Minnesota Wind Facts

Minnesota is among the nation’s leaders in wind energy production, ranking third behind Texas and California. Since the construction of its first wind farm in Crookston in 1987, Minnesota has been the Midwest’s pioneer for wind energy development. In the past 20 years, over 60 wind farms have sprouted up across Minnesota with a total wind energy capacity of 1300 MW.

Minnesota has the legislation to prove it believes in wind energy projects and local ownership models. The Minnesota government has instituted renewable energy objectives for utilities, tax incentives and community-based legislation (C-BED statute), all encouraging wind energy developments. The goal of the legislation is to have 25% of energy come from wind resources by 2025.

Minnesota wind facts as of January 2008:

• Total installed wind energy capacity (MW): 1300
• Current wind energy capacity under construction (MW): 46
• Total wind energy potential (Billions of kWh/year): 657
• Average potential power output (MW): 75,000
• Ranks 9th in US for potential wind energy output.
• Ranks 3rd in US for current wind energy output.

Minnesota C-BED statute

The community-based development (C-BED) statute, passed by the Minnesota legislature in the fall of 2005, promotes locally owned wind energy facilities within the state. The statute provides a framework for community wind projects to negotiate with utilities. Governor Tim Pawlenty plans to have 800MW of “C-BED” wind energy projects produced by 2010. As of October 2007, 866 MW of C-BED developments are either being negotiated with utilities (629 MW), under contract (235 MW), or in operation (2.5 MW). A C-BED project is defined as a new wind energy project that meets the following ownership criteria:

More than two turbines: No qualifying owner possesses more than 15 percent of the project.
One to two turbines: Owned entirely by one or more qualifying owners, with at least 51 percent of the total financial benefits over the life of the project going to the qualifying owners.

• Front-end-loaded tariff:
Permits utilities to pay for power during the first ten years of a project in exchange for a lower rate during the second 10 years. This improves the cash flow of community wind projects, helping landowners afford financing.
• The law highly advises utilities to take the reasonable steps to negotiate with C-BED projects to meet their renewable energy objectives but does not obligate them to enter into a power purchase agreement. C-BED projects need to be competitive and offer “value” to the utility, making an agreement feasible. Value can be in the form of strategic locations with a strong wind resource and demand for electricity.
• C-BED legislation is complex and all compliance issues should be thoroughly evaluated before discussing terms of an agreement with a utility.

A qualified C-BED project owner means:
• A Minnesota resident.
• A limited liability company made up of Minnesota residents.
• A Minnesota nonprofit organization
• A Minnesota cooperative association organized under chapter 308A or 308B, other than a rural electric cooperative association or a generation and transmission cooperative.
• A Minnesota political subdivision or local government other than a municipal electric utility or municipal power agency, including, but not limited to, a county, statutory or home rule charter city, town, school district, or public or private higher education institution.
• A local or regional governmental Minnesota organization such as a board, commission, or association.
• A Minnesota tribal council.

Renewable Portfolio Goals for Utilities

All Minnesota utilities must obtain a certain percentage of their energy production from renewable energy systems by the years listed. Governor Pawlenty has implemented the Midwest Renewable Tracking System (M-RETS), a regional system to monitor utilities' progress toward meeting Minnesota's Renewable Energy Standard (RES). Xcel Energy:

• 7% by 2010
• 15% by 2011
• 18% by 2013
• 25% by 2017
• 30% by 2021

– at least 25% must be from wind energy, the remaining 5% can be from any renewable source

Other Minnesota Utilities:

• 7% by 2010
• 12% by 2013
• 17% by 2017
• 20% by 2021
• 25% by 2026

Financial Incentives

Property Tax Exemption: All wind energy systems are exempt from the state’s property tax. However, large energy systems are subject to a production tax. Large wind systems are taxed accordingly: Those greater than 12 MW are taxed at a rate of 0.12 cents/kWh; systems between 2 MW and 12 MW are taxed at a rate of 0.036 cents/kWh; and systems between 250 kW and 2 MW are taxed at a rate of 0.012 cents/kWh. Wind systems under 250 kW are exempt from the production tax. However, a lower tax rate may be negotiated by the local government to attract further wind developments.

Sales Tax Exemption: Wind-energy conversion systems used as electric-power sources are exempt from Minnesota's sales tax. Materials used to manufacture, install, construct, repair or replace wind-energy systems also are exempt from the state sales tax.

Business Tax Credit: Wind energy projects installed by December 31, 2007 will receive a business tax credit of 1.9 cents/kWh for 10 years. Depreciation: There is a five-year depreciation tax benefit for businesses.

Mandatory Utility Green Power Option: All electric utilities are required to offer green power options to customers.

Renewable Development Fund: Because Xcel Energy increased its storage of nuclear waste at its Prairie Island Plant, it must donate about $9 million dollars annually to renewable resources through the Minnesota Renewable Development Fund.

Terms:
• Through January 1, 2018, up to $10.9 million dollars is allocated to support renewable energy initiatives. • $9.4 million dollars supports up to 200MW of wind energy generated electricity.
Rounds of funding:
• In 2001, 19 renewable energy projects were selected to receive 16 million dollars.
• In 2005, 29 renewable energy projects were selected to receive 37 million dollars.
• In March 2007, a third round of funding began.





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