Wednesday, September 22, 2010

The Wind Energy Developer Question

In today’s U.S. wind energy market, business models and work practices are changing daily as many wind developers (big and small) are in a scurry to buy up as many wind farm land leases as possible for future expansion. These developers like to lease land in continuous 10,000 to 40,000 acre plots.

This is due in part to the world’s interest in the North American continent. Many major Wind Company’s know that Canada and the U.S. have the greatest capacity for generating wind power as compare to any other part of the world. We are known as the Saudi Arabia for wind power potential. We are, afterall, part of “Tornado Ally.”

In the political arena, the recent push for renewable energy polices in America have lead to the current economic boom for the wind industry. This has also lead to the onslaught of large overseas energy companies entering our wind market. They are eager to develop wind farms for monetary gain with the intent of also capturing the generous federal and state subsidies that make wind energy farms very profitable.

Wind farm development is solely dependant upon the issuance of government assistant programs such as production tax credits (PTCs) and the federal stimulus monies (located in the 2008 Resource and Recovery Act) for wind energy projects. Without these programs, annual wind energy growth decreases by 70% to 90% as profitability levels and the return-on-investment (ROI) basically become flat-lined.

Most commercial-scale wind projects need large capital investment and the right business environment to make it happen. The big European players (like EON Climate and Renewables, Gamesa, Siemens, TradeWind, and Iberdorla Renewables) are here in the U.S. for wind farm build out and massive investment opportunities.

Therefore, the American landowners must be keenly aware of the difference between a top wind power developer (like an Iberdorla, who has 6 billion dollars to spend in the US on wind energy projects) verses a small pioneer developer that doesn’t have the appropriate resources to develop a wind farm project.

For a successful wind project, a landowner may have to avoid the smaller domestic wind players since they constantly struggle to compete against the big companies and lack the practical experience, financial abilities and human resources necessary to develop a wind farm.

Know who you are dealing with before signing a wind energy deal. Favor the companies that have a good track record for wind farm development, key personnel and financial abilities. A missed step between a large or small wind company can lead to the loss of land rights and future development opportunities.

Mr. Jeffery J Stephens is an Attorney and Wind Energy Advisor for EHS Energy located at 1413 Garden St., Kendallville, IN 46755. EHS Energy can be reached at 260-582-9046 or for additional comment.


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