Community wind energy is an exciting concept that empowers groups of local residents and businesses by allowing them to control their own sustainable energy future. In a community wind project, locals unite to collectively own and operate their own wind power plant, offering energy independence and electricity cost savings.
There are a number of different ways to structure a community wind project. Here we will discuss a few options.
The Minnesota Flip business model allows local landowners to have a stake in a wind power plant project without having to provide the entire capital investment. In the Minnesota Flip model, local investors provide the land and support for a project and facilitate all planning up to the installation stage. At this point, an investor with significant amounts of capital would provide funds for installation and commission of the wind farm. For a certain period of time (often ten years), or until a certain amount of profit has been made (often 7-14 percent), the capital investor maintains primary ownership of the project. After that time, the “Flip” occurs, where ownership is transferred to the locals. This business model allows locals, without much capital to invest, to be part of an important wind project, while allowing outside investors to profit. The unique structure of the Minnesota Flip business model also permits the utilization of federal tax incentives, such as the Production Tax Credit (PTC). Read more about the Minnesota Flip model.
In areas where the locals may have more capital they are willing to invest in a community wind project, following a cooperative model may be a favorable option. In this business model, the local customers receiving electricity from the wind power plant would all become part owners in the project. This can be beneficial because it allows the locals to have full control over their wind project. This model, however, also comes with some risks, because the locals are responsible for the success or failure of their project.
In a municipality owned wind project, the local government is in control of the wind power plant. This allows residents to reap all of the benefits of locally produced wind energy, but without the risk associated with investing their own capital. Locals are not free from all risks, however, as electricity prices may fluctuate based on the performance of the wind power plant. An added benefit to this model comes in the form of tax breaks. As the project would be publicly owned, it is tax exempt, resulting in lowered project costs for the municipality, and therefore lowered costs to the consumer.
Many areas in Virginia may be well suited for a community-based wind project. Small towns and cities in areas with good wind resources are perfect candidates for a community wind power plant. Areas in Virginia with the best wind resources lie along the Appalachian Mountains in the western parts of the state and along the coast in eastern VA. Coincidentally, the western mountainous regions and the eastern shore of VA both contain a plentiful number of small towns and communities. If you think your community may be interested in a locally supported wind energy project, please contact us, as we would love to help!