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Repair costs push school toward wind turbine sale  

Credit:  By Magdalene Landegent, Le Mars Daily Sentinel, www.lemarssentinel.com 5 April 2012 ~~

A landmark that has been spinning on the Akron skyline since 1999 could be on the market to be sold.

The 165-foot-tall wind turbine with 72-foot blades is now sitting idle and facing major repairs, and the Akron-Westfield Community School District, which owns the turbine, has a difficult decision to make, according to acting A-W Superintendent Larry Williams.

The repairs to the wind turbine’s gearbox, to the tune of $150,000 or more, must be paid out of the school district’s general fund, the same fund which pays for teacher salaries and school programs.

“School district’s general funds are their most challenged funds, the ones that are asked to do everything,” Williams said. “How do we find [the money for the repairs] in an already strapped general fund?”

A-W’s leadership has begun looking into other options, including selling the ownership of the tower and keeping it in its current location or selling the tower for someone to move for use elsewhere, he said.

“We don’t have any firm offers, but we’re looking to see whether we can find some potentially firm offers,” Williams said. “Whether that buyer is out there, who knows at this point.”

For the turbine to be sold but used on its current site, there are a lot of “ifs” in the equation, including whether the current land and energy leases could be renegotiated for an owner other than the school, Williams said.

“Those are big ifs and unresolved ifs,” he said.

The new owner would also have to repair the wind turbine, which has been idle since November, before it can produce energy again.

The second option, selling the turbine to someone who specializes in refurbishing used turbines and reinstalling them in new locations, would mean losing the tower as an Akron landmark.

Williams said there is a firm in New York that deals with this type of sale.

“They make no promises that they might be able to come up with somebody, but they have a short list of people they can at least inquire about,” he said.

The repair problem

The A-W school district installed the tower in 1999 after a research, design and fundraising effort led by the late Ron Wilmot, a former A-W teacher.

The wind turbine’s gearbox became an issue several years after the installation, Williams said.

The school was informed by the wind turbine’s manufacturer and service company, Vestas, that this model of wind turbine had an “under-engineered” gearbox and failure of the gearbox was expected, Williams explained.

The gearbox, which allows blades to spin slower but create more energy, is an essential part of the wind turbine’s function.

The estimate at that time to replace the gearbox with an upgrade was more than $200,000, Williams said.

“That was about four years ago,” he said. “The board could see no way they could tap into the general fund for $200,000.”

The upgrade was not made.

Vestas company officials said they could no longer continue to repair the wind turbine unless an upgrade was made, and they ended their contract to service the turbine.

A-W found another company to attempt to repair the wind turbine, Broadwind Energy, in South Dakota.

“The repair worked, for a while,” Williams said. “But in November of this year, the gearbox failed again, and Broadwind’s assessment of it was that it was at ‘end of life.'”

They gave the $150,000 price to replace it.

The school budget issue

State law requires the wind turbine repairs to be paid for out of A-W’s general fund, even if there were available dollars in the school’s building and facility side of the budget, explained Jodi Ryan, Akron-Westfield’s business manager.

“Because this isn’t a building for the school, it has to come out of the general fund,” she said.

Building and facility dollars are brought in through the physical plant and equipment levy (PPEL) and a statewide one-penny sales tax, formerly known as the school infrastructure local option (SILO) tax.

PPEL dollars can only be used for projects including improvement of school grounds, construction and repair of school houses and buildings, and equipment and technology, and the one-penny sales tax dollars can only be used for major capital facility and building projects, Ryan said.

The wind turbine does not fall under any of these categories, she said.

“It was looked at the last time it broke down,” she said. “We asked the state, and they said it had to be paid for out of the general fund.”

A-W’s general fund will be especially tight this coming year since the district will only see a .8 percent increase in the dollars from the state, Superintendent Williams pointed out.

The increase will be so small because A-W has seen a decline of student enrollment, he said.

Where the power goes

Under the current situation, the energy produced by the A-W wind turbine is sold to Heartland Consumers Power District, which in turn sells it to the city of Akron, explained Gary Horton, Akron public works director.

Heartland, of South Dakota, is Akron’s supplemental power supplier and provides about 30 percent of Akron’s power, Horton said.

The majority of the city of Akron’s power, about 70 percent, comes from Western Area Power Association, he said.

It is possible the sale of the A-W wind turbine to another party would impact who buys the power, Williams said.

The superintendent said school leaders met with both city officials and Heartland representatives to discuss the situation.

Williams said the primary question was this: if a party other than A-W owns the tower, does Iowa utilities law require energy companies to purchase that alternative energy it produces?

Heartland and the city of Akron are researching that topic.

If there’s no such requirement, it is likely Heartland is not interested in purchasing alternative energy because it’s not the core of its business, Williams said.

The city’s future involvement if the turbine is sold is also not certain at this point, Williams said.

He said school leaders are asking city officials whether the city would still be involved in brokering a new energy agreement if there was a new buyer for the tower.

“There are a lot of things up in the air,” Williams said.

Cost versus expense

A recent comprehensive cost-benefit analysis of the wind turbine indicates the turbine “hasn’t exactly been a profitable venture” for the district, Williams said.

When it’s working, the wind turbine generates about $36,000-$38,000 in net revenue each year, Williams said.

In fact, the turbine paid for itself in 10 years, two years ahead of the 12-year payoff, according to an earlier interview with Dwain Wilmot, A-W’s technology coordinator.

However, subsequent repair costs, ongoing insurance and legal expenses of an earlier lawsuit between the city of Akron and the school regarding an energy bill have to be added to the financial picture, Williams said.

“The net loss to the district, as it stands right now, is about $523,000,” he said.

If A-W found the money in the school budget to make the repairs and the repairs were successful for a 10-year lifespan – which isn’t guaranteed – the net revenue would more than cover the repair cost, Williams said.

Still, there would be the current net loss of $523,000 to deal with, he said.

As for an educational impact, A-W instructors have used the wind turbine as part of class learning, and currently middle school students have some discussion of alternative forms of energy, including the school’s wind turbine, Williams noted.

If A-W were to pay for the repairs and retain ownership, the district would probably take another look at incorporating the wind turbine into more class study, he said.

“Where the board probably leans is that this has been an interesting venture, but it’s not a core business of the school district; we really don’t know much about wind energy and these kinds of apparatus,” Williams said. “This is a stand-alone isolated unit, and while other school districts and entities do have them, wind farms are probably more efficient than a single, stand-alone unit.”

Williams acknowledged that, if sold, the wind turbine would be missed.

In the meantime, while the A-W wind turbine stands idle, $36,000 of potential annual profit is blowing away on the wind, he said.

“It’s a landmark, but it’s not an operating landmark at this point,” Williams said.

Source:  By Magdalene Landegent, Le Mars Daily Sentinel, www.lemarssentinel.com 5 April 2012

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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