Wind Energy for Landowners SEAI REIO Briefing Note 2010 This briefing note is aimed at landowners who are investigating if their land is suitable for wind energy development or considering taking on a project of their own. Many of the topics covered however are also relevant for independent developers. This note can also be used by individuals who have been approached by developers to sign contracts for the leasing of lands. Further information on wind energy is available on the SEAI website: http://www.seai.ie/ Renewables/Wind_Energy/ SEAI is the state agency with responsibility for energy efficiency and renewable energy promotion including the provision of independent advice. We do not develop projects or provide products or services and advise you to seek independent professional advice in all aspects of a project and in particular in the event a developer requests the signature of a long term agreement for the use of land. A list of wind developers is provided alongside this document. This list has been compiled from publicly available sources of information and inclusion on the list does not mean SEAI approves or even knows of the developer. Some developers and their developments are more viable than others. Some may be interested in approaches from landowners offering land use and some may not. This note will attempt to give you some introductory information as well as links to relevant authorities. There is a heavy dependence on web-links but it is the best way to introduce people to the correct bodies and sources of information if they are to progress a project. If some of the links are not working please let me know and I'll amend or send you the information directly. If you do not have access to the internet please ring REIO on 023 8842193 and request a print out of the information which you require. Please have this note with you so that you can direct us to the information you need. Assuming the proposed site is viable for wind i.e. no planning restrictions on wind farms in the area, not in a migratory path for birds, not on conservation lands of special interest and above all in an area of good wind resource and availability the site might be investigated further. Is my site suitable? Not all sites are suitable for wind farms, for either economic or environmental reasons. When assessing the suitability of a site both technical suitability and environmental suitability must be addressed. Key suitability criteria are outlined below: Environmental suitability Visual aspects Proximity to dwellings Ecological/archaeological/architectural protection Recreational use Restricted Areas Technical suitability Wind speed Grid connection Site size Access Ownership It is important to discuss a proposed development with a Local Planner at an early stage to receive feedback for the plan and to identify the scope of the planning application and, where appropriate, the Environmental Impact Statement (EIS) that should accompany the planning application. The development of a wind farm can be a long process and cannot be treated lightly so in order to ensure high quality development, professional services must be employed throughout the process. Each local authority has developed a map where wind energy projects will be considered, are prohibited or are encouraged. This local authority wind strategy should be one of the first documents to refer to. Landowners have a number of options for developing their land. One option is to take on the task yourself. This is the most risky and time consuming route. The risk to you is that you don’t get planning permission or a connection offer after initial expense incurred. Obviously this is also potentially the most financially rewarding if the project is successful. It is possible to employ consultants and contractors for each aspect of the project but some development of your own expertise would be required as with any new business venture. Another common route for land owners is to contact wind farm developers and lease the rights of the land to them. The current going rate is approximately €7-8,000 per MW installed although this figure is unreliable as contracts are confidential and difficult to ascertain. The average size of a new wind turbine installed last year was 1.6MW so for every one of those installed on your land you could expect an annual income of around €11,000. Another mechanism for payment is receiving a percentage of the revenue generated by the wind farm on your land. The benefit of going down the route of handing over the project to a developer from the off is that most if not all of the risk is placed with the developer. If they feel the site is worth developing they undertake all the studies and permission applications. The critical factor for this route is of course finding a developer who feels the site is worth developing. If the site has a good wind resource, is close to the national grid, not in an area of natural amenity and can be developed economically the developer will be interested. Following discussions with developers you may find that they already have the rights to all the land they want to develop in the medium term. The greater the parcel of land to be developed the more attractive it is to a developer. Large areas of land are required for wind farms. Wind turbines in a wind farm are typically placed 3-5 rotor diameters (equal to approx. 200-400m) apart perpendicular to the prevailing wind and 5-10 rotor diameters (equal to approx. 