An article in the Lincoln Journal Star (https://journalstar.com/business/local/wind-farms-sue-nppd-over-termination-of-power-purchase-deal/article_06e396a9-829c-5c24-873c-49a642121c7c.html) describes litigation between NPPD (power purchaser) and three of its sellers of wind power. The crux of the litigation is that NPPD wants to terminate three wind PPAs, claiming breaches associated with project acquisitions. Putting aside any questions about the merits or purpose of the suit, for owners and parties looking at buying land hosting the subject turbines, there is good reason to follow this litigation.

One of the projects involved, Broken Bow Wind, has a current PPA rate (we estimate, based on our research) of +/- $41/MWh, while market rates, for new PPAs are (we believe) half this amount. If this PPA is terminated, then there’s a loss of royalty revenue, or if it’s renegotiated, then we’d expect re-negotiation at current rates — which would cut royalty payments in half.

Again — it’s all reason to watch what’s happening in Nebraska, especially if you host those turbines or are looking to buy that land, because this litigation may affect future lease revenue.

#windlease #windleaserevenue #windleasevaluation #nebraskawind

A recent article regarding MidAmerican’s repowering efforts estimate production increases, across seven projects, between 19-28%. If other project factors remain the same (e.g. if the power price remains the same, there’s no additional curtailment, and any minimum rent has been exceeded), then for the lessors in these projects who are paid royalties, they can expect a corresponding increase in revenue. This is significant, especially if the royalty rates escalate over time. And this is a good sign for lessors who host good projects likely to be repowered.

http://newenergyupdate.com/wind-energy-update/midamerican-wind-repowering-targets-28-output-hike-longer-returns?utm_campaign=NEP%20WIN%2025JUL18%20Newsletter%20Version%20A%20%284883%20TA%29&utm_medium=email&utm_source=Eloqua&elqTrackId=30e33b3e6c1b48e09423baa435ce39b1&elq=0d4069ae7ea643e083b21fe7e09ab429&elqaid=38059&elqat=1&elqCampaignId=20379

We noted permit issues in our early model drafts, focusing mostly on administrative issues.

The recent IA case (see our earlier blog post) suggested issuance issues should be considered, as well.

And this most recent article out of MN (see the link below) suggests looking at operations issues, too.

In all, these two recent cases out of IA and MN stress the importance of considering permits when evaluating a project’s viability and thus also its revenue stream.

http://www.startribune.com/state-regulators-hit-bent-tree-wind-farm-near-albert-lea/475697403/

The link below is to an interesting article regarding future resource shifts.

Fortunately, and most notably for our purposes, the article notes resources over the next 20 years will be similar to those of today — suggesting current resource information may have value for forecasting production during that time period.

 

http://cires.colorado.edu/news/continued-emissions-may-cause-global-north-south-shift-wind-power-end-century

Nebraska’s first wind projects is being repowered.

Construction has started on a 30 MW Kimball wind project, which replaces the former 10.5 MW Kimball wind project.

The reason for this repower is noteworthy —  maintenance and repair costs for this 15-year-old project had grown to be too significant. This is one of the factors we have noted in the case of decommissionings — high operation and maintenance costs. The other factor we have noted is weak wind resource. Presumably, Kimball’s moving forward suggests the wind resource is significant and justifies further development at this site.

http://www.omaha.com/money/wind-farm-in-kimball-nebraska-is-being-decommissioned-but-a/article_957e0a70-c98c-11e7-b979-f73266bc6d9d.html