Wind Energy Basics

1. Wind Energy Basics Kirsten McNelly Attorney – Foster, Swift, Collins & Smith, P.C. Ph: (517) 371.8214 kmcnelly@fosterswift.com www.fosterswift.com

2. What is Wind Energy? • At its most simple, air in motion is wind. Wind contains the kinetic energy of that motion. A portion of that energy can be converted into other forms of mechanical force or electricity that can be used to perform work. This has been done for many years (such as a farm windmill).

3. What is a Wind Turbine And How Does It Work? • A wind turbine "transforms the kinetic energy of the wind into mechanical or electrical energy that can be harnessed for practical use." www.awea.org • Mechanical energy can be used for many purposes, such as pumping water.

4. There Are Two Basic Designs of Wind Electric Turbines • Vertical axis ("egg beater" style) • Horizontal axis ("propeller" style) • Horizontal axis are most common today

5. Wind Energy A Renewable Source of Electricity A presentation by Gerry Nicholas October 7, 2009 G. Nicholas and Associates, LLC

6. Clean, renewable energy. Each megawatt hour of wind energy reduces CO2 production by about 1 ton. Cost benefit to building multiple turbines in one area One 1.5 megawatt turbine can produce enough electricity to power 400 homes for one year Wind energy is cost effective compared to other new build electric generation Economic benefits: Jobs Landowner payments Personal property taxes Why Build Wind Farms?

7. Michigan Public Service Commission has agreed with utility targets for installed renewable power Renewable Energy will be 10% of retail electric sales by 2015 Minimum New Renewable Energy Capacity will be a total of 1500 megawatts from all sources, which is equal to one or two conventional coal or nuclear power plants Most of the renewable power will be from wind turbines MPSC has approved DTE and CMS Renewable Energy Plans

8. MPSC rules for the new power source Must be Michigan based Qualified technologies: wind, solar, biomass, hydro, some co-generation Bonuses for solar installations and generation during peak hours, as well as Michigan content MPSC has approved DTE and CMS Renewable Energy Plans

9. MPSC declared ownership rules Allows 50% of new renewable sources to be utility owned. Remainder of the renewable power for utilities must be sourced from others. Power from Wind Farms similar to the John Deere non-utility owned site we are visiting today will be purchased by utilities though competitive bids. MPSC has approved DTE and CMS Renewable Energy Plans

10. Purpose of the Zoning Board Determine, in a public forum, the major onshore areas in Michigan favorable to wind energy development Provide guidance on energy development and transmission planning Draft report published and public hearings underway Publish final report January 2010 Michigan’s Wind Energy Resource Zoning Board

11. Four Regions identified with combined capacity of 6,140 MW (approx 4000 1.5 mW turbines) Areas 1, 2 and 3 are on the west side of the State, near Traverse City and southwest Allegan County, combined represent 30% of the total potential Area 4, most of the northern Thumb area, represents the remaining 70% of the total potential (2000-3000 turbines) Wind Energy Resource Zoning Board Draft Report Results

12. Huron County has some of the best wind speeds in the state of Michigan and is in DTE’s service territory. Huron County has many farms which are very compatible with wind farms. Huron County’s flat land makes construction easier. Current transmission is not adequate for planned wind farms. New facilities will have to be built. DTE and CMS are Concentrating Wind Energy Development in the Thumb

13. Utility-Size Wind Turbine Facts • Turbines of 1.5 megawatts are typical • Total height of a tower is 394 feet from the tower base to the tip of the rotor. • One 1.5MW turbine can produce nearly 4 million kWh annually -- enough electricity to power 400 homes for one year

14. Wind Farm Facts • Size of farm depends on area of land available, additional electric generation required, and transmission capacity available • Typically takes 30 months or more for land easements, siting, zoning, feasibility and environmental studies, permits, andconstruction

15. Wind Farm Land Use Once complete, generators and their service roads may require up to 3 percent of leased acreage; Inter-connecting underground power cables tie the individual Wind Turbines via easements to an electrical substation The balance of land is available for normal activities.

