November 2004 Newsletter

A Wind-Win Scenario?

October 11, 2004
By Chip Thompson, Twin Falls Times-News

Even as cool autumn temperatures settle in the Mini-Cassia area, the wind remains hot – as a topic, that is.

The potential for wind power in Mini-Cassia and the tireless efforts of one local farmer and his family have recently generated significant interest in relatively small-scale wind farms as a way to subsidize struggling farming operations.

This interest led Cassia County Commissioner Clay Handy to join several other policy makers from around the state on a tour of successful wind projects in Rock County, Minn.

"What's happening in Minnesota is amazing," Handy told the other commissioners this past week during a presentation that included video footage of certain projects and specifics of the economy of wind.

Rock County, comprising the southwest corner of the state, hosts numerous, largely farmer-owned wind farms made up of just a few turbines.

According to Paul Gipe, author of Wind Power: Renewable Energy for Home, Farm, & Business, farmers reacted to large-scale wind projects, operated by out-of-state developers, cropping up in the region by asking why they couldn't do it themselves.

The problem they faced wasn't the wind resource, technology or capital, it was finding a power company willing to purchase the power at a fair price, Gipe said.

But ingenuity is the providence of America's farmers and it didn't take those in Minnesota long to come up with a plan to solve the problem.

Under the plan, local farmers form a cooperative with power companies to install turbines with the 1.8 cent tax credit per kilowatt-hour going back to the power company, Handy said.

In one example, the farmers invest $150,000 and the power company $450,000 to construct a turbine. After 10 years the power company will realize a return of $1 million on its initial investment and for the next 10 years the farmers earn about $125,000 per year, Handy explained.

Cooperatives have been so successful that transmission lines in the region are at maximum capacity and new lines are in the works.

But one of the biggest benefits to ownership by local cooperatives is that a portion of the revenues subsidize struggling farms.

"I would much rather see, in the future, co-ops and individuals have local ownership of these things than large wind farms," Handy said. "Wind power's the only thing I've seen come along where an individual can own a piece of the pie, not just stock, but a part of the pot."

And with the wind farms come technical jobs with good salaries. Handy said he met several young technicians at both wind farms and ethanol plants who had grown up in the area and remained due to the opportunities.

"People who say they don't want to see growth around here, what they're really saying is they don't want their kids and grandkids to stay here," Handy said.

Burley farmer Leroy Jarolimek, who has spent years learning and teaching about small wind farms, has said that a desire to keep family farms intact is what motivates his efforts.

Jarolimek installed a 20-kilowatt turbine on his west Burley farm in May and recently received a $500,000 grant from the USDA to begin the first phase of a six-turbine, 10-megawatt wind farm he's spent two years researching.

In addition to propping up farms, small wind projects could prove beneficial to municipalities, Jarolimek said. He reported that Pocatello is currently collecting wind data with an eye toward installing three turbines to supplement the city's power needs.

Tax revenues from wind farms are another benefit to counties and cities in the face of a sluggish economy. But Handy said Minnesota has opted to collect production taxes rather than property taxes in order to avoid declining revenues as turbines depreciate in value.

Turbines such as Jarolimek is planning to install cost roughly $1.3 million each to install once connections to the grid are in place. Initial set-up of connections is expected to exceed $1 million.

Jarolimek has a private investor from the Sun Valley area who will provide the balance of start-up costs and hopes to secure future grants to complete the project.

Unable to attend the Minnesota tour himself, Jarolimek said he was excited about Handy's presentation and its positive message. He said the facts and success stories Handy brought back to Mini-Cassia should help convince others of the potential for small wind farms in the area.

Another obstacle may be convincing local financial institutions, as yet unfamiliar with wind power, to support smaller farms.

"Until a tower goes up and we have some history, the bankers are going to be reluctant," Handy said.

But the economics are there. Jarolimek said that he's currently selling power back to Idaho Power Co. under a net-metering plan for 4.5 cents per kilowatt-hour but expects the rate to jump to 7 cents in the near future.

Under the Public Utilities Regulatory Policy Act of 1978, Idaho electrical utilities are required to purchase power from qualifying facilities, which include those generating less than 10 megawatts, at set rates under 20-year contracts. The price is based on the "avoided cost" for the utility to build and operate a natural gas power plant.

Net-metering allows the producer to sell power they generate but do not use back to the power company at the "avoided cost" rate.

Concerns over abandoned wind farms were also raised during the presentation, but Jarolimek said the salvage value is as much as $125,000 per tower so there's no need to worry about a cooperative walking away from a project.