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Incentives for Developing Locally-owned Wind in Minnesota

Incentives for Developing Locally-owned Wind in Minnesota. American Public Power Association 2006 Business & Financial Conference September 19, 2006. About the Speaker. Asst. Commissioner for Renewable Energy

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Incentives for Developing Locally-owned Wind in Minnesota

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  1. Incentives for Developing Locally-owned Wind in Minnesota American Public Power Association 2006 Business & Financial Conference September 19, 2006

  2. About the Speaker • Asst. Commissioner for Renewable Energy • Fifteen years experience in variety of key staff positions • Governor’s Office; MN Dept. of Commerce; MN Public Utilities Commission; MN Office of Attorney General; MN House of Representatives and MN Senate

  3. Presentation Overview • General Comments • REPI Program(1995-2000) • REPI plus Xcel(2000-2004)Standard Offer • C-BED program(2005 to present)

  4. General Comments • Minnesota targets incentives towards locally-owned energy projects • These provide the optimum mix of benefits to Minnesotans • Most comprehensive community energy program in the country

  5. Renewable Energy Production Incentive • Established in 1995 • Pay 1.5 cents per kwh for 10 years for eligible projects • Energy must produced by locally-owned wind project with a capacity of 2 MW or less • Capped at 100 MW • Only a handful of projects before the year 2000

  6. REPI Plus Xcel Standard Offer • In 2000, the MN Dept. of Commerce and Xcel Energy developed a standard offer for locally-owned small wind projects • Xcel agreed to pay 3.3 cents per kwh for 20 year contracts • Projects qualified for REPI as well • 4.8 cents per kwh for the 1st 10 years • 3.3 cents per kwh for the last 10 • Plus federal PTC

  7. REPI Plus Xcel Standard Offer(cont.) • 100 MW cap met in 2002 • Additional 100 MW of REPI authorized in 2003 • All 200 MW fully subscribed (with a waiting list) by the end of 2004

  8. Community-Based Energy Development • Policy-makers wanted to extend REPI again, but the state had significant budget deficit • Without $$, needed to be creative • Created “C-BED” tariff in 2005 • No size limitation

  9. Community-Based Energy Development(cont.) • C-BED tariff allows the utility to pay a front-end loaded rate • A higher rate in 1st 10 years of a 20-yr contract • In exchange for a lower rate in the later years • Results in a rate similar to REPI plus Xcel standard offer

  10. Governor Pawlenty’s C-BED Goal • 800 MW of C-BED wind by 2010 • An est. $1.2 billion clean energy investment in our rural communities • Xcel has committed to 500 MW

  11. Governor Pawlenty’s C-BED Goal (cont.) • Contracts for ~400 of C-BED wind signed or being negotiated by MN utilities • MN should have a total of ~1500 MW of wind capacity installed by the end of 2007 • 40% of this total will be locally-owned projects

  12. C-BED Lessons Learned • C-BED projects are much harder to arrange than traditional wind projects • But provide more benefits • A few utilities are working hard to work through difficulties • Developers are sharing information & expertise • Looking at policies to address these issues & get more utilities committed to C-BED

  13. Contact Information Mike Bull Assistant Commissioner Renewable Energy & Advanced Technologies Minnesota Department of Commerce 85 7th Place East, Suite 500 St. Paul, MN 55101 651-282-5011 Fax 651-297-7891 Mike.Bull@state.mn.us

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