1 / 29

Wind Project Development 101

Wind Project Development 101. Presented by Locke Liddell & Sapp LLP. Bill Swanstrom (713) 223 – 1143 bswanstrom@lockeliddell.com Elizabeth Mack (214) 740 – 8598 eemack@lockeliddell.com. David Montgomery (713) 226 – 1337 dmontgomery@lockeliddell.com John Arnold (713) 226 – 1575

gregorykelly
Download Presentation

Wind Project Development 101

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Wind ProjectDevelopment 101 Presented by Locke Liddell & Sapp LLP Bill Swanstrom (713) 223 – 1143 bswanstrom@lockeliddell.com Elizabeth Mack (214) 740 – 8598 eemack@lockeliddell.com David Montgomery (713) 226 – 1337 dmontgomery@lockeliddell.com John Arnold (713) 226 – 1575 jarnold@lockliddell.com

  2. Key Market Drivers • Increased Focus on Clean Energy • Increased Focus on Domestic Energy • Production Tax Credit • Renewable Portfolio Standard

  3. Key Market Challenges • Low Pricing in PPA’s • Permitting Delays • Turbine Availability • Land Acquisition • Transmission Constraints

  4. Texas Wind Development Highlights • Texas is now the number one wind energy producer in the nation -- approx. 2900 MW • Texas is widely viewed as having the most progressive Renewable Portfolio Standards in the country • Original RPS called for 2000 MW by 2009 • In 2005, the RPS goal was increased to 5880 MW by 2015, and 10,880 MW by 2025

  5. Texas Wind Development Highlights(cont.) • Wind development in Texas continues to be very robust • Offshore Wind -- the Next Wave?

  6. Proposed Wind Projects in Texas

  7. New Developments • Turbine Financing • Merchant Wind Plants – Hedge Products • Expanding Share of Tax Equity • Private Equity Funds Seeding Development • Strategic Investors Driving Acquisition Market • Financial Structures For Municipal Project Ownership - CREBs

  8. Environmental Review on Wind Farms Driven by: • Required Permits • Expectations/Requirements of Lenders and/or Equity Investors • Including for issuance of environmental opinions • Best Practices

  9. Permits • Generally, if project is on private land, and privately funded, then very few permits typically required: • No material air emissions • Generally no wastewater discharge (possible sanitary or washwater) • Generally no hazardous waste • Stormwater • Wetlands (nationwide permits) • County road crossing/state highway access rights, etc. • Projects on federal land may trigger full NEPA review – generally not an issue in Texas

  10. Best Practice • Private NEPA-style review: • Identify potentially significant issues early in process • Ensure/enhance local acceptance • Support image of wind projects as environmentally friendly and conscientious • Key environmental issues in wind projects, and focus of environmental review, include: • Birds/Avian Survey • Endangered and Threatened Species • Cultural/Archeological Resources

  11. Avian Impacts • Most significant environmental issue raised by wind farms • Migratory Bird Treaty Act – no bird kills, strict liability • Four season avian survey • Turbine and collection/transmission system design • Generally no post construction monitoring – but winds of change are blowing

  12. Endangered/Threatened Species • Both avian and terrestrial • Federal ESA – incidental take permits available, but easier to redesign project • State endangered species laws (Parks and Wildlife Code) – no incidental take

  13. Cultural Resources • NHPA - extensive review, but only if federal permit • Texas Antiquities Code • no protection for cultural resources on private land • development on public land requires THC review and approval – lengthy process

  14. Wind Lease Aspects • Options • Wind Leases • Easements • Title Issues

  15. Options • Almost every Wind Lease in Texas arises from exclusive option with term of 2 – 7 years • Option Fee is usually calculated as $/acre • During Option Term, grants exclusive right of ingress/egress to: • install met towers and conduct wind studies • survey land and perform title work • conduct other due diligence: geotechnical, foundation and soils tests • Accommodations with Owner regarding farming, ranching, hunting and other surface use aspects

  16. Wind Leases • Exclusive right to use as Wind Farm for a term of 30 – 80 years (incl. extensions) • Installation and operation of turbines, transmission and gathering lines, substations, O&M buildings, roads, etc. • Consideration varies widely • Pre-construction bonuses/delay rental and per-turbine bonuses up to $10,000 • Royalties ranging from 3% to 6%, with Minimum Rent protections (per acre or per mW installed) • “Surface damages” for turbines, lines, roads, substations, O&M buildings, control buildings, wells, etc. • As with Option, accommodations with Owner regarding farming, ranching, hunting and other surface use aspects

  17. Easements • Also acquired by Options, either incorporated into Wind Lease or standalone • Access Easements when surrendering leased but unused land • Transmission Easements to get to market • Overhang Easements for turbine blades

  18. Title Issues • Lender subordinations • Oil/gas lessee surface waivers and drillsite agreements • Marital joinders – community property states • Probate matters • Adverse possession claims

  19. Resolving the“Chicken or Egg” Dilemma • Senate Bill 7 (1999): renewable portfolio standard (“RPS”) of 2,880 MW of renewable generation by 2009. • SB 20 (2005) RPS of 5,880 MW of renewable generation by 2015. • Texas is not maximizing its use of available wind resources, because of the “chicken or egg” dilemma:

  20. For transmission utilities: difficult to know if a new transmission line should be built if there are no existing generation facilities. • For wind farm developers: difficult to obtain financing or plan generation if there is no existing transmission infrastructure • Stand off has prevented the development of sufficient transmission infrastructure to bring the available wind generated electricity to load centers and has led to curtailment

  21. The Solution: Senate Bill 20 and the CREZ • SB 20 authorized the PUC to identify CREZs to: • ensure that sufficient transmission infrastructure is built to meet RPS • improve coordination between the transmission and renewable generation • reducing the regulatory hurdles by establishing that there is a need for transmission upgrades • To implement Senate Bill 20, the PUC promulgated Commission Rule 25.174

  22. The CREZ Rule: • To designate a CREZ or CREZs PUC considers the following criteria: • Wind: areas with sufficient renewable energy potential, i.e., wind resources • Transmission: the solution to move the power to load centers • Financial Commitment: to ensure wind developers meet their half of the chicken and egg equation

  23. The CREZ Proceeding • Shell WindEnergy Inc. is a participant • SWE is working with Horizon and RES Americas, Inc. to support a CREZ in Briscoe County, Texas. • Strong competition from FPL others with installed generation. • Contested hearing in May • Final Order designating a CREZ or CREZs on July 5, 2007.

More Related