Community Owned Renewable Projects

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Community Owned Renewable Projects

• Western Wind
• Power
• Paul R. Woodin
• pwoodin_at_gorge.net
• 509.261.0219

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Community Renewable Projects

• Wind, Bio-mass, bio-diesel, ethanol plants,
  geothermal, solar, etc.
• These projects are common in Mid-west just
  coming to Oregon
• 1- 10 MW renewable projects
• Larger for some geothermal and co-gen facilities
• Tied into local utility lines
• Ownership and revenue remains local

• Businesses that keep ownership and profits local.
  Compliments current farm and timber practices in
  rural Oregon
• Power Sales examples
• PURPA contracts to PacifiCorp, PGE, or Idaho
  Power
• Power Sales to local businesses via local utility
  lines
• Power sales to local communities to offset
  raising power costs

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Community Projects can have several structures

• Private ownership
• Local landowners form an LLC and building a
  locally owned project
• Joint private/community ownership
• Counties and towns partnering with local land
  owners to build a jointly owned project
• Community ownership
• Community organizations (schools, counties, small
  towns) financing their own project
• Pictures

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A case Study China Hollow Community Wind Project

• First Community wind project in the Northwest
• Sponsored by Sherman County and Oregon Department
  of Energy
• China Hollow Community Wind Project is a joint
  project between Sherman County and two local
  land owners

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China Hollow Community Wind Project

• Sherman County Oregon and two local landowners,
  Don Coats, and Tom Martin have partnered to build
  a single 1.5 MW GE wind project
• A for-profit LLC company will be formed with a
  portion of the revenue stream to go to Sherman
  County for school and community projects
• Additional Equity investors are being sought to
  provide 30 equity to the project.
• Scheduled for construction in late 2005 or 2006

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Project FinancingApproximate Costs

• Project Cost - 1.9 million
• Oregon Business Energy Tax Credit (BETC) 25 of
  project cost - 486,000
• Negotiating Federal PURPA power contract with
  PacifiCorp

• Energy Trust of Oregon fund contribution for
  above market costs
• Department of Energy SELP bond financing 10
  year debt

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Equity ParticipantsProject is eligible for the
following approximate returns

• Federal Production Tax Credit
  664,000
• 0.018/kwh over 10 yrs.
• Accelerated 5 yr Depreciation
  266,000
• 1.9 m at 34 Marginal Tax Rate
• Project Cash Flow over 10 yrs
  417,000
• Total Equity Return
  1,347,000

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Two Typical Business Structures work for
Community based Projects

• FOR-PROFIT
• Equity funded project takes advantage of
  Production Tax Credits, Accelerated depreciation,
  and cash flow
• Can be used by local land-owners, communities,
  and joint ownerships
• Taxable and pays property taxes
• NON-PROFIT
• 100 Municipal bond financed by non-profit groups
  like schools, counties, towns, etc.
• Non-taxable and does not pay property taxes
• gt

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For-Profit (Equity Flip)

• 30 equity, 70 debt.
• 9006 grants and other grants/loans reduce debt
  requirement
• Local land owners put in small amount of equity
  5 to 10
• If non-profit community organization is involved,
  they are non-equity participants
• Corporate investors are sought who can take
  advantage of PTC and depreciation they provide
  remainder of equity

• Ownership in first 10 years is by equity owners
  based on pro-rated amount of equity invested
• Local landowners and community interests can
  become GENERAL MANAGEMENT TEAM and collect
  management fees during initial 10 year period
• Equity investor makes 15 return for first 10
  years based on tax and depreciation savings plus
  small cash flow amount
• At expiration of 10 year PTC, ownership Flips
  initial management team becomes 95 owners,
  equity investor becomes 5 owner
• gt

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Non-Profit

• Used by non-profit community groups like schools,
  towns, counties, etc.
• Can be built on private land with local
  landowners as part of ownership or can be built
  on non-public land
• Financing is by municipal bond based on strength
  of power purchase contract
• Generally requires very creative financing
  including grants, public contributions, and other
  sources of funds to reduce amount of debt needed

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For-Profit

• Pros
• Brings in approx 3 million equity from investors
• reduces amount needed to finance
• Allows quicker payoff of debt possible in 10
  years if power purchase price is sufficient
• Best economic model very profitable after debt
  paid off and flip is done
• Minnisota projects are returning up to 87 IRR to
  local owners

• Cons
• Can be very difficult to find equity investors
• Community is not equity investor because they are
  non-profit entities
• Local management team is not majority owners
  during first 10 years of project
• Requires a flip after PTC expires

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Non-Profit

• Pros
• Retains local ownership throughout project
• Speeds up financing because there is no need to
  find equity investors
• Assured control of project without sharing
  revenues with outside investors

• Cons
• Requires an additional 30 of debt financing
• Generally requires longer period to pay off debt
  15 to 20 years typically
• Less revenue for the project due to loss of PTC
  and depreciation

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• Community Renewable Power Projects
• Can become a mainstream economy for rural
  communities to supplement farm and timber incomes
• Keeps ownership and profits local
• Can provide opportunities for local schools,
  counties, and towns to participate in projects
  with local landowners

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