The city of Portland could become part owner of a wind farm east of The Dalles if a deal now in the works with Sherman County and the farmers who live there takes hold.
Portland officials are pursuing the idea as a means of offsetting the city government’s own energy consumption, which is about 50 megawatts a year.
In 2001, city leaders set a goal to get all of the energy the city uses – for streetlights, City Hall, public buildings and other facilities – from renewable energy.
The city began talks with Sherman County officials and area farmers this fall after previous negotiations in the private sector fell through. Those talks in Sherman County appear to be going smoothly.
If the project moves forward, the result would be a wind farm that generates 50 megawatts of energy a year to be sold on the open market.
The project is estimated to cost $100 million to build.
The city may pay for as much as a third of the startup costs, or $33 million, which would come from the sale of bonds. The investment, when paired with seed money from grants and investments from the other partners, would fund small wind farms that generate 10 megawatts apiece of electricity.
And how the project would help the city reach its goal of using entirely renewable energy is not as direct as it sounds.
That’s because, in this case, city officials are using an emerging market model that equates funding a renewable energy project with using that energy directly.
The wind energy generated by this project would be sold on the open market. Revenue from the sale would be used to repay the cost of developing the wind farm. Portland would continue to buy its own power from PacifiCorp and Portland General Electric, the city’s current power providers.
Commissioner Dan Saltzman, whose office is leading the negotiations, said while green power generally costs more, the plan ideally would enable the city to meet its renewable energy goal without increasing its energy bill.
He expects the investment to pay for itself in about 10 years and that the city ultimately could draw revenue from the project.
As the national focus on renewable energy increases because of global warming – with emissions from coal-fired power plants considered among the chief causes – other state and local governments have adopted similar plans.
Saltzman believes a shift to renewable energy benefits Portland.
“I think that to the extent that we’re all concerned with reducing greenhouse gas emissions, this is doing that,” he said. “I think a lot of Portlanders are concerned about that.”
Saltzman said the wind deal would set a template for others to follow and also make good on the city’s goal to operate on 100 percent renewable energy by the end of 2010.
That goal was set in 2001 as part of the city and county’s Global Warming Action Plan.
So far the city is getting only 2 percent of its energy from renewable sources.
City was in earlier talks
In an attempt to meet the city’s renewable energy goal, Saltzman’s office first went looking for renewable energy on the open market.
Eventually, city officials entered negotiations with PPM Energy for a deal that would have provided the city with wind power. The plan would have required no upfront investment from the city but would have increased the city’s costs for power.
Last year, the city spent about $12.3 million for electricity, up from $8.7 million in 2000. At the same time, the city’s demand for electricity decreased 4 percent since 2000.
Officials say a PPM deal would have added an additional $2 million to $3 million to the city’s electricity bill. But the increased demand for wind power across the country has caused a spike in the price, and the city couldn’t compete.
“We reached a point with PPM where we didn’t feel we could go forward in terms of the premium,” Saltzman said, adding the terms also were shorter than the city wanted.
The deal officially was called off in September. Officials with Sherman County previously had approached Portland about the possibility of a partnership. Those talks resumed this fall.
Deal has other benefits
For Sherman County, the possibility of a Portland partnership could mean money for the county and for farmers who participate.
Sherman County is involved in the project through tax breaks for landowners who host wind projects, and through that county’s investment in the project as well.
Many communities east of the Cascades have eyed wind power as a way to spur economic development. Sherman County, located just east of The Dalles, has been ground zero for wind projects in the state and is home to between 150 and 200 wind turbines that have been built in the past two years.
With major projects already under way, including PGE’s 450-megawatt project at Biglow Canyon, another 800 wind turbines are set for construction.
The Portland deal would be the county’s first venture into the wind development that is sweeping its landscape. If the deal goes through, the 50-megawatt wind project would be dwarfed by the area’s surrounding wind farms.
The proposal gives Sherman County landowners – the county has only 1,800 residents – a chance to profit by hosting portions of the project, which would be broken up into 10-megawatt pieces.
“We’re trying to break new ground here,” said Sherman County Judge Gary Thompson, who has been working with a lawyer and a developer for two years to determine how such a plan might work.
Sherman County already has received three $80,000 grants from the U.S. Department of Agriculture for feasibility studies on the project. Saltzman is seeking funds from the city budget for the study.
A private company also could step in as part owner and supply the turbines, making the project available for tax credits.
Whether the private company will become a partner is yet to be determined, and the nuts and bolts of the deal remain hazy, leaving a minimum of six months of work to seal the deal.
“We’ve just got to figure out the most economical way of doing it,” Thompson said.
Officials say it could take eight to 12 months to build the project once an agreement is reached, pending acquisition of much sought-after wind turbines.
By Toby Van Fleet and Lee Van Der Voo
27 November 2007
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