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Wind primerapril2011


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Wind primerapril2011

  1. 1. Process and Procedures Issues and Limiting factorsCommercial leasing activity is under the jurisdiction of the As with any developing industry, wind energy is not without Condemnation: The Wind Energy Task Force is currentlyState Board of Land Commissioners (the Board). OSLI admin- critics. Issues with public acceptance or critiques of the industry, assembling recommendations concerning condemnationistrates 2 separate types of leases dealing with wind energy, a however, are not discussed here. authority and scope. Transmission and collector easements 4. In the event that multiple applications are received for theTemporary Use Permit and a Wind Energy Lease. The issues can be grouped into two categories: external (market are the central concern, as the free market seems to be effec- same parcel(s) or the State parcel is large enough to be a stand and environmental factors which impede growth), and internal tive for facility locations. alone project, a competitive bid process may be offered beforetemporary use permits leasing to the applicant. (policy clarifications and administrative issues).“TUP’s” are non-exclusive permits issued for the installation 5. OSLI reviews the subject land for potential conflicts and di-and monitoring of meterological towers and stations. They are rects applicant to fully mitigate these conflicts. Such conflicts External Factorsgenerally limited to a 5 year term at an annual rent of $1,200 include those with existing leases, wildlife, cultural, historic,per tower. These permits do not guarantee or prioritize the and other conflicts as identified. Transmission: Planned transmission lines will likely prog-permitee for future development of a project area. The process 6. Determination is made whether the subject property is with- ress beginning in 2014. There will still be gaps in service,from application to final approval is relatively short, typically in the Sage Grouse Core area and appropriate stipulations are easement issues, and capacity/storage issues.two months. applied.1. Once application and fee is received, notification is sent to 7. Negotiation and Sage Grouse: The Core Area was realigned in August 2010. existing surface lessees for comment; agreement to the2. Wyoming Game and Fish is notified to determine what, terms and condi- This has opened 4 project areas fully and several more par- if any, stipulations will apply if the location is in a Sage tions of the lease to tially. It has also, however closed off several planned project Grouse Core area; fair market value that areas.3. Surface Impact Payments are made by the applicant to include: 1. Annual the surface lessee according to the surface impact payment rents per acre until schedule; operation; 2. An in- Tax Implictions: Current Federal Subsidies are designed to4. Preliminary approval is granted between 20 and 30 days stallation fee based expire in 2013. Whether or not these credits are extended, by the Director of the OSLI after reciept of completed ap- on generating (name- market rates this asserts a level of uncertainty into the industry. The es- plication package; plate) capacity; and5. Final approval is made by the Board at the next regularly tablishment of a viable statewide wind and transmission 3. Operating rent scheduled meeting. equal to the greater program prior to this date would provide additional security There are advantages and disadvantages to using standardized of a percentage of versus negotiated fees for compensation to State Trusts on those for future investors. gross revenue, a rent based on generating capacity, or a rent Trust Lands being leased for wind energy development. A com-wind energy leases per acre. parison of the BLM fee structure and the State fee structure willWind leases are made through a Wyoming Wind Energy Lease 8. After full staff review, the Director of the OSLI will recom- illustrate the differences in standardized fees and negotiated fees.Agreement and provide the lessee with exclusive wind energy mend that the application and lease agreement be approved Internal Factorsdevelopment rights of the state trust lands within the lease. The or disapproved by the Board.agreement is subject to any existing uses. There are 3 phases in 9. Final consideration is made by the Board at their regularly • BLM bases their rental fee on a 30% capacity factor, Inspection and Auditing: Related OSLI staff includes 3the agreement: 1. Intitial Phase for determining feasibility such scheduled meetings (6 per year). the ten year average of the 30 Year Treasury Bond (Jan range managers and 1 commercial leasing manager. Siteas conducting wind data; 2. Construction Phase; and 3. Opera- 10. A Surface Impact Payment is negotiated between existing les- 98 to Jan 08 is 5.27%) and an average price of $0.03 inspections and compliance, thorough remittance audit-tion Phase. The term of the lease is for the anticipated life of the sees and the wind lessee for negative impacts to the state trust per Kilowatt-Hour: ing, and production verifications are beyond staff capabil-project, usually 35 years and may be renewed for a period not to land and the leasehold estate. These payments are paid fully • 30% x 8760 hours per year x 5.27% x $0.03/Kilo- ities at the present levels. Given the current rate of growthexceed a total of 75 years. A reclamation bond is required, and to the lessee according to a schedule outlined in Chapter 6 of watt-Hour x 1000 Kwatts/Mwatt = $4155 wind leases exhibit, coupled with the number of facilitiesat the end of the lease, the land will be reclaimed. The process the Rules. Prior to surface distrubance, the wind lessee must have made the surface impact payment. set to construct in the next 36 months, this may becomefrom application to final approval usually takes several months. • The State receives a royalty percentage that usu- 11. The State Wind Lease Agreement requires compliance with a concern.1. Once application and fee is recieved, notice for comment is ally starts around 4%, the average price of electricity sent by the applicant to all lessees. other governmental agencies. Typically, the Department of Environmental Quality and the Wyoming Game and Fish are received for Wyoming generated power is $0.05247,2. OSLI reviews the applicant for experience, financial sol- most directly involved with Wind Energy leasing. average capacity factor is 35%: vency, business licensing, and procurement of transmission and marketing agreements. • 35% x 8760 hours per year x 4% x $0.05247/Kilo-3. OSLI determines that state lands applied for have adequate watt-Hour x 1000 Kwatts/Mwatt = $6435 access and site control for the applicant.
