United States — Minwind I-IX Wind Farms

Nicola Mares • 13 March 2020
Author: Jarra Hicks

Minwind was one of the first farmer and community-owned wind power projects in the US. Through close collaboration and co-operation, the project has realised several economic, community-based and environmental benefits. Minwind now comprises nine wind turbines, with a combined 16.05 MW of installed capacity.

Project overview

Disillusioned by the lack of local benefits from commercial wind farms in Minnesota, and pressed by the economic hardships that many farmers face, a group of farmers from Rock County, Minnesota started working towards farmer-owned wind farms in 1999. The farmers wanted an investment that would generate extra income and bring wider economic benefits to the community - and reduce impact on the environment. By 2002, these ideas had developed into the first two Minwind projects. There are now nine of them, each a separate limited liability company, owned 85% by local farmers and 15% by other local community members. Electricity the wind farms produce is sold to an electricity utility, and members receive dividends in proportion to how much they invest. The 1.75-1.9 MW projects are on farm properties near Luverne in southwestern Minnesota.

Project cost and funding

Each 1.75-1.9 MW project cost $1.82 million. Projects are 100% community-owned, and funded by selling shares and debt. Seven of the nine projects also received a 10% funding grant from the US Department of Agriculture.

Together, the Minwind projects total 16.05 MW of installed wind capacity, and cost $16.5 million.

Background

Minwind's founders firmly believe that local ownership and control helps make sure local communities feel the benefits of wind power projects. For the Minwind projects, these include return of investment, more local jobs, and better local business relationships. Minwind employs local people and consults local businesses wherever possible. It also means there’s more money in the local economy, so other local businesses are more likely to do well.
Minwind also wanted to generate clean, renewable energy and build a brighter future for farmers, rural communities and the environment.

So why farmers? One of the project founders, farmer Mark Willers believes, “farmers have the financial resources and the entrepreneurial spirit needed to make projects like Minwind happen.” He believes Minwind’s success is down to co-operation, persistence and creative funding ideas. Minwind also benefited from local links with ethanol-producing co-operatives.

After extensive research, the founding farmers decided to establish the Minwind projects as separate limited liability companies (LLCs) with co-operative principles and democratic control. This meant each project could benefit from Minnesota’s renewable energy tax incentives (limited to projects with up to 2 MW capacity), while maintaining their co-operative principles. Each LLC co-ordinates closely with the others and all are very similar in structure.
To maintain benefits to the farmers and local people, each project has a mandate that 85% of the shares are owned by local farmers and the remaining 15% are open to other community members. Also, one person can't own more than 15% of one project’s shares and each project must have completely different investors. It means more local farmers benefit from the projects. Finally, to ensure democratic control, one member has one vote, regardless of how many shares they own.

Minwind I and II

Both I and II have two 950 kW Micon turbines, delivering 1.9 kW. Each is owned by 33 investors. Both projects were up and running in 2002 and are among the first farmer-owner wind turbines in the US. As soon as they were completed, the group started planning more, due to such high levels of local interest and support. Minwind expects to have paid off the debt portion of the finance within ten years.

Minwind III to IX

A $500 deposit from each person interested in being a member covered start-up costs for research and development. Minwind created seven limited liability companies, each owning a single 1.75 MW Vestas turbine. As with I and II, each company has around 33 investors, and received a $178,200 grant (about 10% of the costs) from the US Department of Agriculture. All seven were up and running by December 2004.

By working closely together, the Minwind companies benefit from economies of scale and professional management of the wider project, but retain the economic benefits for the local community. For example, they all shared expert consultants' advice on how to develop the projects, negotiated power purchase agreements, and developed appropriate legal structures to protect common interests.

Challenges

The most challenging aspects of the project were finance and, initially, getting community support. It was also difficult to get connected to the grid and negotiate a fair and viable power purchase agreement with a utility company. At the time, Minnesota had no laws facilitating grid access for community-owned wind power projects, or for guaranteeing a fair price. However, by negotiating collectively all the Minwind projects managed to secure a fair price with a private utility.

Minwind were careful in calculating the cost of capital in the long term, and were aware how changes in interest rates might affect the economic viability of the project. Willers, a co-founder of Minwind, says it was crucial to make the right decisions about “who to work with as your lender”, and the terms of the loan.

Results

Minwind I and II were among the first farmer and community-owned wind projects in the US. As such, they have shown other communities how they might overcome some of the legislative barriers - although renewable energy incentives vary by state in the US.

Through establishing a 16.05 MW project, Minwind has also supplied hundreds of thousands of kW/h of renewable electricity and contributed significantly to abating greenhouse gas emissions. It has also turned out to be a rewarding investment for its members.

The Minwind projects get lots of visitors and many phone calls from other farmers and communities looking to achieve similar results.

More information

Learn more about electricity feed laws, feed-in laws, feed-in tariffs, advanced renewable tariffs, and renewable energy payments at wind-works.or