ORLEANS – For the past four years, the town was the vanguard project in the Massachusetts Technology Collaborative’s campaign to bring wind power to the commonwealth’s municipalities.
The collaborative paid $5.3 million to buy two turbines for the town and reserved $3.72 million this year to stabilize the project’s finances.
But after four years of work, and more than $800,000 invested by the collaborative in studies, technical work, legal fees and other development steps, the Orleans wind turbine project imploded last month. The town’s water commissioners voted twice not to proceed with plans to construct two large turbines in the public drinking-water watershed.
Across the state so far, MTC’s Community Wind Collaborative has invested $4 million in pre-development projects in 40 towns such as wind studies and business plans.
That money has yet to translate into turbines in any of the eight towns on the Cape and Islands or the other 32 towns in the state that participate in the program.
Meanwhile, it took just two years for the Massachusetts Maritime Academy to put up a 660-kilowatt turbine with the help of the MTC. The academy had an advantage: the state school did not have to get voter approval or go through the complicated regulatory process required for municipalities.
A cautionary tale
The Orleans experience typifies municipal wind projects, MTC and local officials say. But even though it fell flat, Orleans’ fruitless effort may speed the process for others.
The money for the Community Wind Collaborative comes from MTC’s Renewable Energy Trust fund. Those trust fund dollars come from a surcharge on electric utility bills that cost each household about $5 to $6 a year and raises $24 million annually to help develop renewable energy for the state’s municipalities. The program initially seemed a perfect match for Orleans, said Kevin Galligan, a former Orleans water commissioner and member of the town’s now disbanded wind energy committee.
The Community Wind Collaborative offered start-to-finish support for towns wanting to construct wind turbines. The program provided technical experts, ran workshops, conducted studies, and guaranteed millions of dollars in subsidies to make the project viable.
“This was perfect, it was everything the town wanted to do,” Galligan said earlier this month.
But as the project developed, other water board members and selectmen discovered the Community Wind Collaborative was still feeling its way through the regulatory and financial maze that plagues municipal wind projects. For example, water commissioner Kenneth McKusick said the MTC presented the town with three different business plans in three years.
First, town officials were told the town could own the turbines, then told that it couldn’t. Then, the MTC said it would own and operate the turbines, then said the state wouldn’t allow it. Finally, the MTC said Orleans could hire a contractor to build and manage the turbines under a 20-year lease that guaranteed the town $64,000 a year as well as free and discounted electricity to power the town’s water treatment plant.
“I don’t think MTC was steering us in the wrong direction, they were just unsure exactly how to do it,” McKusick said.
Water commissioners thought they had too little input into the financial calculations determining that the town needed two industrial-sized turbines instead of one smaller windmill. They were confounded that the financial detail they most wanted to see – whether the town would make money on the lease arrangement – was a mystery even as they prepared to send out requests for bids to build and manage the turbines.
“I think there was something of a learning curve,” admitted Warren Leon, director of the MTC’s Renewable Energy Trust.
The MTC had told Orleans town officials that they would be a “test case,” Leon said, but that they would get extra financial aid as compensation for their troubles. Financial calculations were difficult because of the higher costs of building within a watershed, he said. Special state legislation had to be approved to allow a commercial operation in a watershed. And the lower-than-expected wind potential at the site made for a slimmer profit margin.
Nationally, wind projects take four to seven years from conception to completion, according to MTC officials.
Massachusetts towns interested in wind power face a number of hurdles: a shortage of turbines, too few appropriate-size lots, and wind-test requirements that take a year or more. Also, town projects have lower profit margins because they have a smaller number of turbines than large wind farms. And, much like cellular phone towers, turbines face public opposition, and extensive permitting and regulatory issues.
“In many cases, it’s been difficult to do successful community wind projects,” said Lou Milford, president of the Clean Energy Group, a nonprofit renewable energy think tank based in Montpelier, Vt. Clean Energy also runs a national organization of state renewable trust fund managers.
Massachusetts is not alone in having trouble getting wind power into municipalities, he said. “This is just a tough field and we’ve been at it in a lot of states,” Milford said. “We haven’t yet figured out the right business model for many of these community projects to make economic sense.”
The financial picture would be better, Milford said, if the large utility companies would sign 15- to 20-year contracts to buy electricity generated by municipal renewable energy projects.
Pending state legislation could also make wind projects more financially attractive to towns by requiring utility companies to credit them for power generated by turbines and other renewable energy sources, against their total utility bills. As it stands now, only a handful of towns and cities can sell excess power created on a windy day back to the utilities. Towns must either place turbines next to their biggest power user or lease windmills to a contractor who can sell to utility companies.
To smooth out the regulatory and technical hurdles, MTC tries to help streamline the process for towns, spokesman Christopher Kealey said. Towns are offered consultants, saving them the time and money to find their own experts on avian studies, Federal Aviation Administration requirements, the economics of wind power and other technical fields.
While thankful for the assistance that allows her town to consider wind power, Brewster Assistant Town Administrator Jillian Douglass said MTC and its consultants have a bias toward building large turbines to maximize revenues. That has helped stoke public resistance to 400-foot-tall structures.
“Folks in New England do not think of wind on that scale,” she said. “We value town character, and most would prefer it not to be above the treeline. … If you could go smaller, and be economically feasible, you’d see a lot more people doing it.”
But turbine manufacturers have largely abandoned the smaller 600-kilowatt turbines like the one at MMA and are concentrating on large, commercial models, Milford said.
Several Cape towns remain undeterred by the Orleans’ experience, or the hurdles they still face.
Falmouth has a target construction date of 2008.
“They never tried to influence us one way or the other,” said Megan Amsler, co-chairwoman of the Falmouth Energy Committee and executive director of Cape and Islands Self-Reliance, a nonprofit group promoting alternative energy sources.
The Falmouth panel felt it was in the driver’s seat, even when it was using MTC money and consultants, Amsler said. Her only complaint was that frequent changes among key collaborative personnel and consultants delayed the project.
Kealy, the MTC spokesman, said the turnover was unusual.
Amsler also thinks a savvy energy committee helped. Falmouth officials decided early to own and operate their turbine, and to use the power for the town’s wastewater treatment plant.
Those municipalities coming after Orleans may benefit from some of the groundbreaking work and studies that went into the failed project, Galligan and McKusick said. The wind data, avian studies and business models could be used by other towns. The lease and bid documents could also be used as templates.
“I know for sure we benefitted from that learning curve,” said Jack Slavin, the staff wind-energy adviser for Eastham, which is considering building four municipal wind turbines. Business models provided by the collaborative came with advice on why each might, or might not, work, he said, probably because of the Orleans effort.
“We all learned a lot in Orleans,” said Leon of the MTC. “And, we hope they consider doing a wind project in the future.”
By Doug Fraser
28 October 2007
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