They were over 220 feet tall with rotor blades measuring almost 94 feet long. For around eight years, two 750-kilowatt wind turbines towered over farmland outside rural Altura. Winona County spent years and tens of thousands of dollars developing the project, but the turbines never functioned properly and later broke down. After a multi-million-dollar court battle, the turbines were demolished, cut up, and hauled away earlier this month. The company behind the project hopes to erect a new turbine at the same site next year.
Known at one point as Winona County Wind, Winona County government played a central role in promoting and planning the wind turbine project. Winona County officials began planning work in 2005. At the time, the state legislature had recently passed a new law allowing the “Minnesota Flip,” a type of public-private partnership in which private companies own 99 percent of a wind energy project for the first 10 years and reap tax credits off the project. After those tax credits expire in 10 years, the county would take ownership of 90 percent of the project. Juhl Energy worked with the county as a consultant for the project, and Juhl officials at one point told the County Board it could make $1.5 million from the deal.
That was the plan, and the county spent at least $150,000 and years of staff time researching and developing Winona County Wind. The Winona County Economic Development Authority (EDA) created a limited liability corporation – Winona County Wind, LLC – to own the county’s one-percent stake in the project. As the County Board considered the deal with Juhl Energy and permitting for the turbines’ construction in 2008 and 2009, County Board member Marcia Ward raised numerous concerns about the proposal. One rural resident told the County Board during a hearing, “I don’t believe Winona County should be spending their money, my money, on that.” Dwayne Voegeli was the County Board chair at the time, and he encouraged the county to move ahead on the project. He responded to Ward’s concerns by saying, “This is the county saying we’re ready to move, and make those decisions as they come,” and, “This can be delayed to death.”
In late 2009 and early 2010, Juhl Energy and county officials realized that valuable tax credits would not be available to Juhl Energy if the county owned any stake in the project. As a result, the county agreed to sell Winona County Wind, LLC, to a Juhl-affiliated holding company. The county was reimbursed for some of its expenses in developing the project, but not all. The county lost $45,000 on the deal.There was one consolation: the county EDA was given the option to purchase the turbines after the project’s tax credits expired.
Then, in 2010, Juhl Energy purchased two turbines from the Korean manufacturer Unison. Unison would later sue Juhl Energy because the Minnesota company never paid the Korean manufacturer for the $2.6-million wind turbines. According to the arbitrators’ award in that case, because the turbines were the first of their type that Unison had manufactured and because Unison hoped the Winona County Wind project would lead to more U.S. sales of that turbine variety, Unison financed the turbines for Juhl Energy and gave Juhl Energy a generous deal. Under the deal between Unison and Juhl Energy, Unison was supposed to be paid when positive cash flow was available, when other investors were found to provide “take-out financing,” and when proceeds from a $1.6-million U.S. Treasury Department stimulus grant were available, but none of that ever happened, according to the arbitrators. “No such financing was ever secured … the project generated no cash flow … all of the proceeds from the grant were used to pay other project expenses,” the arbitrators wrote.
Unison sued Juhl Energy in 2013 in federal court over its failure to pay for the turbines, claiming that it had been defrauded.
Unison lost in court, in part because the wind turbines it delivered reportedly did not work right. “Shortly after the [turbines] were installed and put into commercial operation, they began experiencing a number of problems which rendered them only intermittently operable, particularly during cold weather,” the arbitrators wrote, adding that while Unison made some attempts to fix them, the turbines’ performance continued to get worse. Juhl Energy claimed the turbines were never outfitted with equipment to function in cold weather, the turbines never produced enough electricity to pay for themselves, and the two turbines completely broke down in 2015 and 2017, respectively.
The agreements Juhl Energy and Unison signed in 2010 blocked Unison from suing Juhl Energy and required that any disagreements go through mandatory arbitration. Initially, a lower federal court upheld Unison’s right to sue anyway, but Juhl Energy won on appeal, and an appellate court ordered Unison and Juhl Energy to go through arbitration.
A panel of arbitrators reached this conclusion about who was at fault: “Both parties should have known that a cold weather package was needed, and both should have taken steps to assure and confirm that one was provided.” Although the panel did not assign blame, Unison essentially lost. The panel ordered Unison to pay for the cost of decommissioning the two turbines plus some of Juhl Energy’s construction and shipping costs, a grand total of $792,720. The panel rejected Unison’s demand for payment. Federal courts upheld the arbitration award and ordered Unison to follow it. A judge noted in the decision that, under federal law, even if arbitrators get some of the facts wrong, binding arbitration is binding so long as the arbitrators acted in good faith.
In July, a law firm representing Juhl Energy contacted the Winona County EDA to check if it wanted to exercise its option to purchase the turbines. The EDA Board declined. EDA Board member and County Board member Greg Olson explained, “I think it was deemed that they had no value.” He continued, “I asked about scrap value, but the demolition cost would be worth more than the turbines themselves … They were more of a liability than an asset.” Olson added, “That was unfortunate.”
On November 8, contractors pulled down one of the mighty turbines with winches. Its blades crumpled as it hit the ground. The second turbine fell the same day or the next morning, according to one witness.
Unison did not immediately respond to a request for comment.
In an email, John Brand of Juhl Energy wrote that the outcome of the lawsuit and arbitration was appropriate. “The machines just plain didn’t work out, and we need to go in a different direction,” he wrote. Of the project in general, Brand stated, “The project obviously would have performed better with a different turbine choice. We have had a terrific track record of developing and operating successful wind projects. It’s time to look ahead as it’s water over the dam.” Brand added, “There are tentative plans to locate a replacement turbine on the same site to continue with the project. In order to do that, we need to use the winter time frame to get a number of project details pulled together. Hopefully, another project will be operating in 2019.”
According to Winona County staff, because the county-issued conditional use permit for the Winona County Wind project is permanent, the property has the primary local approval needed to construct another turbine on the site.
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