European models of co-operative ownership of wind farms are now taking off in North America.
LONDON -- What would you imagine to be the fastest-growing segment of the U.S. wind industry today? It might not be what you'd think. According to the American Wind Industry Association's (AWEA) annual market report, the community wind segment is growing at a faster pace than commercial wind, capturing 5.6 percent of the overall wind market at the end of 2010 and projected to have roughly the same market share in 2011.
Community wind is a relatively new idea in the US. In fact, in 2001, in a report entitled: Community Wind Power Ownership Schemes in Europe and their Relevance to the United States, Mark Bolinger of the Lawrence Berkeley National Laboratory stated that, unlike in many areas of Europe, community ownership of wind projects was ‘unheard of’ in the U.S., where most wind projects were commercially owned. However, local communities around the country are slowly but steadily beginning to realise the benefits of community wind.
Community Wind in Europe
European community-owned wind projects have been around since the 1970s. In Denmark, the birthplace of community wind, about 80 percent of installed wind capacity is individually or co-operatively owned; in Germany it’s about 51 percent. Sweden also has co-operative wind, and the community wind market in the UK is growing.
For an example, in the German district of North Frisia (home to the town of Husum, which has hosted a major wind energy trade fair since 1989) there are more than 60 wind farms with a capacity of about 700 MW, and 90 percent are community-owned. According to Jens Müller-Nielsen, managing director of REpower Systems GmbH, North Frisia is a model location for community wind. ‘With the success model of public wind farms,’ says Müller-Nielsen, ‘the region is leading the way for other regions and states, especially in southern Germany.’
OEMs Enter the Community Space
Major OEMs are becoming community wind market players. In 2011 REPower signed contracts with a syndicate representing seven farming communities in North Frisia to deliver 47 turbines with 115 MW capacity; the projects are planned to be operational in 2013. And in March of this year Gamesa signed a distribution agreement with Harvest the Wind Network (HTWN), a U.S. installer, making HTWN the primary U.S. distributor for Gamesa’s 840 kW G5X turbines.
Gamesa vice president for marketing, David Rosenberg, said: ‘Distributed and community wind is the next frontier for Gamesa. Combine our turbine platform with Harvest the Wind’s vast network of distributed wind developers, and the wind-energy solutions we can jointly bring to communities and businesses across North America is enormous.’
Community, Co-operative and Municipal
There are three main business models for community wind projects. In the wind energy co-operative model, developed in Denmark, wind turbines are jointly owned. For example, in Copenhagen’s Middelgrunden Wind Turbine Cooperative, shareholders buy shares corresponding to 1/40,500 of the partnership each. Of the 20 turbines in the harbour, local utility Copenhagen Energy owns the 10 northern turbines and the co-operative owns turbines 11-20. U.S. observers have cited this public/private partnership model as a potentially interesting way to move projects forward.
In another model, some wind turbines are municipally owned and operated, sited on town land, and tax exempt. As an example, the Hull Wind One project in Boston, Massachusetts, which boasts a 660-kW Vestas turbine, ‘zeroed out’ the town’s street lighting bill and generated 1,597,367 KWh in its first year. Of the town’s residents, 95 percent support the project.
In U.S. community wind projects a local entity or group will usually initiate a project, do the planning work, and then team up with a national developer or turbine manufacturer to realise the idea, offering investment opportunities to the local community at an early stage. The community thus has a direct financial stake in the project, over and above the usual income from land lease and taxes.
Community wind projects range from 1-1100 turbines, usually commercial scale and more than 100 kW, and may generate energy for on-site use or for sale. According to Windustry, an outreach and advocacy organisation, US community wind projects are owned by farmers, schools, colleges, tribal governments, municipal utilities, local businesses, rural electric co-operatives and others. The organisation reports that community wind projects are in the planning stages in nearly every US state where there is wind development.
Andreas Nauen, CEO of REpower Systems SE, says: ‘The benefits to the initiators [of community wind projects] are plain to see: Not only business tax but much of the value added stays in the region and the citizens can play active roles in the planning process.’ In addition, local jobs are created: a 2009 report from the US National Renewable Energy Laboratory (NREL) showed that the number of construction-period jobs created for a community wind project is, on average, 1.3 times higher than for other kinds of projects, and the number of operations-period jobs is as much as 2.8 times higher. ‘Policies that prioritise higher levels of local ownership,’ concluded the report, ‘are likely to result in increased economic development impacts.’
A cornerstone of the community wind idea is that profits will be reinvested into the community. Jake Susman, CEO of US developer OwnEnergy, currently the largest national player in community wind, says: ‘Our Pennsylvania project makes donations to the local fire house. We sponsor scholarships in Texas around our project there. We’re doing similar work in Oklahoma, and we’re now in upstate New York putting together a community group to let the community decide how to reinvest in the local area. In New York the people want more hiking trails; we also sponsor the local baseball team.’ Wind power for schools is a popular benefit, adds Susman.
Five-year-old OwnEnergy has developed 27 community wind projects totalling more than 1 GW across 14 US states, according to Susman. The company’s strategy is to attend trade shows and ‘let the [customers] come to us’ – ensuring that local support is already in place – rather than choosing an ideal location in advance.
‘A big part of success in smaller projects,’ says Susman, ‘is to make sure you don’t spend your time, or your local partners’, in wild goose chases. We’ve developed advanced feasibility and screening systems; we see 300 leads a year, but actually take on about 5% of them; and fewer of those make it all the way through to completion.’
In conversation with Susman, one is struck by his emphasis on community relations. In getting to know the community and feeding profits back into it, OwnEnergy cultivates relationships that bind developer and residents together.
...and Cautionary Tales
Susman also referred to examples where ‘some of these partnerships haven’t worked out so great’. In some cases, he said, the community ultimately felt that it did not ‘get what it bargained for’.
US communities’ problems with wind turbines overwhelmingly involve siting and noise issues, which can divide a community once united around the idea of wind power and can result in a backlash against the developer. A single wind turbine in Falmouth, Massachusetts, has been the subject of local controversy since some residents living close to the turbine, which is sited at the town’s waste water treatment plant, complained of headaches and disturbed sleep. The community of Vinalhaven, Maine, has been profiled in a film about ‘wind turbine syndrome’. However, health issues caused by wind turbines ‘are not on the agenda’ in Germany and have ‘not received much traction’ in Denmark – in both cases because of widespread public and parliamentary support for wind power.
Growing Policy Support
In late 2011, US senators Franken (Minnesota) and Tester (Montana) introduced the Community Wind Act, which would extend the small wind investment tax credit to projects up to 20 MW, and would last through 2016. So far the bill has not been passed.
At the state level, for example, Minnesota’s Community-Based Energy Development (C-BED) programme is designed to optimise local and regional agricultural resource economic development benefits from renewable energy, and to facilitate the development of community-based renewable energy projects. C-BED projects are owned by ‘farmers, local businesses, schools, community groups, and ordinary members of local communities,’ according to the initiative’s website.
The Way Forward
‘The beauty of community wind,’ says Jake Susman, ‘is that it captures hearts and minds in a way that commercial wind farms struggle to do.’ Not only do these projects benefit local communities in numerous ways, they are also the best way to ensure residents feel invested in their wind turbines and avoid the kinds of planning delays and conflicts that often surround non-local developers. When communities are involved in their local wind projects, everybody wins.