Community Wind

Maine island community lowering
energy costs with wind-power project

Alan Borst, Ag Economist
Cooperative Programs
USDA Rural Development

onventional electricity generation from fossil fuels is associated with several policy problems, including pollution, import dependency from countries with hostile or troubled governments, trade deficits and periodic price shocks. Renewable energy sources are clean fuels that are domestically-based and substantially local.

Wind is one of the lowest cost and fastest growing renewable energy sources in the United States. Wind power provides clean and cost-effective energy generation, increases rural incomes, hedges against fuel price shocks and increases energy security.

Most U.S. wind-energy projects are remotely owned by large corporations, while the remaining fraction is owned, wholly or in part, by local residents and businesses — referred to as “community wind.” According to Windustry, a Minneapolis-based nonprofit organization working to increase wind energy opportunities for rural residents, as of January 2010, community wind makes up 1,521 megawatts (MW) of the total 35,170 MW of U.S. wind energy. Community wind energy projects have all the benefits of remotely owned wind projects and some important additional ones.

Community wind developer Own Energy identifies three important benefits: The bottom line: few would dispute that community wind is good for the economic development of rural communities and for the entire U.S. wind-energy industry.

Best in the West,
Least in the East
Community wind is geographically concentrated in five states: Minnesota, Washington, California, Iowa and Texas. These five states have 88 percent of developed U.S. community wind power. States east of the Mississippi River have 2.5 percent of U.S. community wind. This is partly due to the more limited wind resources available in much of the East, especially the Southeast. It is also because of higher population density and real estate patterns. Landowners tend to own smaller parcels of land, which makes project development more difficult. Mark Anderson summed up the New England situation in the May 2007 edition of Windpower Monthly by commenting that it is a region “where vistas are sacred and naysayers can be rich and powerful.”

Massachusetts has by far the most community wind of any eastern state, with 15 megawatts (MW). Massachusetts has been relatively successful at promoting community wind development through a series of programs and incentives over the last decade. The coastal town of Hull, outside of Boston, installed the first community-owned utility-scale wind turbine in New England in 2001. It proved to be popular enough that a second, larger wind turbine was installed in May of 2006.

With the success of the Hull project as precedent, several other community wind projects were developed in Massachusetts. All of these projects have been developed by either municipalities or a single business or organization. The cooperative model that has been so successful with community wind projects in the Midwest and West had not been used in New England until recently. All that changed recently on a Maine island.

Wind Power Down East
The largest community-owned wind project in the East was recently completed on the island of Vinalhaven — one of the Fox islands — in Penobscot Bay off the central Maine coast. The hope of the project developers and local community wind advocates has been that this project could serve as a template that would stimulate similar projects. There is evidence that this is happening. On Nov. 17, 2009, the $14.5-million Fox Islands Wind Project was officially commissioned. Governor Baldacci and Maine House Speaker Hannah Pingree joined community and project leaders to dedicate this wind-energy venture. The three General Electric 1.5- megawatt wind turbines were installed in the summer of 2009 and started generating electricity in December. This project is providing stabilized power supplies and lower energy costs for the islands' residents, who had been paying more than double the national average for their electricity.

Since wind speed is not constant, the three turbines actually generate just under 30 percent of their total rated capacity of 4.5 MW — about 1.3 MW per hour — or 11,600 MW hours per year. Residents consume about 10,500 megawatt hours of electricity per year. Any surplus energy will be sold to Central Maine Power, their electricity supplier. Residents consume about 10,500 megawatt hours of electricity per year. Any surplus energy will be sold to Central Maine Power, their electricity supplier.

There will be a surplus in the winter, when the wind blows harder, and a deficit in the summer, when electricity will be purchased from the Central Maine grid. The electricity generated from the project is expected to offset 5,400 tons of carbon dioxide emissions.

The Fox Islands have a history of generating their own power. Maine’s strong offshore winds historically made these communities viable by filling the sails of ships carrying granite, timber and other vital products between islands and the mainland. There was once a mill system that used hydropower for a granite-cutting operation. There have also been coal-fueled and dieselpowered generating plants on Vinalhaven. Now this wind energy project is considered a model for communities along the Atlantic Coast. Several other Maine island and coastal communities are now looking at wind power as a viable alternative or complement to conventional energy sources, including Monhegan, Swans Island and Frenchboro.

The Island Institute in Rockland, a development group that focuses on Maine's 15 year-round island communities, is one of the entities that was involved with the development of the Fox Island project. It reported that a neighboring island has already voted to develop wind energy: “This past summer Monhegan … voted with a 75- percent majority of ratepayers and taxpayers to proceed with plans to erect a small turbine on the island’s highest hill: Lighthouse Hill. This proposed turbine will supply more power than can be used to meet all the island’s winter electric needs and about a third of its summer needs.”

Co-op Wind The Fox Islands wind project has been successful because of the combination of the residents being faced with relatively high electricity costs and the presence of an excellent wind resource. The economics for the project were solid. This has been the same combination that has spurred the recent development of several community wind projects in coastal Alaska. In both Alaska and Maine, rural electric cooperatives have been the project developers.

For most of the last century, the Fox Islands have secured their electricity through a small investor-owned electric utility — Vinalhaven Light & Power Co. In October 1974, the islanders voted with an 80-percent majority to organize the Fox Islands Electric Cooperative and to buy out Vinalhaven L&P. In 2001, the co-op began to explore the idea of developing wind power.

The timeline shows that: The project was financed with a combination of loans from the Rural Utilities Service of USDA Rural Development and a tax-equity investor. As reported on the Fox Islands Wind website (http://www.foxislands wind.com/background.html), a forprofit firm had to be formed to take advantage of the tax credits.

Philip Conkling, president of the Institute, worked with Dr. George Baker, a seasonal resident of Frenchboro Island who is also on the faculty of the Harvard Business School, to complete a preliminary economic analysis for the cooperative as well as a financial model suggesting how the island communities might finance a local wind-power project by finding a tax equity investor and by selling power and renewable energy credits via the Fox Islands Co-op's submarine cable.

Because such a tax investment was not available to the nonprofit Fox Islands Electric Cooperative, a separate for-profit Fox Islands Wind LLC (FIW) was formed to take advantage of the tax credits, with Baker selected as CEO. He and the Island Institute secured the commitment of a Maine company for a roughly $5-million investment in exchange for the tax credits the federal government allows to encourage investments in renewable energy projects. Permanent financing was obtained via a loan from the Rural Utilities Service.”

While the Fox Islands wind project is currently negotiating a turbine noise issue with some dissatisfied neighbors, it is moving forward and setting an example that is stimulating the development of other coastal community wind projects.




March/April Table of Contents