  2. 2. wind ResourcePre-Qualified Wind and Commercial sites: development: Summary and factsThe OSLI has redesigned its website. Beginning in mid-2011, State Trust land sites that exhibit strong potential for future wind developmentor other commercial purposes will be listed on the site as “available for leasing.” These sites include larger assemblages of State trust lands a Primerwhich do not conflict with Sage Grouse core areas, established wildlife corridors, or existing lesees. These sites are also situated to take advan-tage of planned transmission capabilities, and all are in Class 4 or higher wind areas. The RFP process has met with mixed success, and this • Most wind leases are structured for progressive rev-‘listing’ method may offer the same results more efficiently. Also contemplated is a web-based platform for project applications which could The Office of State Lands and Investments (OSLI) has the fiduciary enue over the lease term. For example, base rent wouldsolicit comments from non-traditional stakeholders and the general public. More information can be obtained by contacting Don Threewitt, responsibility to its beneficiaries to manage trust assets using a total start at ~$6/acre for the first 5 years, and increase toCommercial Leasing Manager, at 777-5762, or asset management approach. OSLI’s two key directives consistent ~$12/acre for years 11-15. Operating rent follows a with traditional trust principles: 1. long-term growth in value, and 2. optimum, sustainable revenue production. similar progressive schedule based on a percentage of actualized production. • Based on a 1.5 Mw model generator, annual income • Wind Energy leasing on State Trust lands is enabled per turbine: $9,652. through W.S. 36-5-114 through 36-5-117. • There are 11 projects currently in lease negotiations as • All necessary permitting of Commercial-scale wind of April 30, 2011, totalling approximately 56,500 acres. farms is administered through the Industrial Siting • Total reciepts for 2009: $365,934. Division, Department of Environmental Quality. • Total reciepts for 2010: $497,876.Policy Analysis and Industry research • The rules and regulations of the Board of Land Com- • Total income to date for all currently leased lands: $2.1 missioners allows for wind energy development million.The Wind Energy industry is relatively nascent in its current form. New industry-guiding information is released on a virtually daily basis,from varied disciplines including: engineering, finance, policy, meteorological science, utility development, and the like. Simply keeping cur- through Temporary Use Permits (Chapter 14) and • Estimated annual revenue, once operational, of cur-rent information, methods and market data is a daunting task. The OSLI has been and continues to rely on industry experts for information Wind Energy Leasing (Chapter 6). rently leased lands: $105.74/acre.relative to commercial wind development, and does not engage any significant primary research or policy advice. • There are currently 25 wind leases on state lands • Current average income per acre: $17.34. which contain a sum of 50,052 acres. OSLI entered • The State of Wyoming currently ranks 11th nationally into the first 5 wind leases between October 1997 and in total installed wind capacity at 1099 Mw. December 2004. April 2011 updateadditional Resources: 1. Don Threewitt, Commercial Leasing Manager, Office of State Lands and Investments. 307-777-5762, or 2. UW Ruckelshaus Institute Publication: “Commercial Wind Energy Development in Wyoming: A Guide for Landowners” at www.uwyo. edu/enr/ienr/info.asp?p=11857 3. OSLI website, wind energy leasing: 35000 $600,000.00 7000 4. American Wind Energy Association: General information and basics on wind energy 30000 $500,000.00 6000 5000 5. National Renewable Energy Laboratory Wind Research: 25000 $400,000.00 20000 4000 $300,000.00 6. US Department of Energy, Wind and Water Power Program 15000 3000 $200,000.00 7. 10000 Acres 2000 Series1 $100,000.00 PHOTO CREDITS: p.1 Wind Turbines: Tom Corser, 2005; p.2 Sage Grouse: Jim Laybourn; remaining photos: D3, 2008-2010. 5000 $- 1000 0 0 pre-2000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ytd pre-2000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ytd 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 pre-2000 2010 ytd Wind Lease Revenue by Year Acres leased by Year Acres Operational by Year