Wind turbine power a difficult solution

By Dan Linehan
The Free Press

MANKATO October 05, 2008 06:27 pm

— If wind power works for St. Peter schools, Gustavus Adolphus College and the city of Mountain Lake, can it work for the city of Mankato?
That’s the question Mankato Councilman Mark Frost has been asking lately, prompted by higher energy prices, reliance on foreign sources of oil and carbon pollution.
He cautions that profitability is a must: “This isn’t one of those, ‘Boy, we’re gonna do it no matter what’ programs,” he said. “I’m just askin’ questions.”
But the success — though it has been decidedly mixed — of other public entities has piqued his interest.
During the past few months, he’s learned wind energy is more like a puzzle than a straightforward path.
Private entities are typically needed to put up money — and get a government tax credit in return. Most of the time an electricity company has to connect the turbines to the power grid and agree to buy the electricity.
And wind helps.
“It just depends on your circumstances and situations,” said Wendy Meyer, city administrator of Mountain Lake, which installed a turbine last year. “There are no blanket statements.”
Fitting pieces
Mountain Lake has an opportunity to decide its energy future more than most Minnesota towns.
That’s because it belongs to a municipal power cooperative that allows its member cities to decide where to get power from. In Mountain Lake, electricity is a city issue and is treated similarly to how drinking water and trash pickup are handled in Mankato, which does not belong to such a cooperative.
That means Mountain Lake had a guaranteed customer base when it decided to build a turbine. Mankato would likely have to craft a deal with a private power company.
Even so, Mountain Lake first discussed a wind project in January 2003, but it wasn’t completed until June 5, 2007.
Myriad issues — including acquiring a turbine, leasing from a nearby farmer’s land and studying wind strength in the area — taught Meyer a lesson: “Go slow and do your homework.”
Navigating the not-in-my-backyard reflex is another issue, as the New Ulm Public Utilities Commission is learning as it tries to build a 200-foot-tall tower to measure wind speed in rural Nicollet County.
Empty words?
Earlier this year, Mankato signed the U.S. Mayors Climate Protection Agreement.
And Frost said he doesn’t want the city to voice token support for anti-climate change efforts, and then do nothing. That pattern, he says, is all too familiar.
Eric Ennen, with the Minneapolis-based Center for Energy and Environment, said most cities that sign the agreement do a study to determine their carbon footprint and then form a committee.
Partially in response to Frost’s questions, City Manager Pat Hentges recently updated the council on the progress of the city’s own sustainability plan.
It includes an audit, retrofits to buildings and vehicle efficiency upgrades. There are dozens of other steps, though they are almost all small-scale changes to the way the city does business — a solar panel here, a directive to use electric vehicles there.
There are no high-profile changes on the order of a wind turbine.
Hentges said the sustainability plan’s policy recommendations will result in real change once opportunities come along. The vehicle fleet can’t be replaced in a day; nor does it make economic sense to make drastic changes to existing buildings.
He, too, agreed that simply passing the climate agreement isn’t enough.
“You need to pass it with some substance behind it,” he said.
“The real trick in this comes in the implementation of this,” Ennen agreed.
But despite the lack of a more visible initiative, Ennen says more can be done by getting many people to take smaller steps.
“A lot of people want to see something big and flashy as an indication of change,” he said.
Gustie gusts
Gustavus Adolphus College has been looking for wind turbines for about 21 months.
Suppliers are devoting almost all of their turbines to big wind farms, said James Dontje, director of the college’s Johnson Center for Environmental Innovation.
Due to high setup costs, it’s more difficult for a vendor to consider installing just one or two turbines, he said.
A pair of turbines that generate about two megawatts each would supply the campus with between two-thirds and three-fourths of its energy needs.
Excess supply, including during the less windy summer months, could be sold back to the city of St. Peter, which belongs to an electricity cooperative.
Because the turbines can offset traditional energy costs, Gustavus can calculate cost savings based on the electricity it won’t have to pay for.
That’s the key, Dontje said, because the school could not break even simply by selling the electricity back into the grid.
For various reasons, electricity generated by the turbines would only generate about 3 cents per kilowatt hour, while the school pays much more for electricity off the grid — 7 cents per kilowatt hour or more.
In the end, the turbines are expected to make money, Dontje said.
But despite Gustavus’ advantages of having a guaranteed market and owning enough land, it’s all theoretical until turbines become available.
“We’ve been kind of on hold as we look for openings in the markets,” Dontje said.
St. Peter deal totters
In late 2006, the St. Peter school district announced a plan to use $3 million in government no-interest bonds to build wind turbines, probably in southwest Minnesota.
The deal was supposed to net the district $30,000 per year during the 15-year loan repayment period. After the loan was paid off, the district would rake in at least $125,000 per year.
But because of delays in turbine purchasing, land acquisition and government regulation, the parties never met a deadline to accept the bonds, which were lost at the end of 2007, Supt. Jeff Olson said.
The new plan is to seek legislation to allow the school district to form a limited liability corporation in a bid to secure a different type of funding.
That legislation was part of a wider education bill that was vetoed last session, but the district will try again next year.
The strategy uses an “equity flip” or “Minnesota flip” model, a popular one that involves a public-private partnership.
It relies on federal production tax credits that allow investors to subtract money, dollar for dollar, from their income taxes. School districts don’t pay income taxes, but an outside investor could fund much of the project in exchange for these credits.
Once the credits are all gone after a decade or so, the investor “flips” ownership of the turbines to another limited liability corporation, which earns money on electricity generated and hopes the turbines don’t have high maintenance costs.
So the private corporation gets income tax bonuses and the limited liability corporation — the St. Peter school district, in this case — gets wind turbines without paying huge upfront costs.
Despite the early setback, Olson is still positive about wind energy’s potential for public institutions.
“My recommendation is that if you can get all of your ducks in line, it’s a good deal,” he said.
Gov. Tim Pawlenty’s mandate that 25 percent of the state’s electricity must come from renewable sources by 2025 has also helped fuel demand, Olson said.
Frost, the Mankato councilman, knows about the complexities involved, but says wind energy is worth it.
“My preference is that we hand off a better world to our children.”

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