16. Homes and other sensitive receptors Noise, shadow flicker, shadow glint, tower shadow Wildlife and Wetlands Landowner usage of the land Community Aviation, communication and radar beams Wind resource Terrain and ease of construction Project economics Wind Turbine Siting Issues

17. Over 100,000 acres of easements under contract by DTE and CMS in the thumb counties Independent developers are also planning additional wind farms with energy output to sell to the utilities Meteorological stations have been collecting wind and weather data for several years. Interconnection to the Power Transmission System has been applied for. Wildlife and wetland studies are nearly completed Noise, siting and zoning issues are being evaluated Participation in County, local township and planning commission meetings Wind Energy Development Activities Are Substantial

18. Michigan’ s best winds are offshore in Lakes Michigan and Huron (red and orange areas) Moves turbines away from population Being considered by Wind Farm Developers A Future Option - Offshore Wind

19. Feasibility studies underway Costs to install and maintain are higher Potential for good sites greater than on shore Offshore Wind Power in Michigan

20. New technologies are allowing wind farms to be built “on top of the city” Zoning ordinances and buildings codes must be modified Chicago recently approved zoning for rooftop wind generation Wind Farms “in the City”

21. Windy Cities like New York , Chicago and San Francisco are Prime Locations for Roof Top Turbines Wind Farms in the City

22. 60 kilowatt units can be sited easily and blend into the architecture Wind Farms in the City

23. For consulting services on wind, solar, biomass, cogeneration and other renewable energy systems please contact: Gerry Nicholas Office: 586-774-1186 Mobile: 734-604-0387 Email: gnicholas@wowway.com Presented by: G. Nicholas and Associates, LLC

24. Michigan Wind Energy Law Liza C. Moore Attorney – Foster, Swift, Collins & Smith, P.C. Ph: (517) 371.8281 lmoore@fosterswift.com www.fosterswift.com

25. National Wind Energy Potential • The U.S. Department of Energy has studied wind energy potential nationwide. The Great Lakes and Michigan have significant wind energy potential, as indicated in the map.

26. Michigan Wind Energy Potential • The U.S. Department of Energy's Wind Program and the National Renewable Energy Laboratory have mapped wind resources for Michigan. Their map, shown below, shows wind speed estimates at 50 meters above the ground and shows areas that could be used for utility-scale wind development.

27. Michigan Department of Energy, Labor & Economic Growth Wind Maps • According to the Michigan Department of Energy, Labor & Economic Growth, AWS Truewind has developed wind energy resource maps for the Energy Office and the National Renewable Energy Laboratory. DELEG notes that "although the maps are believed to represent an accurate overall picture of the wind energy resource, estimates at any location should be confirmed by measurement before purchase or installation of any wind power system." DELEG has posted maps online that depict wind power density at 30, 50, 70, and 100 meters above the ground.

28. Taking Advantage of Michigan's Wind Resources • According to the U.S. Department of Energy, Michigan has wind resources consistent with utility-scale production. These natural wind resources give Michigan the opportunity to develop that potential into useful wind energy.

29. Michigan Wind Energy Law • In recent years, Michigan lawmakers have taken action to facilitate the development of wind energy in Michigan by passing the Clean, Renewable, and Efficient Energy Act and creating the Wind Energy Resource Zone Board and Michigan Great Lakes Wind Council to study Michigan's wind resources. New legislation and rules will likely be developed to help Michigan put the wind to work.

