Developing a Community-based
Wind Energy Project
Wind projects are lengthy, expensive, and complicated to develop. All wind turbine projects have unique site characteristics which must be taken into account when designing and managing a project. However, there are a number of interconnected steps common to all projects:
Phase I : Feasibility Work
- First stage of project
- Involves initial testing, determining if site is viable
- Relatively low level of funds required
- But considered non-recoverable expenses (NRE)
- If data results are disappointing or other research doesn't come together, project cannot proceed, NRE are lost
- This is where the initial big picture of the project starts to take shape
Key Feasibility Phase Milestones
- Site Selection
- Legal Rights to Land
- Wind Resource Assessment
- Data Analysis and Initial Viability Decisions
- Financial and Corporate Structure
- Project Plan (initial timelines, costs, business plan)
Phase II: Development Work
- Starts after project determined to be viable based on initial data
- Runs until actual date of commissioning
- Longer phase than feasibility
- Also more expensive
- Includes the scientific and technical studies that give you 'permission' to proceed
Key Development Phase Milestones
- Environmental Assessment
- Interconnection Studies
- Financial and Corporate Structure
- Power Purchase Arrangements
- Municipal Permitting
- Turbine Selection
Phase III: Financing
In most cases, community based co-operatives go to the community to raise funds to cover the costs of the turbine and construction. However, in some cases, a community investment offering is done during the development phase to raise money for that part of the work.
- Co-op goes out to the community with a formal investment offering
- Community invests in the project through a share offering, or finances the project through a bond offering
- Once enough equity is raised, debt from traditional sources can be arranged
- Then, ordering and construction can more forward
Sale of Electricity
- Complicated, but essential to success of projects
- Must have buyer for electricity
- Preferably long-term, fixed-price
- Allows for long-term financial planning
- Less risk for both buyer and generator
- Trade-off is that there may be less opportunity for greater revenue
- Several different mechanisms to allow co-ops to do this
- Sometimes all generally referred to as "power purchase agreements"
Phase IV: Construction
Construction begins once all permitting, scientific and tech work have been completed, and financing has been arranged for the project. In many cases the turbine manufacturer can manage the construction process for the developer, which means they arrange for the transportation and construction as well as the manufacturing.
Phase V: Operations
Operations take place for the lifetime of the turbine, generally 20 to 25 years. Regular repairs, administration, distribution of investment returns and other items are handled on a regular basis as part of this phase. This is when revenue finally starts flowing back to the developer and out to the community and other investors.