December 19, 2007
Massachusetts
Massachusetts
LUDLOW – With the importance of alternative energy sources growing at roughly the same pace as rising oil prices, PeoplesBank is teaming up with Massachusetts Municipal Wholesale Electric Co. to harness the wind.
The electric company’s Massachusetts Municipal Light Department Wind Energy Cooperative recently obtained $6.5 million in financing from PeoplesBank for a wind turbine project in the town of Princeton.
The two, 1.5 megawatt turbines will send power to the Princeton Municipal Light Department. The turbines replace Princeton’s previous eight-turbine wind farm that was dismantled in 2004 after 20 years of operation.
And in a separate project, Massachusetts Municipal Wholesale Electric, a non-profit that provides power and other services to the state’s municipal power systems, may buy a proposed wind farm in the Berkshire County town of Hancock.
That proposed wind farm will have 10, 1.5-megawatt turbines. One megawatt can power about 300 homes.
Glenn O. Steiger, general manager of Massachusetts Municipal Wholesale Electric Co., said the company would own the farm and send power to 15 of its member municipal power systems.
The municipal wholesale electric company and the Princeton Municipal Light Department formed the Massachusetts Municipal Light Department Wind Energy Cooperative in September to assist municipal utilities with the development and financing of wind energy projects.
Steiger said the wind energy cooperative was needed to create a more nimble vehicle to finance small wind projects.
The wholesale electric company goes through
long-term bonding to finance its projects, such as the proposed $300 million, 280- megawatt power plant at Stony Brook, the company’s Ludlow campus.
The one-, two- and three-turbine wind projects are “not significant in terms of the generating projects we’d normally be dealing with,” Steiger said. “It’s quicker to do it through a co-op rather than go out through long-term bonding.”
PeoplesBank, a 112-year-old bank based in Holyoke, and the municipal wholesale electric company have worked together previously on some other credit transactions, Steiger said.
While it’s not hard to find institutions to handle financing for renewable energy projects in general, Steiger said it is more difficult to find financial institutions to deal with small projects.
“If you have a one- or two-turbine project, that’s relatively small in terms of wind farms. Because of that, it becomes a little bit more niche financing,” he said.
Douglas A. Bowen, the bank’s president, said PeoplesBank has two commercial lenders who developed some expertise in renewable energy projects after handling a $6 million loan to Holyoke Gas & Electric in 2003 to upgrade some hydroelectric equipment.
Wind energy and hydroelectric power are moving into the mainstream as they become more established and cost-effective, so lending to those projects is becoming less radical and more conventional, Bowen said.
“Wind is the fastest-growing source of electricity in the nation, so it’s establishing itself,” he said.
Because it’s a much costlier project at about $40 million, MMWEC will form a separate co-op to finance the Hancock wind farm through bonding.
“We’re going to keep two separate cooperatives,” he said. “One for the much smaller projects, so we can infuse them in a fairly quick manner, and a second co-op just for this second project because it is much larger.”
The Berkshire Wind project at Brodie Mountain was initially proposed by Distributed Generation Systems Inc., which obtained the permitting and began site preparations but couldn’t finish the project.
Steiger said if the electric company succeeds in purchasing it, the company hopes to be able to begin construction by the end of the year.
The Berkshire Wind project would provide perhaps 2 or 3 percent of the average electricity demand from the 15 participating towns, but it is more significant that it is a renewable resource that would supplement their power supply, according to David Tuohey, spokesman for the electric company.
While MMWEC and Princeton are the only members of the wind energy cooperative to date, Steiger said several other MMWEC members are “in various stages of discussion in developing a wind project.”
Most of those projects would consist of just one wind turbine in the municipality, he said.
Not content to develop a niche in “green” lending, PeoplesBank is evaluating its operations “from top to bottom” to find energy efficiencies, Bowen said.
That has included replacing more than 1,000 incandescent bulbs in its Holyoke offices with more energy-efficient compact fluorescents at a cost of $120,000, as well as a $500,000 project to install more energy-efficient heating, ventilation and air-conditioning units, Bowen said.
Those measures have resulted in energy cost-savings of between 12 and 25 percent, depending on the building, he said.
A recent employee survey on ways to reduce use of paper and energy and improve recycling drew an avalanche of ideas, Bowen said.
“Global warming has caused us all to think about green in new ways,” Bowen said. “We’re committed to making this place a healthier place to live.”
While PeoplesBank is considering photovoltaic panels to produce electricity, the municipal wholesale electric company is looking at tidal energy.
Both are not quite cost-effective yet.
Bowen said photovoltaic panels on its buildings might have to wait because “the payback is a little long.”
Steiger said the Massachusetts coastline represents “fairly substantial potential” for harnessing tidal energy, and “it’s just a little bit past experimental.”
Along the Pacific coast there are a few prototype tidal energy plants that are producing energy, but “we’re probably 10 years out before we get something commercially feasible that will be part of the energy supply for MMWEC members,” Steiger said.
By Marcia Blomberg
16 December 2007
URL to article: https://www.wind-watch.org/news/2007/12/19/peoplesbank-finances-wind-project-cooperative-will-install/