The latest buzzword to enter the wind turbine saga is “yieldco,” and this new wrinkle adds a dimension to the potential construction of Buckeye/Champaign wind farms.
Partially because of a more nimble type of investment model called a yieldco that is apparently well-suited to progressive energy development such as wind, EverPower (the parent company of two utility-scale wind farms proposed for Champaign County) may now be worth as much as $1.5 billion. The two proposed local wind farms are only part of EverPower’s portfolio, which spans several states and includes operational wind projects, as well as those in planning stages of development.
If EverPower is acquired by investors who are structurally better able to finance the farms, their construction is more viable financially. On the flip side, if it is so easy for the wind farms to change owners, how do their prospective neighbors know for certain the farms will be good citizens once constructed?
We don’t know if the potential sale of EverPower to an owner with more financial prowess will equate to the locally-sited farms being constructed. There are still too many other variables.
When renewable energy standards, mandates and incentives for development were made possible by state lawmakers during the 2006-2010 time frame, Democrats held enough power in Ohio to enact legislation friendly to the farms. In the recent years since, Republicans have overtaken nearly all of the state’s government and the GOP is not so friendly to turbines.
At the federal level, the winds of political change shift constantly, causing uncertainty for wind developers who cite the production tax credit/investment tax credit (PTC/ITC) for wind energy as a necessity for consistent development. After allowing its expiration at the end of 2014, Congress has yet to extend the PTC/ITC in 2015.
When Republicans gained control of both houses of the Congress, wind found itself out of favor even though President Obama is a supporter of renewable energy incentives.
If a Republican wins the White House and Republicans maintain their majorities in Congress in 2016, we can’t help but think EverPower faces an uphill battle constructing the proposed wind farms here. In addition, Ohio lawmakers have required more distance between homes and the turbines (also known as setbacks) for future projects. It is possible the longer setbacks could be applied to the local projects if they must go through another review. Longer setbacks would significantly curtail wind farms’ viability. Also, the mandates on power companies to use renewable energy have been frozen by state legislation, making it more difficult to find buyers for the electricity generated by wind.
Complicating the process further, EverPower faces deadlines for starting construction on each project, according to state law. While such deadlines are sometimes flexible based on other factors, EverPower also continues to face persistent legal opposition from Union Neighbors United and a handful of well-heeled residents who live near the proposed projects. In addition, some county agencies and townships have begun to express concerns about problems the farms could cause during and after construction.
One of the biggest hurdles EverPower will face is its application for “payment in lieu of taxes” (PILOT) status from Champaign County Commissioners. This process involves so many monetary variables that the county auditor struggles to pin down the differences in how much local entities would draw in taxes versus the lesser but more predictable payments in lieu of taxes.
When and if EverPower does apply for PILOT, there will be a renewed push from proponents and opponents to win the hearts and minds of county commissioners and the citizens who elect them. One key point of contention will be how much revenue is enough for local school districts and other local governments to draw compared to the inconvenience of building and hosting the farms and any demand for emergency services they could create.
The proposed wind projects began rather stealthily with the company signing up private landowners to leases that will allow the turbines and their system’s infrastructure to be installed. This is not a public utility, but it is under the authority of the Public Utilities Commission of Ohio and it is heavily reliant on the public sector incentives supplied by our tax money for its birth and survival.
Will Champaign County ever host the approximately 100 turbines that have been on the drawing board for nearly a decade? And will the yieldco model better allow EverPower to turn its dream into a reality in our back yards? Stay tuned.
An opinion of the Urbana Daily Citizen Editorial Board.
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