Community Wind Q&A

Q:     What is the Community Wind Development Program (CWDP)?

A:     CWDP is a phased approach for developing community sized wind projects (<10 MW) for private landowners and businesses, as well as schools, cities, counties, utility districts, colleges, and other units of local government.  The Program provides decision makers with a step by step procedure for developing community wind, beginning with a low cost broad stroke assessment of conditions and resources and adding increasing detail as the Project moves towards implementation.  The Program minimizes your risk and expense by proceeding to subsequent phases only after the preceding phase warrants moving forward.

Q:     What are the phases of the CWDP?

A:     There are 4 phases: Preliminary Project Assessment (I), Wind Resource Assessment and Project Plan (II), Project Feasibility Study and Implementation Plan (III), and Project Implementation (IV).

Q:     What does the Preliminary Project Assessment (Phase I) provide and what does it cost?

A:     Phase I seeks to broadly determine whether a community wind project is worth pursuing in your area, by assessing the “three legged stool” that any wind project needs: Resource, Transmission and Buyer.  Phase I asks such questions as:  Is there adequate wind in your region to support a wind project?  Is electrical interconnection and transmission available?  What are the typical power purchase rates in your area?  The answers determine whether you should proceed to Phase II.  The fee for Phase I is $500.

Q:     Wind Resource Assessment and Project Plan (Phase II)?

A:     Phase II provides an assessment of your area’s wind resources, as well as a Project Plan that details how to bring your Project from concept to completion.  Phase II will generate a FirstLook™ Report for your area created by industry leader 3TIER™, which will verify and quantify your wind resource through historical data and atmospheric modeling.  If your area’s wind resource proves to be adequate, the Report will recommend proceeding to Phase III.  The fee for Phase II is $2,500.

Q:     Project Feasibility Study and Implementation Plan (Phase III)?

A:     Phase III verifies the legal, technical, and financial viability of your proposed Project.  Serving as “due diligence” for potential bond buyers, investors, grantors and loan guarantors, Phase III will provide a site, transmission, and regulatory assessments, as well as identify turbine, project ownership, financing, and operation and maintenance options.  Additionally, a financial pro-forma will be developed by applying the wind resource data generated in Phase II to the power curve of your selected turbines.  The pro forma will result in a projection of your Project’s revenue, expense, and financial returns.  Finally, MFE will provide you with an Implementation Plan that will outline the best strategy for bringing your Project to completion.  The fee for Phase III should be in the $7,500 to $20,000 range depending on your Project size.

Q:     Project Implementation  (Phase IV)?

A:     Phase IV will bring your Project concept to reality by carrying out the Implementation Plan determined in Phase III.  We can assist you with land acquisition and financing procurement, as well as engineering drawings and specifications, construction management, and operation and maintenance contracting.  Phase IV proceeds in one of three ways: Design-Bid-Build Approach, Design-Build Approach or Third-Party Developer Approach. The cost of Phase IV is entirely determined by your Project’s size and design.

Q:     Do I need to follow the phases sequentially?

A:     No; for clients who already have their wind resource verified by a third party, Phases I and II may not necessary, and for projects which are already in progress, a client may wish to begin with Phase III or IV.

Q:     Are we obligated to proceed to the next phase once the process is begun?

A:     No; each phase is independent and provides valuable deliverables, which may be used to support this or other projects in the area.  Each phase includes a recommendation of whether or not to proceed to the next phase.  It will be your choice on whether or not to proceed.

Q:     What are some advantages/disadvantages of each project delivery method?

A:    

1.     Design-Bid-Build Approach.  An engineer is selected through a Request for Qualifications (RFQ) process.  The engineer then prepares bid documents with drawings and specifications for qualified contractor responses.  Once a contractor has been selected through the formal bidding process, the engineer oversees the construction, final project approval and payment.  You finance, own and operate the project.  The Design-Bid-Build Approach is the most traditional and takes the most time.

2.     Design-Build Approach.  A Request for Proposals (RFP) is issued to qualified design-build firms to provide a “turn-key” installation including design and construction.  The proposals are selected based on both concept and price.  You own finance and operate the project.  The Design-Build Approach is efficient because project responsibility lies with one firm.  This approach is growing in popularity but is still a relatively new concept for public entities.

3.     Third-Party Developer Approach.  A RFP for third-party development of the project is issued.  After the third-party developer has been chosen, you would enter into a long term relationship with the selected developer, who finances, owns and operates the project, as well as pays you an annual royalty for the right to operate the project.  The Third-Party Developer Approach has the advantage of minimal financial outlay, but you must consider developer qualifications and proposed royalty.  The advantage to the developer is freedom to move ahead quickly without the need for a public bidding process. The project can be “flipped” into your ownership after the major tax benefits due the developer have been realized (typically after 10 years).

Q:     Which approach do you recommend?

A:     Each approach has its own strengths and weaknesses.   Your chosen approach will depend on which method works best for you.

Q:     Where will I site my Project?

A:     The process of determining where to locate your Project will require evaluating wind data, transmission access/capacity, and energy sales options.  Project sites will be recommended in Phase III.

Q:     Who will own my Project?

A:     Project ownership structure will be determined by your specific project and financing conditions.  Examples of possible ownership structures include self-financed, private equity flip, and developer-financed.  Ownership options will be outlined and recommended in Phase III.

Q:     Who will operate and maintain my Project?

A:     There are 2 possible options:  1) conduct O&M yourself with guidance from MFE, or 2) sub-contract O&M responsibilities to a qualified third-party O&M firm.  MFE will work with you to discover the best method for you.  An O&M plan will be recommended in Phase III.

Q:     What financial incentives and support are available?

A:     There are many, such as the US Department of Agriculture Farm Bill Program, Clean Renewable Energy Bond (CREB) Program, Production Tax Credit (PTC), green tag/renewable energy credit sales, and various other federal, state, and local financial incentives.

Q:     I’m interested, what’s next?

A:     Initiate Phase I or skip to a later phase if you already have preliminary work complete.  You may call Matney-Frantz Engineering to begin your Community Wind Development Program or to ask any questions that remain unanswered.  MFE’s CWDP coordinator is Claud Matney.  Claud can be reached at               (512) 203-0998        or cmatney@matneyfrantz.com This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .