I attended the “Windpower 2007 Conference and Exhibition” in Los Angeles California in early June.  The goal of attending this meeting was to gather knowledge that would be valuable to farmers who are wondering how they can capitalize on this growing business. 

• It goes without saying, but the number 1 and 2 things that would qualify a farm to have wind one ore several turbines is good wind and local transmission lines.  It is hard to quantify “good” wind because of differing measurements. Mph average / mph mean, class 4/5, etc.  It also depends on developer you choose to work with (or those who choose you) and what they consider “good” relative to the amount of land you have or the amount of turbines you can fit on it.

• Wind Farm “Developers” are who you want to work with for ease, experience, and minimal cash out of pocket.  Developers will pay for up front research (met-tower), full development planning, permitting, grid tie in, on going maintenance.  They then pay you the farmer to lease the land used.

• As a general rule I was told that tracts of land that run East to West have more wind farm potential as you can theoretically put more turbines on it.  Every farm varies and local terrain and geographical features could eliminate some areas while all the land in the area works well. 

• Small Farm Strategy: When you have a smaller sized farm in good wind area that is not big enough for 25 to 50 MW production, you can partner with other local farmers to put turbines on your land and theirs.  When done right, and when assessing some type of management fee for bringing it all together, a farmer could generate significant returns beyond his own property production capacity.

• Developers don’t seem to want wind farms under 25 MW (most 50 MW, some say even say 100MW)

• A turbine costs the developer about $2M per 1 MW (3 MW turbine $6M)

• Typical leases 25 to 35 years, some allow for 1 time payment, most are annual though

• Assume revenue of $5000 per year per turbine, but real payment are factored off how much wind the area has, how constant it is, and what size and type of turbine would be used. (I’ve heard spreads of $4500 to $6000 per year per turbine)

• Bigger (high voltage) local transmission lines are not necessarily better. Connection fees are higher on high voltage lines and this sometimes skews revenue which can lower lease payments or kill the deal.

• If you are interested in doing some preliminary research and spending some of your own money to find out if you are in a good area for development, start with a windmap.  Windmaps cost around $600 per state from AWS, although some states are free.  A feasibility consultant from Tetra Tech will give you better data and more refined maps that include local grid information for $2000 per state.  A serious local study can cost you $10K.

• John Deere is starting to look at more “green field” projects.  In the past they have mostly partnered with developers to help bridge the gap between farmer and large development company.

• A typical wind study takes 1 year but can take up to 2 years which is preferred by the development companies. It typically takes 6 months to complete installation once the developer decides it’s a go ahead and permit, build the farm, and tie into the grid. This assumes no push back from neighbors.

• Multiple met-towers are required for a field study.  (usually 3 +) A full tilt-up tower and installation costs 40K to 50K each. You could increase your returns if you were willing to assume the development risk and create our own studies, but this is very risky. 

• Unfortunately when choosing to go with a developer, you really don’t know if you are getting a fare payment offer for the production capability and it is virtually impossible to shop once you are that far into an agreement with them.

• No one in the business seems worried about the tax credit not being extended because of President Bush’s 20 in 20 push.

• Turbines can’t be stacked too densely or the will “steal wind” from the others around them.  Assume 1 turbine per forty acres although this is not a fixed rule.