LINCOLN – The gravel roads are in, climbing Rollins Mountain and the adjacent ridgelines that rise along the surrounding towns here in northeastern Penobscot County. They lead to concrete pads, crowned with beefy bolts anchored to bedrock. If the weather cooperates and work stays on schedule, a giant crane next month will begin erecting 389-foot-high steel towers on the pads.
By mid-summer, 40 turbines stored in a neighboring town will be spinning above the forested landscape. A tour of the site last week suggests that Rollins appears on target to become Maine’s next wind farm, helping the state meet its renewable energy goals and help the region reduce its dependence on natural gas-fired electricity.
Opponents of industrial-scale wind power have a different perspective, however.
They see the developer – Boston-based First Wind Holdings LLC – in financial trouble and struggling to secure the money to complete the $130 million venture. They also see a new Congress that may balk at the subsidies that help support wind power, and a new state government that may be less friendly to wind energy development.
On the ground, Rollins seems like a done deal; but out of view, Maine’s anti-wind power movement is trying to exploit shifting financial and political conditions to hobble First Wind, the state’s most prominent wind developer – and, by extension, other proposed projects.
This strategy helps explain why Friends of Lincoln Lakes and wind-power foes from around Maine last week invited news media statewide to a well-choreographed demonstration here, during which five people were arrested and led to police cars.
At first glance, Rollins seems an unlikely rallying point. The project is not in Maine’s high, scenic mountains. Tote roads bisect low hills that have been harvested for timber. The Walmart outside town certifies Lincoln’s status as a service center for this corner of the county. The pungent plume from Lincoln Paper and Tissue, the largest employer, says Lincoln is at ease with industry.
Hugging the shores of Mattanawcook Lake, however, this town also is a mecca for four-season recreation. It calls itself “the land of 14 lakes,” and some residents who value the area’s rural beauty and solitude don’t want to see, or hear, the big turbines turning on the ridges. They’ve been joined by a vocal coalition of citizen groups that say evolving evidence shows the effect of wind farms on the landscape and nearby residents outweighs the benefits.
The next salvo in this ongoing war will be less visual: Opponents say they’re preparing a legal challenge of Rollins’ environmental permit, based on their contention that First Wind failed to prove it has the financial capacity to complete the project. The company so far has survived these assaults. Opponents have lost past appeals, including a test of the state’s wind-siting law heard earlier this year by the Maine Supreme Judicial Court.
First Wind said it chose this area not only for the wind resource, but also because it’s away from sensitive environmental areas. The road clearing and rock blasting being publicized by opponents are being done within permit standards, the company said, and adjacent forestland will be restored once the work is complete. The project also is creating more than 200 construction jobs and a burst of spending that’s welcome in a community with above-average unemployment.
Regarding its financial capacity, First Wind said last week it has “a clear path” for financing and expects to make an announcement by year’s end that it has secured third-party loans.
Opponents are skeptical. They were emboldened last month, after First Wind failed in its long-planned bid to go public and sell stock to investors. Documents filed in connection with the aborted sale show that its projects depend heavily on a federal stimulus program that took effect in 2009.
That program offers a cash grant for up to 30 percent of a project’s cost in lieu of an investment tax credit. First Wind received $254 million in grants for four projects, including the nearby Stetson II wind farm. In its public offering filing, First Wind states that if the incentives are cut or eliminated, or if government reduces its support for wind, it would hurt the company’s ability to get financing.
New projects must be under way in 2010 to qualify for the grants. That’s one reason, opponents say, First Wind needed to break ground for Rollins this fall.
With the program set to expire, the wind industry is lobbying Congress to extend the incentives during the current, lame-duck session. They face a less-certain future next year in the new, Republican-controlled House.
Reacting to this scenario, First Wind said last week that although the program is important, most project financing comes from private capital markets and investors. It also expects a prior subsidy to remain in effect until 2012.
“If the program expires at the end of the year, we will adjust our planning and financing to reflect the program that’s in place,” said John Lamontagne, the company’s spokesman.
Opponents, however, say this uncertainty raises questions about First Wind’s financial capacity.
Lynne Williams, a lawyer for Friends of Lincoln Lakes, is charging that Maine’s Department of Environmental Protection was lax in granting First Wind a permit to build Rollins, because the company failed to demonstrate that it had the money to finish the job.
Williams points to a letter in the Rollins application from Michael Alvarez, First Wind’s president. The letter summarizes First Wind’s intent to fund the $130 million project with both company financing and money from unrelated third parties, such as banks. This is a common arrangement in wind projects.
The letter also notes that the turbines, valued at $80 million and acquired through a loan to be paid at the close of third-party financing, are stored in Chester. It says First Wind will make the balance of construction costs – $50 million – available prior to closing on third-party financing. It attaches a consolidated financial statement as evidence.
“As indicated in those financials, First Wind has liquid financial assets in excess of the $50 million required to complete construction,” Alvarez wrote.
That cash may not be available today, according to Lawrence Dwight, a financial planner and wind power critic in Wilton. Dwight reviewed First Wind’s financial statement as of Sept. 30.
The statement listed assets of $140 million and liabilities of $205 million, with some large loans due next year. Cash on hand was roughly $31 million, Dwight found. The challenge for First Wind, Dwight said, will be to nail down financing in the coming months to complete Rollins.
Rollins has an important asset that makes it attractive to lenders – a long-term power contract. Last year, the Public Utilities Commission directed Central Maine Power Co. and Bangor Hydro-Electric to buy power from the 60-megawatt project for 20 years.
Meanwhile, First Wind says it’s continuing to move ahead with plans to develop other projects, including Bower’s Mountain in eastern Maine, Oakfield in Aroostook County and sites in Rumford and Bingham.
That awareness has foes focused on the state’s recent wind-siting law, under which Rollins received its permits. Opponents will try to convince the new, Republican-controlled Legislature to revisit the law, which streamlines the review process in specific locations. They also plan to petition the DEP to amend existing noise regulations, which critics say allow turbines too close to homes.
Wind opponents also plan to take their case to Gov.-elect Paul LePage. Outgoing Gov. John Baldacci is a strong supporter of wind energy. By contrast, LePage has questioned the state’s commitment to wind power. He has expressed more interest in energy projects that compete on price.
First Wind has its own spin on prices, and will outline the benefits of stable, long-term rates. Also, it will pick up LePage’s campaign theme of creating jobs and economic growth, citing the hundreds of millions of dollars the industry has spent in Maine so far.
“We are excited to work with his administration and continue our investment in Maine,” Lamontagne said.
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