As for what Orleans would get out of the deal, although the figure would have to be negotiated between the town and the developer
As planning continues on a possible pair of wind turbines in the town watershed, the tacks are starting to take on a brassy hue.
“I think we’re on track,” wind energy committee chairman Kevin Galligan said. “There is tons more work to do, but each step of the way, we’re making progress.”
So much so that Galligan said the committee’s next meeting Dec. 1 will be devoted to a presentation for selectmen with the hopes of appearing on their Dec. 7 agenda.
“We’re at the point where we need to give everybody an update,” he said.
The committee has been working with the Massachusetts Technology Collaborative’s Renewable Energy Trust, and it received financial estimates from Jason Gifford, the trust’s manager of strategy and special projects, last week.
The primary motivation for building a turbine is to power Orleans’ iron and manganese plant. Although the town would continue to own the watershed property, a private entity would own the turbines for 20 years before turning them over to the town.
Gifford’s estimate is that the turbines would cost $5.35 million out of a total project cost of $7.34 million. After the production tax credits are factored in, he is assuming a return for the private investor of 8 percent.
“I’m hoping that it’s salable,” he said.
Although Town Meeting approved $100,000 in town funding for the projects, Gifford said his financial model did not include any up-front town money.
The projected costs are based on acquiring two turbines from Vestas, a manufacturer of wind turbines, with a total capacity of 3,300 kilowatts. Diedre Shupp Matthews, the trust’s program director for clean energy, said the trust has signed a letter of intent with Vestas that carries a Dec. 2 deadline for an agreement.
Although Matthews said the trust is “about to enter close negotiations with Vestas,” trust Deputy Director Warren Leon said it is also engaging in a “full-court press” with General Electric because the Vestas bid was so high.
“It was $1 million more than what we would have expected,” he said.
However, the schedule in Gifford’s report calls for construction to begin next July 1, and he said GE turbines will not be available in 2006 or 2007.
“The first availability would be 2008,” he said.
As long as Orleans remains enthusiastic about the project, Gifford said the trust will do everything it can to make it work, including what he initially estimated as $3.2 million in financial support.
With that kind of assistance, Galligan said a private developer would have a much better chance of getting a project financed.
“Basically, they can take the project to the bank,” he said.
For now, the financial assistance is based on the trust buying 20 years’ worth of renewable energy certificates from the developer, which spell out the sources of and emissions from energy production and are used to prove that state requirements on renewable energy sources are met.
However, that may change.
“We may decide, working with the town, that there’s a better way to support the project,” Gifford said.
Other factors, such as the price of the energy produced, could play a role. With only 6 percent of the electricity produced actually used for the iron and manganese plant, the remaining 94 percent could be sold elsewhere, and Gifford is projecting a price of $50 per megawatt/hour.
“If that’s $70 or $30, that’s an impact on the necessary financial support,” he said.
The MTC board is scheduled to develop its financial support plan by Dec. 21.
As for what Orleans would get out of the deal, although the figure would have to be negotiated between the town and the developer, Gifford estimates that the electricity at the plant would cost $125/mWh, which Galligan said is less than current costs.
Gifford is also projecting annual revenue of $42,000 to the town, with any additional revenue based on negotiations between the town and the developer.
Setting the standards
With the town and the Renewable Energy Trust working together on the project, the two parties need to spell out who is responsible for what.
That is the purpose of the host agreement approved by the wind energy committee last week and slated for an MTC board vote Nov. 30. Should that vote be affirmative, the selectmen and board of water commissioners would receive the agreement for review.
Under the terms of the agreement, which committee counsel Jonathan Klavens said he views largely as a memorandum of understanding, the MTC’s responsibilities would include developing a timeline for project completion, putting together the request for proposals from developers and arranging for all necessary federal, state, regional and local approvals.
Leon said a group of states, including Massachusetts, is already working with the U.S. Fish and Wildlife Service on bird and bat standards for small wind projects, as the agency has been setting high standards for larger developments.
The Fish and Wildlife Service does not give permits, Leon said, but it holds the right to sue if birds are killed after a project is installed.
“The risk to birds is not the same (with a smaller project),” Leon said. “If you do a larger project with more turbines, you cover more space.”
Town responsibilities include assisting the MTC with its tasks, issuing the request for proposals, arranging for the lease of the watershed site and negotiating the lease with the developer.
During a discussion of the host agreement last week, wind energy committee member E. John Wherry Jr. wanted to be clear that the town can reject any and all bids, to which Town Planner George Meservey replied, “We would never issue an RFP that didn’t have that language in it.”
The town is also charged with providing reasonable access to the project site, a potentially sensitive issue because it is the town’s watershed. However, Galligan said the MTC has cooperated in everything the committee has asked, including conditions that any work be approved by the board of water commissioners and that the watershed cannot be harmed.
“They’ve been very good,” he said.
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