350-600m) apart parallel to the prevailing wind. The contact lists on our web-site at http://www.seai.ie/Renewables/REIO_Library/Contacts_and_Useful_Links provide lists of the companies who provide services and equipment to those developing wind farms. There is a list of developers who take on the full running of a project and a list of consultants in the industry. There is also a list of companies who assist in planning applications. They would also be the type of company who would be involved in site assessments and wind studies. There is a list of wind developers at the end of the document. For legal advise a solicitor experienced in wind energy should be used. IWEA have a list of members on their website and many are legal firms www.iwea.com. The family or local solicitor may have never dealt in such contractual matters. First Steps The first thing you need to do is talk to the local authority. Meitheal na Gaoithe provide good information on how to begin the process in their FAQ section (http://www.mnag.ie/ case_study.html) Meitheal are a smaller scale wind farmer grouping). IWEA also give good guidelines for larger scale developers (www.iwea.com). The Irish Wind Energy Association “Best Practice Guidelines for the Irish Wind Energy Industry” published in September 2007 and part-funded by SEAI can be downloaded at no charge from the publications section of the IWEA website www.iwea.com. In general critical requirements for developing and financing a wind farm are: wind resource assessment, planning permission, grid connection agreement and power purchase agreement (PPA). Each will be covered at a high level below. Wind Resource Assessment The Irish wind atlas can be viewed on our website at http://maps.seai.ie/wind/ Wind data for a particular place on the map can be viewed by zooming in, clicking on “info” and then clicking on the point of interest. This will give you a first cut at knowing the average wind speed (in metres per second) in your area of interest. A higher resolution DVD version of the atlas can be purchased from our online resource centre (www.seai.ie/resourcecentre). An average wind speed reading of 7 – 8 metres per second or above is desirable for further investigation. Further investigation and site assessment takes the form of erecting a wind speed measuring device on a mast. The mast may require separate planning permission but can be exempt under certain conditions. An anemometer and data logger measure the wind speeds for a period of time- usually 4 full seasons at least. This assessment allows an estimate of the wind power available at the site and more accurate modelling of the site for optimal siting of the turbines. Financiers require a solid business case for funding wind developments and a good resource assessment is part of it. Grid Connection It has to be mentioned that the wind industry in Ireland has rapidly matured in the last 5 years and as a result there is a long queue of applications for grid connections. If you decide that this is something you want to pursue you should be prepared to be in it for the long haul and be ready to wait for 5-8 years for a grid connection. Some sites still awaiting a connection offer from the network applied as far back as 2004 and they will be unlikely to connect in less than 4 years time. Grid connection agreements for wind farms have become a major area of difficulty in the past number of years and the Commission for Energy Regulation instructed EirGrid and ESB Networks to introduce a group processing mechanism at the beginning of 2005. The processing of applications within this mechanism is lengthy and often becomes a critical factor for successfully developing new projects. Gate 3 is currently in progress and the consultation and decision papers and updates can be viewed on the EirGrid website. At present the sequence of connecting wind farms within Gate 3 is being finalised. The Gate 3 decision document on the EirGrid website includes a list of projects included. These are the wind projects due to connect in the next ten years. Projects not on this list will be unlikely to connect in that time. This should be remembered when signing lease options agreements with developers further down the queue. Wind farms below around 20MW in size will generally connect to the electricity distribution network. Detailed maps of the 10kV, 20kV and 38KV rural electricity networks can be found at http://www.esb.ie/esbnetworks/en/about-us/our_networks/index.jsp There are technical limts to the size of a wind farm that can connect to the different voltage levels. As a guide these would be as follows: Up to 5 MW---------------------existing 38kV From 5 MW to 10 MW------existing 38kV or 110kV From 10 MW to 40 MW----existing 110kV From 40 MW to 177 MW---requires new 110kV line General details of the process for connecting generators to the electricity distribution system can be found at http://www.esb.ie/esbnetworks/en/generator-connections/index.jsp ESB Networks are the best organisation to contact with regard to the capacity for wind generation in the local distribution network (email@example.com). In the would provide an outline proposed method of connection upon request, however, processing scheme for wind generators is in effect, they may be reluctant information to connecting parties outside of this scheme. connecting past ESBN as a group to provide Applications for connecting larger wind farms which may be transmission level connected are made to EirGrid. Information on the application process and application forms can be found on the EirGrid website www.eirgrid.com . The details of current applications can be found on the following page: http://www.eirgrid.com/customers/completedgenerationapplications/ The vast