Watch out for what’s happening in Nebraska

An article in the Lincoln Journal Star ( 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

One more decommissioning

Wisconsin Public Service is in the process of decommissioning its Lincoln Wind Energy Facility.

The 9 MW facility was commissioned in 1999.

The utility stated the project has reached the end of its useful life and is no longer cost-effective to operate.

Notably, the utility’s statement concerning cost-effectiveness is consistent with our observations regarding other decommissionings.

Also notably, this project apparently is not being repowered — confirming careful attention should be paid to revenue in later project years.

Why royalties matter — and why wind lease revenues may increase

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.


Not to be dramatic, but, ….

The moral remains that permits matter.

Permits Matter — Again!!

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.

Permits Matter!!

I think this recent Iowa case is the first I have heard of where a developer’s permitting failure may lead to decommissioning.

This case is worth watching, while on appeal to the Iowa Supreme Court.

From a valuation standpoint, the lesson is permits matter, even after project construction is complete.

Interesting Article Regarding Potential Wind Resource Changes

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.

Wind and Storage

Interesting article about Tesla’s Hornsdale Power installation.

Kimball NE Repower Started

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.

Interesting Article on Future Wind and Solar Energy Pricing

59% and 26% price decreases?!

Something for all landowners to think about.