While fossil fuel sources have fluctuating input costs, wind operators only pay for maintenance. Unlike coal and natural gas, wind is free. Installing turbines, however, isn’t cheap. One megawatt of wind capacity (which can power approximately 225-300 homes) can cost roughly $2 million.
Financing wind farms can be difficult, especially with business investment 15% below pre-recession levels. To help promote investment in renewables, Minnesota established Community-Based Energy Development (C-BED).
C-BED is a program that provides financial incentives to renewable energy projects that are at least partly-owned by communities, organizations, and schools. C-BED was created in 2005, and has proven successful for Minnesota wind power. When the incentives were expanded in 2007, there was a wait list of projects to take advantage of them.
The success of C-BED isn’t that surprising; Danish community-based wind programs have been wildly successful for wind development for 30 years. In Denmark, developers are required to offer shares in wind farms to local residents, and it has proven to be a strong investment. Copenhagen’s Middelgrunden wind farm is projected to yield investors a 7.5% return – and provide power for 12,000 Copenhagen residents.
C-BED, just like in Denmark, is a great for local communities. Revenue from wind will keep blowing into rural communities regardless of recessions, droughts, or crop prices. It will also provide the benefits of local ownership – which amounts to 2 times the jobs and 3 times the income over non-local ownership. Beyond monetary benefits, if Denmark’s experiences are any indication, this could help ease local opposition to wind power.
For those not familiar with C-BED – local citizens and organizations opting to fund a project that is of interest to them – think about it as a much larger and more spohisticated version of Kickstarter, the online forum allowing users to fund a small part of a technology, art, or business endeavor
C-BED has already proven itself to be a successful model for developing wind power. Once the uncertainty surrounding the Production Tax Credit extension is resolved, Minnesota should expand C-BED to continue utilizing our tremendous wind resources. Would Minnesota benefit by taking a page from Denmark’s program, and requiring developers to offer shares in the project to local residents? It’s hard to say, but it would certainly diversify wind power finance and provide a tool to reduce local opposition.