > Small Wind

• Uses state wind map data at 98ft (30 m)• Most accurate when using site

coordinates• For initial consideration only, need on-site

assessment by a professional wind site assessor

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Wind Speed at 100 ft hub height

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Project Siting

Wind Resource Assessment• Wind shear - drag produced by terrain• Displacement height - effective ground

level above nearby obstacles (treeline)• Rayleigh Distribution – frequency that

certain wind speeds occur in a year• Wind Rose – prevailing / seasonal

wind direction

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Project Siting

Wind resource and tower height strongly affect payback

AEO = 0.01328 D2V3

AEO= annual energy output, (kWh/yr)

D = rotor diameter, ft

V = wind velocity, mph

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Project Siting

• Recommend minimum tower height: • 100ft if there are no trees or structures nearby, • Lower blade at least 30ft above obstacles within

500 feet of tower.

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Project Siting

additional considerations• Proximity to interconnection site,

circuit breaker, and inverter• Location of well, septic tank and field,

other underground utilities• Soil type, depth of water table &

bedrock• Site access for concrete truck and

crane

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Permitting

• Permitting by township, municipality or county• Usually require a variance for towers over 30

feet

• Inform permitting officials early of any plans

• If no wind ordinance exists, you may want to introduce a model ordinance

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Interconnection

• Minnesota has uniform statewide guidelines for utility interconnection.

• Customer must pay for any metering and distribution line upgrades

• $300,000 of liability insurance required

• Electrical inspection by state inspector

• Utility anti-islanding test

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Metering

• Bidirectional meter is typical for net-metering

• RECs – need revenue grade meter to register in MRETS

• Some utilities may require separate meters for their own purposes

• MR 7835.1400 requires utilities to report energy delivered to and from the facility (not total energy produced)

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O&M Cost

• between 1 – 2% of installation cost, on average over life of turbine

• Depends on how much maintenance you can do yourself

• Varies with manufacturer• Ask other turbine owners!• Turbulent wind resource leads to

increased maintenance costs

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Other ongoing expenses

• Insurance • <40kW: $300k liability required• 40kW to 250kW: $1M liability with

coverage for utility line workers• Additional meter fee, if applicable• Net-metering fee

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Selecting an Installer

NABCEP Certified Small Wind Installers http://www.nabcep.org/installer-locator

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Selecting an Installer

Directory of small wind companiestheCleanEnergyBuilder.com Developed by SWIF and CERTs

Questions to ask a prospective installer: “Hiring a Renewable Energy Contractor” at www.energy.mn.gov > Clean Energy > Wind > Small Wind

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Selecting a Turbine

2010 Wind Generator Buyer's Guide, Ian Woofenden and Mick Sagrillo, June/July 2010 issue of Home Power Magazine

Ask other turbine owners!

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Sizing the turbine

Nameplate Capacity vs. swept area– Blades are the energy collector

Woofenden and Sagrillo, Home Power, 2010

**

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Independent Turbine Testing

Small Wind Certification Council http://smallwindcertification.org/ • Rated annual energy at 5 m/s• Sound level (not exceeded 95% of time, 60 ft from

rotor @ avg 5 m/s)

• Rated power at 11 m/s

National Renewable Energy Laboratory http://www.nrel.gov/wind/smallwind/independent_testing.html

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Federal• Residential Renewable Energy Tax

Credit • Small Wind Investment Tax Credit (ITC)• Treasury Grant in lieu of ITC• USDA Rural Energy for America

Program (REAP) • USDA Value Added Producer Grant

(VAPG)

Policies and Incentives for small wind projects

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Federal (continued)• Accelerated Depreciation • Clean Renewable Energy Bonds

Policies and Incentives for small wind projects

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State of Minnesota• Residential & Small Business Rebates• Net Metering Policy (< 40kW) • Sales Tax Exemption • Property Tax Exemption• Accelerated Depreciation• Sustainable Agriculture Loan Program• Agricultural Improvement Loan Program

Policies and Incentives for small wind projects

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Residential Renewable Energy Tax Credit

• Federal tax credit on personal income• Wind systems < 100kW• 30% of installation expenses• no maximum if placed in service after

12/31/08• Excess credit may be carried forward • Consult your tax advisor for more info

Policies and Incentives for small wind projects

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Small Wind Investment Tax Credit (ITC)

• Federal corporate tax credit • wind systems < 100 kW• 30% of installed cost• for equipment installed from January 1,

2008 through December 31, 2016.• Consult your tax advisor for more info

Policies and Incentives for small wind projects

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Treasury Grant in lieu of ITC• Cash grant instead of tax-credit• Same incentive level as ITC• Commercial, Industrial, Agricultural (not

for residential or non-taxable)• Construction must begin 2009 – 2010

and be completed before 2013.• Can’t be combined with PTC or ITC.

Policies and Incentives for small wind projects

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USDA Rural Energy for America Program (REAP)

• Non-metro farms and small businesses• Also eligible: electric co-ops and rural

utilities• limited to 25% of a proposed project's cost

(maximum grant is $500k)• loan guarantee up to $10 million • Grant + loan up to 75% of costs

Policies and Incentives for small wind projects

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USDA Rural Energy for America Program (REAP) continued

• Funding priority given to grants of $20k or less and combined loan and grant requests

• Submit application early – funding may run out.

