1. Wind Energy: Landowner Options Lisa Daniels, Windustry Executive Director Great Lakes Regional Wind Institute Webinar October 11th, 2007

2. “Yep, they make some noise, but it’s the soothing sound of money being made.” Louis Woodward, Texas Rancher,Landowner Prepared by Virtus Energy Research for Public Citizen and the SEED Coaltion

3. Outline About Windustry Levels of involvement in wind Community Wind in the US Why are Minnesota and Iowa leading in community wind development? A few success stories

4. Landowner Options for Wind Development

5. Landowner Options Lease your land to a wind project  Local project  External developer Be a partner in a community wind project Own a residential/farm size turbine for your own power

6. Wind Development Options: Risk vs. Reward Lower Risk & Responsibility Intermediate Risk & Responsibility Greater Risk & Responsibility Leasing Land to a Wind Company or Utility Cooperative, Investment Pool, Partnership Individual Ownership

7. Easements and Leases are typical components of most wind energy projects, large and small.

8. Windustry’s Package of Lease/Easement Resources Lisa Daniels, Executive Director of Windustry Ed DeMeo, President, Renewable Energy Consulting Services, Inc., California Van Jamison, POWAIR, Montana, consultant and small wind project developer Joe Richardson, North Dakota landowner Steve Wegman, South Dakota Public Utilities Commission Fred Zalcman, Executive Director, Pace Law School Energy Project, New York Windustry staff and consultants Wind Easement Work Group - team of wind industry and landowner experts:

9. Wind Energy Leases and Easements Most common way that landowners are participating in wind energy development  No cash outlay  Low financial risk Few standards: range from good to bad to ugly. Compensation varies widely based on:  turbine size  wind resource  price of energy  knowledge level of landowner  and many other factors. Long term commitments – usually last 20 to 40 years. Best results when landowners make informed decisions.

10. Sustainable Wind Energy Development Windustry’s Lease/Easement Resources Goals: 1) To help landowners make informed decisions about their land. 2) To promote land agreement practices that are mutually beneficial to landowners and project developers. Motivation: Wind development must be an asset for both the owners of windy land and their local communities for the industry to thrive long term. Wind energy is a significant economic opportunity for rural communities if windy landowners and communities are well informed partners in the development process.

11. Windustry’s Package of Lease/Easement Resources 1) Easements and Lease Agreements – What might appear in these contracts and what to watch out for. An updated version of Windustry’s original “Wind Energy Easements: Legal Issues.” 2) Compensation – Compilation of compensation packages from real wind projects. 3) Policy and Best Practices – Recommendations and Proposals to facilitate sustainable wind development. 4) Bibliography of additional resources.

12. Before you sign on the dotted line… How much of my land will be tied up and for how long? How much will I be paid and how will I receive payments? Are the proposed payments adequate now and will they be adequate in the future? How will a wind project impact my other land uses? Have I considered all of my other options and is this the best one for me? More questions listed in the Outline.

13. Types of Compensation Packages Fixed payments  Preferably includes an escalator  Advantage: stable income for landowners, low risk Royalty or Percentage of Revenue  Need to have access to relevant information about power sales.  Advantage: Landowner has a vested interested in the success of the project. Combination  Fixed payment plus a percentage of revenue  Fixed payment OR a percentage of revenue (usually, whichever is greater)  Equity partnership

14. Old: $2,000 per turbine year.  Based on turbines in the 600-750 kW range.  “Average” figure popularized in late 1990s. New: bigger turbines (1,500-2,500 kW) usually mean bigger payments. Price of energy is another key factor (especially in contracts that offer a % of revenue) Other factors to consider: wind resource, transmission access, competition, value of alternative land uses, geographic region. Compensation Packages How much can you expect?

