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Larry Flowers, deputy director for community wind at the American Wind Energy Association (AWEA), reports there is “strong interest” in community wind projects from municipal utilities and rural electric cooperatives, which are beginning to understand the value proposition in owning such wind farms.

So named for their ownership structures – as opposed to the wind farms’ nameplate capacities – community wind projects incorporate local participation and control and often can encompass a wide range of project sizes. According to AWEA, any wind farm smaller than 20 MW can be considered a community wind project so long as it includes community involvement or provides a local benefit as demonstrated in terms of retail power costs. A 20 MW to 100 MW wind farm can also be considered a community wind project if the local ownership stake equals 33%.

Through a co-op/municipal utility outreach effort, AWEA’s Community Wind Working Group is working with state and national public power organizations to communicate the recent success that co-ops and munis have had with wind energy.

“We will be facilitating the telling of their stories to colleagues through workshops and webinars,” Flowers explains. “Wind is in the co-ops’ backyards, and local ownership significantly multiplies the local economic development.”

Advocates, such as Flowers, maintain that community wind projects, by virtue of interconnecting closely to load, are grid-friendly and can greatly impact the local economy.

Although co-ops and municipal utilities are not new to wind – the U.S. Department of Energy has recognized so-called “wind leaders” in the co-op and municipal utility space since 2005 – the number of such energy companies expressing interest in owning wind farms has increased.

Jacob Susman, founder and CEO of Brooklyn, N.Y.-based community wind developer OwnEnergy, agrees. He maintains that the involvement of utilities will provide the industry with a sorely needed boost.

“This is the dominant adder of new community wind megawatts and the leading new source of capital to the segment,” he says.



Despite this encouraging news, the community wind sector is plagued by many of the same challenges faced by its utility-scale counterpart. Before the segment can reclaim its momentum from 2011 – when no fewer than 50 community projects totaling 549 MW were completed – the industry must do the following:

Push for long-term policy. Community wind developers can no longer monetize the Section 1603 cash grant, which expired in 2012. The incentive helped to lessen the amount of tax equity required for the financing of community wind projects. Because community wind projects tend to be smaller, such projects are often overlooked by investors and lenders that are able to obtain larger returns from deals involving utility-scale wind projects.

However, the community wind sector can – and must – seek long-term incentives on both the federal and state levels, and Iowa is perhaps the best example of what can happen when a state establishes community wind policy.

According to advocacy group Windustry, Iowa instituted both a corporate and individual income tax credit for qualifying wind energy projects in 2005. Sections 476C (individual) and 476B (corporate) of the Iowa tax code afford a $0.015/kWh production credit for individuals and a $0.010/kWh credit for businesses, with the idea that projects that are owned by Iowa individuals and businesses will compete with wind projects that can more easily capture the production tax credit.

To qualify for the personal tax credit, the wind energy facility must be at least 51% owned by qualifying Iowa entities as defined in the statute. To qualify for the corporate tax credit, the project must be approved by the Iowa Utilities Board.

Since the incentives were established, community wind farms have proliferated in the state. In 2012 alone, Iowa completed 15 community wind projects.

However, beyond Iowa, most states have not followed suit.

“For a time, many states, such as Colorado, Maine and Montana, were adding new legislation relating to community wind,” recalls Susman. But, other than seven state programs that support community and small projects, new programs have not been rolled out.

“As the broader wind industry turns its attention to state policy, community wind should be at the top of its list, as these projects are the poster children for the wind business,” Susman adds.

Establish better utility relations. While investor-owned utilities (IOUs) are integral to the success of conventional utility-scale wind projects, the community wind sector is often unable to compete with the project economics of its large-scale brethren.


“If a utility goes out with [a request for proposals] for a 100 MW project, it’s very difficult for a community wind project to pencil out at a competitive number,” explains Flowers, adding that IOUs needing to satisfy a state renewable portfolio standard prefer procuring wind energy in large chunks. Therefore, he says, a utility is not inclined to purchase the output of a 5 MW or 10 MW project.

Dan Juhl, founder of Juhl Energy and a community wind pioneer, has a different perspective. He maintains that technological advancements made by the renewable energy industry continue to eat away at a utility’s profits and, therefore, threaten an electricity company’s business model.

“The entire concept of distributed generation has undermined the utility’s monopoly,” he says. “Community wind puts the utility on its heels. Once that grid-parity line is crossed, the gloves come off.”

In addition, recent behind-the-meter innovations have carved out a niche for community wind projects.

For example, Foundation Windpower – a Menlo Park, Calif.-based developer, installer and builder of distributed generation systems – has helped corporations, such as industrial provider CEMEX, by erecting wind turbines on-site. According to John Pimentel, president and co-founder of Foundation Windpower, the benefits are two-fold: A company can use the output generated by the wind turbine to serve load, and it can add a revenue stream by virtue of selling the excess output back to the utility.

Pimentel says the potential cost savings of installing wind turbines are too promising to ignore. By taking advantage of net metering and incentives, companies can save between $0.01/kWh and $0.025/kWh on their retail utility bills.

Get creative. With the expiration of the cash grant, community wind developers need to continue getting creative in finding and attracting financial investors. As an example, Susman cites the September 2012 deal that saw NJR Clean Energy Ventures (NJRCEV), a subsidiary of natural gas distributor New Jersey Resources, acquire a 20% stake in OwnEnergy.

He says NJRCEV’s minority ownership provides OwnEnergy with access to NJRCEV’s balance sheet and tax capacity. “NJRCEV is an efficient user of tax credits, and it has an option to provide the capital for a substantial portion of OwnEnergy’s community wind projects for the next several years.”

Lastly, some companies will simply head in the direction of opportunity, he explains, adding that some in the community wind space have begun to establish operations outside the U.S., “presumably as a solution to find cheaper and [easier] financing.” w

Industry At Large: Community Wind

Can The Community Wind Sector Meet Its Challenges?

By Mark Del Franco

Before the segment can claim a larger slice of wind generation, advocates must address the sector’s laundry list of hurdles.






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