• For more information, go to http://www.rurdev.usda.gov/mn/rbs.htm and click on REAP

Policies and Incentives for small wind projects

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USDA Value Added Producer Grant (VAPG)

• farms and producer groups• Funding for feasibility study, business plan,

and/or legal evaluation.• $100,000 maximum• Minimum 50% match with non-federal $• For more information, go to

http://www.rurdev.usda.gov/mn/rbs.htm and click on VAPG

Policies and Incentives for small wind projects

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Clean Renewable Energy Bonds• Local Gov’t, State Gov’t, Tribal Gov’t,

Municipal Utility, Rural Electric Co-op• Low- or no-interest• Awards granted from smallest to largest.

Smaller requests have higher chance of award.

• Max term: 16 years [on 3/2010] at current investor interest rates (calculated daily)

• maximum term posted daily at: https://www.treasurydirect.gov/GA-SL/SLGS/selectCREBDate.htm

Policies and Incentives for small wind projects

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Accelerated Depreciation - Federal• Five year depreciation schedule for wind• Consult your tax advisor for more information. • See also:

• IRS Publication 946 “How to Depreciate Property” at www.irs.gov

• And www.dsireusa.org, MACRS + Bonus Depreciation (2008-2009)

Policies and Incentives for small wind projects

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Accelerated Depreciation - State• Five year depreciation schedule for

wind• Consult your tax advisor for more

information. • See also: www.taxes.state.mn.us

Policies and Incentives for small wind projects

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• Net Metering• Limited to generators under 40kW• For generators using this rate, utility pays average

retail rate for the customer class• Customer opts for either utility check for NEG paid

at the end of each month or customer may opt to carry a credit for NEG on their bill and have credit paid out on request.

• Effectively like using the grid as a battery back up– Customer must pay for extra meter charge

Policies and Incentives for small wind projects

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Exempt from MN Sales Tax:• materials used to manufacture, install,

construct, repair or replace wind-energy systems (including rental equipment)

• buyers complete  MN Dept of Revenue Form ST3  "Certificate of Exemption"

• sellers keep the form in their files for tax reference

• see: www.taxes.state.mn.us

Policies and Incentives for small wind projects

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Exempt from MN Property tax:• all real and personal property of wind-

energy system• land on which wind system is located

remains taxable

Policies and Incentives for small wind projects

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Sustainable Agriculture Loan Program• Up to $40,000 per farmer• Up to $160,000 on joint projects • 3% interest, up to 7 year term• See:

http://www.mda.state.mn.us/grants/loans/esaploan.aspx

Policies and Incentives for small wind projects

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Agricultural Improvement Loan Program• On-farm wind up to 1 MW• Interest Rate 4.5% (as of March 2009)• Up to 10 year term• Admin by MN Dept. of Ag. through MN Rural Finance

Authority (RFA)• RFA participation limited to 45% of the principal or

$300,000, whichever is less• See:

http://www.mda.state.mn.us/grants/loans/improvement.aspx and http://www.mda.state.mn.us/en/about/divisions/agdev/agfinance.aspx

Policies and Incentives for small wind projects

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Public Building (e.g. school):Federal:• Clean Renewable Energy Bonds (CREBs)• Residential Renewable Energy Tax Credit • ITC or Treasury Grant• Accelerated Depreciation• USDA Grants - REAP and VAPG

State:• State Rebate• Accelerated Depreciation• Sustainable Agriculture Loan Program• Agricultural Improvement Loan Program

Policies and Incentives for small wind projects

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Personal Installation:Federal:• Clean Renewable Energy Bonds (CREBs)• Residential Renewable Energy Tax Credit • ITC or Treasury Grant• Accelerated Depreciation• USDA Grants - REAP and VAPG

State:• State Rebate• Accelerated Depreciation• Sustainable Agriculture Loan Program• Agricultural Improvement Loan Program

Policies and Incentives for small wind projects

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Small Rural Business :Federal:• Clean Renewable Energy Bonds (CREBs)• Residential Renewable Energy Tax Credit • ITC or Treasury Grant• Accelerated Depreciation• USDA Grants - REAP and VAPG

State:• State Rebate• Accelerated Depreciation• Sustainable Agriculture Loan Program• Agricultural Improvement Loan Program

Policies and Incentives for small wind projects

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On-farm installation :Federal:• Clean Renewable Energy Bonds (CREBs)• Residential Renewable Energy Tax Credit • ITC or Treasury Grant• Accelerated Depreciation• USDA Grants - REAP and VAPG

State:• State Rebate• Accelerated Depreciation• Sustainable Agriculture Loan Program• Agricultural Improvement Loan Program

Policies and Incentives for small wind projects

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For more information, go to

www.dsireusa.org

Database of State Incentives for Renewables and Efficiency (DSIRE)

Policies and Incentives for small wind projects

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Additional comments and questions:www.energy.mn.gov > Clean Energy > Wind > Small Wind

1-800-657-3710 (MN only)651-296-5175

651-296-2860 TTYenergy.info@state.mn.us