15. Compensation Packages: Examples ProjectState YearSizeTurbinePer turbine*Per MW* Lake Benton I MN1998107 MW750 kW$1,500$2,000 Storm LakeIA1999193 MW750 kW$2,000 ($750 + 2 % rev) $2,667 Vancycle Ridge OR199925 MW660 kW$1,500- $2,000$1,200- $2,400 Top of Iowa IA200280 MW900 kW$2,400$2,667 Wood-wardOK2003102 MW1,500 kW$4,000$2,667 High WindsCA2003162 MW1,800 kW$9,500$5,185 TrimontMN2005100 MW1,500 kW$3,500- $4,500$2,500- $3,000 Crescent Ridge IL200555 MW1,650 kW$5,000 (minimum) $3,030 *Several figures are based on estimates and averages. Payments to individual landowners may vary.

16. Recent Articles Wall St. Journal, March 13, 2007 Texas Wind Powers - A Big Energy Gamble “In this pancake-flat country…Royal Dutch Shell Group, BP PLC and a wind-development company owned by Goldman Sachs Group Inc. are racing to lease vast expanses of ranchland. In a bet on wind power's long-term viability, they're planning to erect what would be some of the biggest wind farms in the world, with thousands of wind turbines costing some $2 million apiece.”  The Amarillo Globe-News, March 25, 2007 Companies outline details of wind power projects “A blizzard of paper blew into Austin on Wednesday and Thursday as wind power companies filed details on their plans in the Panhandle…. From the eight companies that include details of land deals, at least 477,000 acres, or 745 square miles, are leased for the right to use them for wind farms or are the subject of negotiations.”

17. Always consult a qualified attorney before signing a contract. Consider how a wind easement/lease will impact how you use your land (farming, ranching, hunting, recreation etc.). Contracts should be clear on this point. Consider negotiating for non-monetary compensation, such as access to wind resource data. Learn as much as you can about wind energy and the specific project and company in question. Recommendations

18. For royalty based compensation packages, consider what it would take to exercise your audit rights. Carefully weigh your alternatives, expectations and goals. You don’t have to sign the first contract you see. Work together. Whether you’re negotiating with a wind developer or trying to market your land with neighbors. Worth Repeating: Always consult a qualified attorney before signing a contract. Recommendations (continued)

19. Additional Wind Energy Legal References Farmers’ Guide to Wind Energy: Legal Issues in Farming the Wind Farmers Legal Action Group http://www.flaginc.org/topics/pubs/index.php Harvesting the Wind: A Legal Guidebook for Landowners NYSERDA Wind Energy Tool Kit www.powernaturally.org The Law of Wind: A Guide to Business and Legal Issues Stoel Rives LLP www.stoel.com/resources/articles/renewableenergy/LawOfWind.pdf Minnesota Model Wind Ordinance (2005) The Minnesota Project, Lyon County (MN), Southwest Regional Development Commission, Pipestone County (MN), Nicollet County (MN) http://www.mnproject.org/e-windresources-tech.html Wind Energy Guide for County Commissioners Mike Costanti, Peggy Beltrone, U.S. Department of Energy, National Renewable Energy Laboratory, Wind Powering America, National Association of Counties http://www.eere.energy.gov/windandhydro/windpoweringamerica/pdfs/wpa/county_commissi oners.pdf

20. Wind Project Ownership Levels of Local Involvement High Local Involvement Public Projects Community or Farmer Owned Projects Examples: Minwind Energy, Spirit Lake Schools, Municipal Utility or REC Lower Levels of local Involvement Conventional Developer Owned Wind Projects Local involvement limited to taxes, land leases, and indirect economic benefits Varying Degrees of local Involvement/Value-added Some local organizing, equity and investment May or may not be locally owned

21. What is Community Wind? Working Definition: Locally owned, commercial-scale wind projects that optimize local benefits. - Locally owned means that members of the local community has a significant direct financial stake in the project other than through land lease payments, tax revenue, or other payments in lieu of taxes.

