By Sarah Doty

Post-Bulletin, Rochester MN 

enXco. Xcel Energy. Horizon Wind Energy. Florida Power & Light Company.

High profile corporate names grace many of the wind farms developing in southeastern Minnesota.

But corporate support isn't the only way to fund wind energy operations. Another lesser known but quickly growing option are Community-Based Energy Development (C-BED) projects.

According to Dan Juhl, a leader in developing Minnesota C-BED wind projects and legislation, C-BED wind projects are best defined as locally or community-owned wind farms that keep the money generated in the area.

"If we are going to develop these wind farms, don't just do it and let big national corporations take all the profits and move it out (of the state)," Juhl said. "That's just kind of goofy, and that is what C-BED is all about. It's about trying to do something to help keep those dollars here. It's a huge opportunity for rural Minnesota if it is done right."

Juhl's vision has taken him all the way to the state Capitol to propose changing legislation so that C-BED projects are easier for locals to develop.

In 2007, the Minnesota Legislature listened and Gov. Tim Pawlenty signed into law the "Next Generation Energy Act," which expanded and strengthened the state's commitment to C-BED development.

For many in southwestern Minnesota, this was a long time coming.

The Rural Minnesota Energy Board was developed in the mid-1990s in response to the wind energy development in southwestern Minnesota. Several counties joined together to try and find a way to benefit from the turbines that were popping up in their backyards.

For years, David Benson, a Nobles County commissioner and a member of the Rural Minnesota Energy Board, and his fellow board members saw companies paying landowners an average of $5,000 to $9,000 per turbine, per year. But they didn't think that was sufficient considering millions of dollars were being generated by those turbines.

"The issue that I feel strongly about is that we are really locked out of meaningful investment," Benson said. "We want renewable energy to happen, but we also want it to be balanced with the needs of the local community, the county, the school district. If there was a return on investment and the opportunity to invest that would be a benefit to the community that really isn't significantly available now."

Benson and the board joined with Juhl to promote C-BED and are excited about the possibilities it has created for Minnesota communities.

Landlordor entrepreneur?

Austin attorney Craig Byram has spent much of the last three years negotiating wind easements and options with larger developers.

He likens the differences between commercial wind and C-BED projects to a landlord versus an entrepreneur.

"It's a risk tolerance question and it's an investment question," Byram said when asked to compare the two. "It goes back to, do you want to be a landlord or an entrepreneur? Do you want to own a business that carries with it risks and rewards or do you just want to get a check?"

"A lot of farmers like the idea of being the landlord," Byram said. "'I don't really have to do anything and I get a check every year, that sounds neat.' The entrepreneur says, 'I have to take a lot of risk and I have to own this and I have to hire people to maintain it and I have to sort of run this as a business.' You get less people excited about that even though the money is better."

Jeff Cook-Coyle, vice president of development for Nature Energies, thinks C-BED is a nice idea but doesn't believe it works.

"I have been in this business for a long time and I think that C-BED has some really fatal flaws," he said. "It is almost impossible, it is impossible, to get a project financed by the letter of the C-BED law. It just wasn't designed for building real wind farms. It's a nice idea but it really doesn't work."

The 'Minnesota Flip'

Juhl and others have put in much work to make C-BED workable for farmers and landowners who are interested. One way they did this was to develop a business model known as the "Minnesota Flip."

The "Minnesota Flip" model teams up C-BED owners with large investors so that the investors foot the bill for the turbines while receiving the federal production tax credits.

As an example, the investor owns 99 percent of a wind farm while the C-BED owners own the other 1 percent. Once the production tax credits have been exhausted, after 10 years, the project will "flip," with the investor taking the minority of the farm and the C-BED owners taking the majority.

The flip guarantees that C-BED owners can "afford" the turbines, while at the same time giving the production tax credits, which C-BED owners can't qualify for, to an investor who has the finances to do so.

"We partner the people with the corporation and they use the tax credits, and we borrow the balance of it through the local banks," Juhl said. "This keeps the money in the local community, and the revenue keeps it in the local owners' pockets once the tax credits are used. The local people become the local owners. We have done many projects with it and it works just great."

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