30. Clean, Renewable, and Efficient Energy Act • In 2008, the Michigan Legislature passed the Clean, Renewable, and Efficient Energy Act, (2008 PA 295; MCL 460.1001 et seq.) to: • promote the development of clean energy, renewable energy, and energy optimization through the implementation of a clean, renewable, and energy efficient standard that will cost-effectively do all of the following: • Diversify the resources used to reliably meet the energy needs of consumers in this state. • Provide greater energy security through the use of indigenous energy resources available within the state. • Encourage private investment in renewable energy and energy efficiency. • Provide improved air quality and other benefits to energy consumers and citizens of this state

31. Renewable Energy Standard • The Clean, Renewable, and Efficient Energy Act created a Renewable Energy Standard for Michigan, which requires Michigan electric providers to achieve a retail supply portfolio that includes at least 10% renewable energy by 2015. Providers will begin meeting annual interim compliance requirements in 2012, working up to the 10% renewable energy standard by 2015.

32. Wind Energy Resource Zone Board • The Clean, Renewable, and Efficient Energy Act also established the Wind Energy Resource Zone Board. This board includes representatives from the commission, the electric utility industry, alternative energy suppliers, the attorney general, the renewable energy industry, cities and villages, townships, independent transmission companies, environmental organizations, and the public.

33. Report of the Wind Energy Resource Zone Board • The Wind Energy Resource Zone Board was required by the Clean, Renewable, and Efficient Energy Act to issue a report that explained what regions of Michigan have the highest level of wind energy harvest potential. • The board issued a proposed report on June 2, 2009, which was prepared by Public Sector Consultants Inc. and the Michigan State University Land Policy Institute. • The final report is expected on October 15, 2009.

34. Industry Response to the Report of the Wind Energy Resource Zone Board • Electric utilities, affiliated transmission companies and independent transmission facilities will have 45 days after the final report is issued by the Wind Energy Resource Zone Board to identify existing or new transmission infrastructure necessary to deliver maximum and minimum wind energy production potential for each of regions. • The Wind Energy Resource Zone Board is set to dissolve in early January 2010.

35. Michigan Public Service Commission Response to the Report of the Wind Energy Resource Zone Board • Based on the Wind Energy Resource Zone Board 's findings, the Michigan Public Service Commission will then issue a final order designating the area of Michigan likely to be the most productive of wind energy as the primary wind energy resource zone.

36. Department of Energy, Labor & Economic Growth Guidance for Local Governments • Even though the Michigan Department of Energy, Labor & Economic Growth notes it does not have authority to issue regulations related to wind energy systems siting, DELEG has developed guidance containing recommended zoning language for local governments to use if they amend their zoning ordinance to address wind energy systems. • The Michigan Department of Energy, Labor & Economic Growth developed Michigan Siting Guidelines for Wind Energy Systems, dated March 5, 2007. This publication is available at: http://www.michigan.gov/documents/Wind_and_Solar_Siting_Guidlines_Draft_5_96872_7.pdf • The Michigan Department of Energy, Labor & Economic Growth developed Sample Zoning for Wind Energy Systems, dated April 16, 2008. This publication is available at: http://www.michigan.gov/documents/dleg/WindEnergySampleZoning_236105_7.pdf

37. Great Lakes Wind Council • On February 6, 2009, Governor Granholm signed Executive Order No. 2009-1, creating the Michigan Great Lakes Wind Council, an ad hoc advisory body within the Michigan Department of Energy, Labor & Economic Growth established to study and make recommendations related to the development of offshore wind energy projects in Michigan. • "The Great Lakes are Michigan's most precious natural resource, and they provide tremendous economic value to the citizens of Michigan," Granholm said. "The availability, consistency, and velocity of wind in the Great Lakes make their waters uniquely attractive to wind energy developers seeking to build offshore wind energy systems - but we want to make sure we are prudent in this process of approval."

38. Report of the Great Lakes Wind Council • The Michigan Great Lakes Wind Council issued its report on September 1, 2009. The report's key recommendations related to: • the development of a set of criteria to identify and map areas of the Great Lakes that appear to be most favorable for wind turbine placement, areas where development should be categorically excluded, and conditional areas where turbines may be permitted but require additional study or mitigation compared to the most favorable areas; • a process for approving or denying offshore use of the Michigan's Great Lakes bottomlands for wind energy, achieved through amendments to Part 325 of Michigan's Natural Resources and Environmental Protection Act and new legislation; • asking the U.S. Army Corps of Engineers to conduct a programmatic environmental impact statement to evaluate potential impacts, jurisdictional issues, and agency roles as part of offshore wind development; and • the continued existence of the Council to provide further guidance to the development of wind power.

