Minnesota Leads in Community Wind Project Financing

When it comes to wind power, Minnesota has a lot to be proud of. Not only a national leader in wind power development and output, Minnesota is also, as a recent report highlights, the clear leader in community wind project financing. Community wind projects are commercial-scale, locally-owned wind farms that many people see as key to the future success of wind power.

Giving community members a stake in their local wind project not only allows them to reap economic benefits but also renders them more favorably disposed toward the project in a broader sense. Favorable disposition can be hard to come by; despite overwhelming public support for wind power on a general level, local opposition frequently arises where turbines are proposed. Typical complaints concern unsightliness, noise and impacts on wildlife. An international study about public perceptions of wind power found that another common reason for opposition to wind projects is suspicion of development organizations, a concern that one can reasonably expect to be mitigated by local ownership. The study also found that smaller wind farms, such as tend to be most viable for community projects, are more positively perceived than large-scale farms. (Small projects are also more economically efficient.) Most importantly, the study showed that “local involvement, in either economic or political terms, tends to have positive affects upon public perceptions of wind farms.” Enter Minnesota, ahead of the curve on community wind projects.

A key component of any major development is, of course, capital. Minnesota paved the way for creative community wind financing techniques by pioneering the “Minnesota flip” financial structure ten years ago. The “flip” is an arrangement wherein a local project sponsor partners with a larger investor to fund a wind project. The investor receives cash and tax benefits as majority owner for the first ten years, then turns majority ownership over to the local sponsor. That’s right: the flip in ownership happens after ten years, and the flip method was pioneered ten years ago.

We are now reaching the point of turn-over for many Minnesotan wind energy projects. More than a few will see ownership change hands from the tax equity investor to Juhl Wind Inc., a Minnesota-based company that specializes in developing and managing community wind projects. Juhl Wind will retain a small stake in each project while overseeing the devolution of majority ownership to locals. In all likelihood, this proliferation of community wind will soon provide even more evidence in favor of local ownership as Minnesota continues to lead the way for the country.

Posted in Economic Development | Related Topics: Business Growth  Corporate Business  Energy  Wind Energy 

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