Wind

The North American wind power market is entering a period of sustained growth. Both the US and Canada achieved record installations of wind power projects in 2006, and both are poised for steady growth moving forward. The key with Wind Energy is site selection and development. There are two major factors to consider when evaluating potential sites. The first is the straight line wind potential of the area. This is measured by mph and areas are then qualified in "factors" of wind potential. Kansas has the third leading area of wind potential in the United States with over 50% of the state residing in at least a factor 4 area (15.7-16.8mph) and almost 20% of the state possessing Factor 5 (16.8-17.9) winds. The latter is ideal for wind farm development although many facilities have been constructed using Factor 4 winds. The second aspect to consider is the proximity of the site to electric transmission lines. It is critical that any site selected has access to a load bearing line of 136KV or greater.

There is high profit potential in Wind Energy development with the correct structuring of the financial model. The significant component is the presence of a major utility that can utilize the Production Tax Credits (PTC) provided by the federal government. Most models are structured that the utility partner takes ownership of the project during a 10 year period of time to take full advantage of the PTC. This is financially beneficial for three reasons:

  1. The development company receives a flat fee to help recover all costs and earns a bonus for completing the project.
  2. The first decade of operation for a wind facility holds tight margins because of competitive energy market and a massive debt load.
  3. The utility becomes the consumer of the wind farm’s off-take (electricity).

Upon the lapse of the ten year time frame project ownership is shifted back to the developer. In summary this scenario offers both the original payment of a development fee and ownership of the farm in a more profitable period.

“Our universe is a sea of energy - free, clean energy. It is all out there waiting for us to set sail upon it.”
- Robert Adams