Renewable Energy Financing Mechanism Encourages Farmer-Ownership

Date: 3 Sep 2004 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Article below originally posted in October 2002.

Wind energy is the fastest growing energy source in the world. Wind energy provides benefits to land owners and rural communities, but not as much as it could be. At least that’s what Dan Juhl, principal of Dan Mar Associates in Minnesota, believes and he has created an interesting solution.

With a long-term purchase price of 3.3 cents per kWh from the local utility and using the tax advantages that stem from creating a Limited Partnership between the rural landowner and the financing company, Dan has installed turbines on eight farms already, and dozens of others are clamoring to get in line.

Wind power’s promise to provide significant rural development benefits faces a reality where most wind energy development is occurring through contracts to large wind farms owned by national and even multi-national corporations. The landowners where the turbines are sited typically receive payments of $2,500-3,500 per 1 MW turbine installed. This is a welcome supplement to their income, but it pales besides the much greater revenue they could receive by owning the wind turbines.

In Minnesota local ownership is even more attractive because of a 1.5 cent per kWh producer payment from the state for certain types of wind energy projects that are less than 2 MW in size. With this incentive, a rural landowner that also owns the wind turbine can earn $25,000 or more. And after 10 years, assuming 10-year financing on the machine, the earnings could rise to more than $100,000 ayear.

John Farrell
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John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.