39. Exhibit 12 of the Michigan Great Lakes Wind Council's September 1, 2009, Report: • Application of Recommended Mapping Criteria

40. Additional Resources for Michigan Wind Energy Law • Clean, Renewable, and Efficient Energy Act • 2008 PA 295; MCL 460.1001 et seq. • Michigan Public Service Commission--Renewable Energy Standard • http://www.michigan.gov/mpsc/0,1607,7-159-16393_53570---,00.html • Michigan Public Service Commission--Wind Energy Resource Zone Board: • http://www.michigan.gov/mpsc/0,1607,7-159-16393_52375---,00.html • Great Lakes Wind Council: • http://www.michiganglowcouncil.org/ • Great Lakes Commission--Great Lakes Wind Collaborative: • http://www.glc.org/energy/wind/ • Michigan State University Extension--Wind Energy: • http://web1.msue.msu.edu/wind/index.htm • Michigan State University Land Policy Institute: • http://www.landpolicy.msu.edu/modules.php?name=Pages&sp_id=382&pmenu_id=79

41. Inside a Wind Turbine • The U.S. Department of Energy has provided information about wind turbines to the public to help citizens know how wind energy works. • According to the DOE, "modern wind turbines fall into two basic groups: the horizontal-axis variety. . . and the vertical-axis design, like the eggbeater-style Darrieus model, named after its French inventor. Horizontal-axis wind turbines typically either have two or three blades. These three-bladed wind turbines are operated "upwind," with the blades facing into the wind."

42. Inside a Wind Turbine • Anemometer: Measures the wind speed and transmits wind speed data to the controller. • Blades: Most turbines have either two or three blades. Wind blowing over the blades causes the blades to "lift" and rotate. • Brake: A disc brake, which can be applied mechanically, electrically, or hydraulically to stop the rotor in emergencies. • Controller: The controller starts up the machine at wind speeds of about 8 to 16 miles per hour (mph) and shuts off the machine at about 55 mph. Turbines do not operate at wind speeds above about 55 mph because they might be damaged by the high winds. • Gear box: Gears connect the low-speed shaft to the high-speed shaft and increase the rotational speeds from about 30 to 60 rotations per minute (rpm) to about 1000 to 1800 rpm, the rotational speed required by most generators to produce electricity. The gear box is a costly (and heavy) part of the wind turbine and engineers are exploring "direct-drive" generators that operate at lower rotational speeds and don't need gear boxes. • Generator: Usually an off-the-shelf induction generator that produces 60-cycle AC electricity. • High-speed shaft: Drives the generator.

43. Inside a Wind Turbine • Low-speed shaft: The rotor turns the low-speed shaft at about 30 to 60 rotations per minute. • Nacelle: The nacelle sits atop the tower and contains the gear box, low- and high-speed shafts, generator, controller, and brake. Some nacelles are large enough for a helicopter to land on. • Pitch: Blades are turned, or pitched, out of the wind to control the rotor speed and keep the rotor from turning in winds that are too high or too low to produce electricity. • Rotor: The blades and the hub together are called the rotor. • Tower: Towers are made from tubular steel (shown here), concrete, or steel lattice. Because wind speed increases with height, taller towers enable turbines to capture more energy and generate more electricity. • Wind direction: This is an "upwind" turbine, so-called because it operates facing into the wind. Other turbines are designed to run "downwind," facing away from the wind. • Wind vane: Measures wind direction and communicates with the yaw drive to orient the turbine properly with respect to the wind. • Yaw drive: Upwind turbines face into the wind; the yaw drive is used to keep the rotor facing into the wind as the wind direction changes. Downwind turbines don't require a yaw drive, the wind blows the rotor downwind. • Yaw motor: Powers the yaw drive.

