Selling Wind Power in Minnesota

Why do Utilities Buy Wind?

Utilities invest in wind energy because it is an environmentally friendly and economic electricity resource. State and federal laws encourage (and in some cases require) utilities to purchase wind energy. Utilities also purchase wind energy based on their energy needs.

The Public Utility Regulatory Policy Act (PURPA), which was passed in 1978, requires utilities to purchase the output of “qualifying facilities” at no less than the utilities’ avoided cost. (Qualifying facilities can be properly constructed and maintained wind turbines.) Minnesota law requires that the avoided cost for a renewable is the cost of utility’s lowest-cost renewable. An “avoided cost” is the cost that the utility avoids (or, would otherwise have to pay) as a result of purchasing from the qualifying facility, such as the cost of producing more electricity from an existing facility, the cost of a new facility or the cost of buying power on the market.

Minnesota Renewable Energy Objective calls on utilities to make a good faith effort to produce at least 1percent of their energy from renewables by 2005 and increase that by 1 percent each year until 2015. For the most part, the renewables are presumed to be wind energy, but biomass energy is also recommended

In addition, Minnesota utilities must spend up to 5 percent of their Conservation Improvement Program funds on the development of renewable and distributed generation. Utilities must also demonstrate that renewables are “not in the public interest” in order to get necessary permission to build non-renewable generating facilities.

It’s not Just ‘Plug and Play’

Before you develop wind energy you’ll need a Wind Resource Assessment. The economics of your project will depend on how good your wind resource is. To determine the likely wind resource on your property, contact the Minnesota Department of Commerce or visit their website.

Rates for Renewable Energy

For projects that are 40 kW and smaller, utilities must pay the “average retail rate” for wind output (reverse metering). For larger projects, utilities must pay the “renewable avoided cost.”

Studies Required

You must apply to interconnect your wind generators to the utility transmission system. Interconnection will be studied to ensure it does not harm the rest of the system. The project owner/developer must pay these study costs. The transmission system must also be studied to see if it can accept the energy from the wind project. Again these studies take time, and their costs are paid for by the wind owner/developer.

Transmission Service

Great River Energy’s offer to purchase wind is at a delivered price. The energy must be delivered to the high side of a Great River Energy substation. The wind generator owner may need to wheel power over distribution co-op or other utility lines. There are additional costs to wheel power over these lines.

Wind is an Intermittent Resource

Wind generators only generates electricity when the wind is blowing and unfortunately that doesn’t always correspond with energy needs. Other utility resources are adjusted to carry wind on the transmission system, and those costs are assessed when setting renewable rates.