Summary of Wind Power Progress for 2005:

Summary of Wind Power Progress for 2005:

Beginning in June, the committee met often and we beli= eve that we are making some progress, particularly as we learned more about the many competing factors. We invited Bob Weisenfeld to join the group in order to explore grant opportunities. After a few me= eting to get him up to speed Bob and his assistant explored a range of possible g= rant opportunities. He also made c= ontact with a number of state officials who have made helpful suggestions on how to proceed. Lois Mack, now retir= ed Manager of the Conservation Improvement Program and Special Projects for the Minnesota Department of Commerce, visited campus in July to meet with us and explore some of the issues. A= t the urging of Bob Douglas, we also met with Kevin Walli ‘76, of the offic= es of Fryberger, Buchanan, Smith & Frederick, w= ho lobbies for alternative energy. Both Lois and Kevin have continued to serve as resources regarding funding opportunities, finance models, and regulatory issues.

In August, we became aware that the State Commerce Department would be issuing a request for proposals for its Community Wind Energy Rebate program with a potential grant possibility of $200,000 and a deadline of early October. As= we began to prepare to write a proposal for that program, it became clear that there would be conflicts between their guidelines and some of the financial models that we were considering, including various approaches to utilizing federal production tax credits. To complicate matters further, Nicollet County Environmental Services began the discussion period for Wind Energy Conversion System ordinance and requested that we delay any application for permits until after the ordinances was passed. One of the items that= could have been included in the grant proposal was evidence of receipt of the cou= nty permits so that there was confidence that there would be no permit-related impediments to moving forward. The combination of these two factors encouraged us not to submit a proposal. Subsequently, we were contacted by Michael Taylor from the Commerce Department, informing us that they had only one acceptable proposal and asking for suggestions that might make the prog= ram more attractive to us and other potential applicants. We informed him of our concerns an= d were told that a second call for proposals might be coming early in 2006.

In the course of our research efforts and deliberation= s, it became clear that we needed the help of a consultant who had experience with some or all of these issues. = We had already met one such person, Kevin Walli, but decided that we should interv= iew others as well to ensure a fair and open process to guarantee the best assistance. During October and November, we interviewed Jeffery Paulson, John Wachtler, Daniel Yarano, and Kevin Walli (again). All would bring various strengths to bear on our project. For example, Paulson has substanti= al experience developing wind resources for academic institutions (notably Carleton and UMN Morris). Dan Yarano has experience working with SMPPA.&= nbsp; John Wachtler has done a lot of work on the engineering side, design= ing foundations. And Kevin Walli = has experience with limited liability corporations (and he’s an alum). Our most immediate need is in developing one or more financial models, which involves several variables and at least preliminary discussions with SMMPA. At this time, we are weighing the merits of the candidates and hope to make a decision very soon, perhaps in time to help us prepare information for the January Board of Trustees meeting.

Variables to be Considered:

What level of financing, if a= ny, makes good fiscal sense in terms of the viability of the project.

All of these variables affect the potential financial structure to be implemented. = For example, if we were able to negotiate a selling price of 3.5 cents/kWh and = were able to take advantage of the production tax credits of 1.9 cents/kWh throu= gh a limited liability corporation, we would make more than our avoided cost. In any case, we will need to negot= iate a power purchase agreement to sell our excess electricity, the amount of which depends upon the number of turbines we install. If the rules for the Wind Energy R= ebate program do not change, we will be forced to choose between the Commerce Department’s $200,000 grant and the production tax credits. We would like to hire a developer = or consultant who can help us sort through these issues and determine the best financial model based on our wind resource and the College’s financial situation.

An additional factor in our discussions has been the increase in cost and decrease in availability of turbines in the last year = or so. Currently it is not clear= that we could purchase a turbine or turbines for delivery before the end of 2007. For example, the European supplier, Neg-Micon/Vestas, is not taking any orders at this time.= The Indian company, Suzlon, has tu= rbines reserved for some contractors and equity investors and may be willing to reserve one for us for 2007, with a down payment, of course, which might be= due within a relatively short time line. =

Summary of Tasks:

Preparation and review of investment agreement with equity investor(s) as appropriate.
However, the first t= hree are interrelated. We will nee= d to have a fairly good idea what the selling price will be in order to complete= the financial analysis and this depends to some extent on the number of turbines.