44. Source Slide • Slide 24: • U.S. Department of Energy Map and Information available at: http://www1.eere.energy.gov/windandhydro/wind_potential.html • Slide 25: • U.S. Department of Energy Map and Information available at: http://www.windpoweringamerica.gov/maps_template.asp?stateab=mi • Slide 26: • These maps are available from the Michigan Department of Energy, Labor & Economic Growth at http://www.michigan.gov/dleg/0,1607,7-154-25676_25774-101765--,00.html • Slide 27: • U.S. Department of Energy Information available at: http://www.windpoweringamerica.gov/maps_template.asp?stateab=mi • Slide 28: • Photo of Michigan Wind I, Huron County, 69 MW, 2008; photo available at http://www.michigan.gov/documents/dleg/Wind_Chart_288934_7.pdf • Slide 29: • MCL 460.1001(2). • The Michigan Public Service Commission will promulgate rules to implement this act in fall 2009. MCL 460.1191.

45. Source Slide • Slide 30: • MCL 460.1027; Michigan Public Service Commission information on the Renewable Energy Standard available at: http://www.michigan.gov/mpsc/0,1607,7-159-16393_53570---,00.html • Slide 31: • MCL 460.1141 et seq. • Slide 32: • MCL 460.1145; ProposedReport of the Wind Energy Resource Zone Board is available at http://www.dleg.state.mi.us/mpsc/renewables/windboard/werzb_proposed_report_june_2_2009.pdf • Slide 33: • MCL 460.1145 • Slide 34: • MCL 460.1147 • The Wind Energy Resource Zone Board 's website is available at http://www.michigan.gov/mpsc/0,1607,7-159-16393_52375---,00.html

46. Source Slide • Slide 36: • Press Release from the Office of the Governor dated February 6, 2009, available at http://www.michigan.gov/gov/0,1607,7-168--208364--,00.html • Slide 37: • Report of the Great Lakes Wind Council available at http://www.michiganglowcouncil.org/GLOW%20Report%209-1-09_FINAL.pdf • Slide 38: • Image Source: Institute for Fisheries Research, UM/MDNR, 2009. • NOTE: Data for the following criteria are not yet included in the Michigan GIS Lakebed Alteration Decision Support Tool and are not reflected in this map: aids to navigation; buoyed navigation channels; submerged transmission lines; globally or continentally significant concentrations of bird or bat species of conservation concern; habitat for threatened and endangered species; very high concentrations of birds or bats on at least a seasonal basis; underwater archaeological sites; and commercial fishing areas. In addition, the Thunder Bay National Marine Sanctuary in Lake Huron is not reflected on this map. • Report of the Great Lakes Wind Council available at http://www.michiganglowcouncil.org/GLOW%20Report%209-1-09_FINAL.pdf (this image is from page 29 of the report) • Slide 40: • U.S. Department of Energy information available at: http://www1.eere.energy.gov/windandhydro/wind_how.html • Slide 41 & 42: • U.S. Department of Energy Diagram and Definitions available at http://www1.eere.energy.gov/windandhydro/wind_how.html

47. Wind Farm Leases Scott A. Storey Attorney – Foster, Swift, Collins & Smith, P.C. Ph: (517) 371.8159 sstorey@fosterswift.com www.fosterswift.com

48. Wind Farm Leases are Negotiable • Must be written • Must contain operative words ("grant") or ("lease") • Property description • Identification of parties • Signatures of the parties Everything else is negotiable!

49. Wind Farm Leases Are Long Term • Leases are often for terms of 25 years or more • Many leases grant options to the developer to extend the lease an additional 25-years or more • Entering into a wind farm lease may commit your property beyond your lifetime or ownership.

50. Wind Farm Leases and Development • Most wind farm leases do not guarantee wind farm development. Rather, most leases allow the lessor a year or more to run tests and to evaluate whether a wind farm is feasible. Usually, only a nominal fee is paid for the initial evaluation.