22. Local/Community Ownership Options Municipalities & Municipal Utilities Palmdale, CA; Algona, IA; Moorhead, MN Rural Electric Cooperatives Farmer/Local Investors LLCs, Investors Pools, Cooperatives; Kas Brothers Minwind Energy Schools Spirit Lake, Iowa Carleton College, Northfield, MN Tribal Communities Example: Rosebud, SD Spirit Lake, Iowa

23. Key Incentives in leading Community Wind States Minnesota:  Production payment for projects under 2 MW.  Standard tariff and power purchase contract for wind projects under 2 MW. Iowa:  Iowa Energy Bank- low interest loans.  Net metering- unlimited for matched loads. Successful incentives address financing issues, provide access to capital, and/or strengthen the market for community wind.

24. Recent Support for Community Wind in Minnesota and Iowa: 2005, 2006, & 2007 Minnesota: Community-Based Wind Energy Development (C-BED Tariff)  MN utilities required to establish a C-BED tariff based on the net present value of the energy.  Provides a framework for negotiating power purchase agreements between utilities and qualifying community projects. Iowa: Personal Tax Credit for Small Renewable Energy Projects  For wind projects up to 2.5 MW owned by an Iowa resident, a farm operation or an electric cooperative.  1.5¢ per kilowatt-hour tax credit for 10 years.  Available for 90 MW starting in July ‘06.  Expanded and extended in 2006

25. Policy Resources Reaching Community Wind’s Potential Windustry http://www.windustry.org/sites/windustry.org/files/FLAG_Report.pdf Community Wind: A Review of Select State and Federal Policy Incentives Farmers’ Legal Action Group http://www.flaginc.org/topics/pubs/arts/CommWindAug06.pdf The Farm Bill Environmental Law and Policy Center www.farmenergy.org Community vs. Corporate Wind: Does it Matter Who Developes the Wind in Big Stone County, MN? University of Minnesota, Morris: Arne Kildegaard Ph.D. and Josephine Myers- Kuykindall http://cda.mrs.umn.edu/~kildegac/CV/Papers/IREE.pdf The Debate over Fixed Price Incentives for Renewable Electricity in Europe and the United States: Fallout and Future Directions Wilson Rickerson and Robert Grace http://www.boell.org/Pubs_read.cfm?read=161

26. Wind Energy – An Economic Opportunity for Rural Communities Benefits of Conventional Wind Projects  Wind easements and land owner payments ($3,000-$6,000 per year per MW)  Local tax revenue (Lincoln County, MN collected $471,822 from 156 MW in 2003)  New jobs and investment in rural communities.

27. Community Wind Energy – A new economic opportunity Benefits of Community Wind Projects Same benefits as conventional projects, PLUS:  Creates bigger economic opportunity for farmers, local investors, industry, and local businesses.  Keeps energy dollars local and electricity sales revenue local.  Builds more local support for wind energy by keeping more of the benefits local.

28. Additional Community Wind References Community Wind Energy Toolbox Windustry http://www.windustry.org/CommunityWindToolbox NYSERDA Wind Energy Tool Kit New York State Energy Research and Development Authority http://www.powernaturally.org/Programs/Wind/toolkit.asp Community Wind: An Oregon Guidebook Energy Trust of Oregon http://www.energytrust.org/RR/wind/community/forms_request.html A Comparative Analysis Business Structures Suitable for Farmer-Owned Wind Power Projects in the United States Mark Bolinger and Ryan Wiser, Lawrence Berkeley National Laboratory http://www-library.lbl.gov/docs/LBNL/567/03/PDF/LBNL-56703.pdf

29. In closing Community Involvement  Benefits reach across many sectors. Leadership  Policymakers, utilities and local communities can help lead the way by Supporting policy that establishes a market for wind Creating this economic development opportunity Building new industry in the rural economy  Equipment, Contractors, Materials suppliers, Bankers, Fabricators, Technical Training Programs, and potential for manufacturers  Keeps added value of wind projects local.

30. Contact Info: toll free (800) 946-3640 Lisa’s phone (612) 870-3462 e-mail info@windustry.org www.windustry.org