majority of the 11,000 MW on the completed application list will not connect in the next ten years and many appear to be speculative. The standard application charges for grid connections can be found at the following page: http://www.esb.ie/esbnetworks/en/generator-connections/gen_connection_export.jsp The €7,000 is just a deposit and if you were to get an offer you would have to pay the balance of the application fee. Power Purchase Agreement As mentioned above an initial indication of whether your site has a worthwhile wind resource can be obtained from the wind map on our website. Under Government price support schemes to date, sites need to have an average wind speed of approximately 7.5 m/s or above to be viable. Generally for a project to obtain financing at least 12 months of certified actual wind measurement data from the site will be required. Ideally you would measure the speed on the site for at least 4 full seasons. Power purchase agreements may be negotiated between a generator and an energy supplier and are usually supported by Government renewable energy price support schemes. Details of the last Government price support scheme, REFIT, can be found at http://www.dcenr.gov.ie/Energy/Sustainable+and+Renewable+Energy+Division/ REFIT is currently under review and will be revised in an effort to promote wind towards meeting our 2020 targets. The price a generator gets paid for power produced depends on the contract arrangement they have through a power purchase agreement but the price will tend to be around the relevant REFIT reference price. The terms and conditions provide an outline of the operation of REFIT which is administered by the Department. Full indexation for 2005 applies from 1.1.2006 rather than from the date of the announcement. The DCENR website has the current value of each REFIT. Large wind for example is currently 6.6c/kWh. REFIT Reference Prices c/kWh Announced Indexation -------see table 2 following Wind <5 MW 5.9 01/05/2006 Yes Wind >5 MW 5.7 01/05/2006 Yes Hydro <5 MW 7.2 01/05/2006 Yes Biomass LFG 7 01/05/2006 Yes Other' Biomass 7.2 01/05/2006 Yes Biomass CHP* 12 24/01/2008 Not yet announced Anaerobic CHP* 12 24/01/2008 Not yet announced Offshore Wind* 14 08/02/2008 Not yet announced Wave* 22 15/01/2008 Not yet announced *Indicates not yet operational Current REFIT reference prices are: 2009 2010 Large Wind €66.353 €66.353 Small Wind €68.681 €68.681 Hydro €83.814 €83.814 Landfill €81.486 €81.486 Biomass €83.814 €83.814 Application of CPI The published terms and conditions of REFIT provides for indexation. It is a matter for participating generators to reflect the indexation provisions in power purchase agreements concluded bilaterally with participating suppliers as the wholesale purchaser of the power from any named individual electricity generating plants. The CPI will be calculated along the lines in the following table: Change in CPI Applicable from 2005 1.1.2006 2006 1.1.2007 2007 1.1.2008 and so on, compound, to 2024 The CSO office (www.cso.ie) has information on CPI at: http://www.cso.ie/statistics/consumpriceindex.htm Full details of REFIT and how it works can be found in the state aid clearance decision (N571) http://ec.europa.eu/comm/competition/state_aid/register/ii/ by_case_nr_n2006_0570.html#571 (This document is much more useful in explaining REFIT than the terms and conditions on the Department website.) Planning Permission Planning permission is obtained through the normal planning process. Wind farms larger than 5MW will require an environmental impact assessment which can be a considerable expense prior to obtaining planning permission. The web-link to the DOEHLG wind farm planning guidelines is http://www.environ.ie/en/Publications/DevelopmentandHousing/Planning/FileDownLoad, 1633,en.pdf . Only wind farms with more than 50 wind turbines or 100MW capacity are included in the Strategic Infrastructure Act so the normal planning process is in effect for the vast majority of wind farms. That is to say only the largest wind farms are deemed strategic infrastructure and thereby covered by the 2006 Act. All other wind farms are subject to regular planning requirements as per the guidelines. The Environmental Protection Agency (2002) Guidelines on the information to be contained in Environmental Impact Statements and Environmental Protection Agency (2003) Advice Notes on Current Practice (in the preparation of Environmental Impact Statements) can be downloaded form the EPA website at http://www.epa.ie/downloads/advice/ea/guidelines/ . Note that planning approvals usually lapse after 5 years so some developments have fallen away as the permission lapsed before a connection was achieved. In certain circumstances planning may be extended where substantial works is completed within the original 5 years. There is no national definition of substantial works and local authority requirements vary. The national requirement for local authorities to identify areas for wind project development has not necessarily been implemented by all local authorities but has by the majority. Each local authority develops a development map every 5 years and it includes areas where wind is encouraged, excluded or considered. This map should be a first port of call for any prospective wind developer or land owner. A generating licence and authorisation to construct a generating station will also be required from the Commission for Energy Regulation (http://www.cer.ie/en/electricity-generationlicences-and-authorisations.aspx) but these tend to be formalities once a connection agreement and planning permission has been obtained.