Farmers on the Cutting Edge of Energy

Aug. 12, 2008— -- TRIMONT, Minn. -- One would hardly know it driving down Main Street, but this tiny prairie town surrounded by corn and soybean fields is at the forefront of America's fight to wean itself off oil.

Long before gas topped $4 a gallon or Texas oilman T. Boone Pickens embraced renewable energy, a group of farmers here banded together to build a massive wind farm.

Today their vision is paying off.

At the edge of town, 67 giant turbines -- each taller than the Statue of Liberty -- rise above the landscape, producing enough electricity to power 29,000 homes throughout the state and providing the farmers and local government with roughly $2 million a year. And it's just the beginning. Soon, a second phase of the project will be online -- doubling the number of towers -- and a third phase is already being planned.

So how did this town of only 754 residents, where the local radio station includes the price of cattle and corn in its news updates, land on the forefront of the nation's energy solutions?

It was part geography, part luck and part foresight by a few local farmers.

Trimont sits at the southern end of Minnesota, a few miles north of Iowa. The flat land spreads out in every direction, broken occasionally by a farmhouse or grain elevator.

Strong winds pass easily across the prairie, making it an ideal location for commercial-scale, wind-power generation. But strong winds aren't enough.

The best places to capture a strong and steady wind -- Minnesota, the Dakotas and Iowa -- are far away from the population centers that demand the most electricity. To get power from the Great Plains to, say, Chicago or Denver requires a large network of transmission lines that simply doesn't exist.

Trimont was lucky: It already had one of the power transmission lines running through town.

All that was missing was a vision. And that's where local farmer Doug Scholl came in.

"It was his idea that instead of sitting here waiting for a major wind developer to come to us … to instead take matters into our own hands," said Neal Von Ohlen, a fellow farmer who helped start the project and now oversees the farmers' interests. "I didn't know anything about wind. I was just a landowner-farmer. But it seemed intelligent."

The Growth of Wind

Wind will never be the solution to all our energy problems. Supporters say that in two decades the country could generate at least 20 percent of its electricity with it.

Today, the biggest source of electricity is coal, accounting for nearly half of all power generation in 2006, according to the Department of Energy. Natural gas and nuclear power each accounted for another 20 percent, and hydroelectric another 7 percent. All forms of renewable energy -- that includes wind, solar and biomass -- accounted for just 2 percent of all electricity production. Compare that to Denmark, where wind makes up nearly 20 percent of country's power needs.

Wind is the fastest-growing form of energy. Thanks to projects like the one in Trimont, the amount of wind power in the United States nearly tripled between 2003 and 2007.

Wind is on the forefront of the energy debate, thanks to recent record-high oil prices and an advertising and lobbying push by Pickens, who is spending $58 million this election campaigning for larger infrastructure investments. His company, Mesa Power, has already spent $2 billion to construct the world's largest wind farm in Pampa, Texas.

"I've been an oilman all my life," Pickens says in one of his ads. "But this is one emergency we can't drill our way out of."

But not everybody loves wind. For years, residents of Massachusetts have been fighting a proposal to create a wind farm off Cape Cod.

The key argument against wind is typically aesthetics. The towers are giant but quiet. They make about the same amount of noise as your household refrigerator, but they are tall, break up sweeping vistas and have lights at night to warn passing aircraft.

"Some of the biggest tree-huggers are against it. I don't see why anyone would be against wind power," Von Ohlen said. "Some people, point blank, don't like the looks of the turbine. My wife and I love the look."

Wind is also bringing jobs.

The industry employs about 50,000 Americans, adding 10,000 jobs in 2007 alone, according to the American Wind Energy Association, a trade and lobbying group. By 2030 -- if wind reaches its full potential -- the industry could employ as many as 500,000 people.

The New Work Force

Jake Hansen grew up on a farm in the tiny community of Morgan, Minn., about 50 miles north of Trimont. Roughly 70 percent of the residents there graduate from high school but less than 10 percent hold bachelor's degrees. The typical resident made $16,454 in 1999, according to Census data.

Hansen was home-schooled and "had no idea" what he was going to do until he heard a radio ad for a wind technician program at an area community college.

"I thought it sounded interesting," Hansen said. "Farming or driving a truck are the only jobs around."

But with wind, he said, "there's so much future in it."

Now, two years later, Hansen works at the Trimont project earning more than $20 an hour; that's more than $40,000 a year plus overtime and bonuses.

With that salary he just bought his first house, at the age of 20.

Hansen has two other brothers. One is in school for law enforcement and the other works at Wal-Mart. He earns more than both of them.

After graduating from the two-year program at Iowa Lakes Community College, he had 12 job offers. (He also had an internship in between his first and second years at the college, which paid him enough to cover his second year of school.)

"It's just your average 9-to-5 job," Hansen said, "just 280 feet in the air."

The college started the wind program in the fall of 2004. Back then, there were only 15 students and one instructor. Today, there are five instructors and more than 100 students. The college recently added another 16 slots for the upcoming school year. They were filled in just six days, according to school president Harold Prior.

The college even has its own working turbine. It's not just used for instruction but actually generates power that is sold to the local community, providing about $150,000 a year to the school.

Opportunity Knocks

For the farmers of Trimont, the perfect opportunity presented itself in the spring of 2003. Great River Energy, a regional power cooperative, was looking for somebody to generate renewable energy for its customers.

Scholl managed to organize 50 different farmers to join the project; and submitted a bid to the power company. They were one of 65 proposals but ultimately won because of the site's location and the local involvement. (Scholl has since died in a small-plane crash.)

"At first, the idea was, hey, this is going to be the largest land-owner wind farm in the country. Until you know the facts, it's easy to dream big," Von Ohlen said.

After they were awarded the project, the farmers realized that they wouldn't be able to take advantage of a substantial federal income tax credit associated with wind power. They simply didn't earn enough money. There were also major financial risks associated with the project. If a gear box went out or a blade broke, the farmers would be responsible for paying for its repair.

So they decided to bring in a large company to operate the facility. But because the farmers had won the right to sell the renewable energy, they held all the cards when negotiating.

"We had a lot of negotiating power in the first proposal," Von Ohlen said. "We could have brought in anybody."

The group eventually choose PPM Energy, which has since become part of Iberdrola Renewables, a Spanish company that is the world's largest provider of wind power.

As part of its deal with the energy company, the farmers got a noncompetitive clause. Neither group could develop a wind farm in the area without the other. Today they are preparing to go online with their second joint venture adjacent to the first project. And like the first one, the farmers will also get a share of the profits.

While there are 50 landowners in the first group, only 43 have turbines on their property. They can still plant crops right up to the base of the tower.

The layout of the turbines -- over the 8,970 acres -- is based on a number of factors. Wind strength and consistency is key. But there are also a number of regulations about how far away a turbine can be from roads, homes and other structures. They also need to be a certain distance setback from other landowners who aren't participating in the project.

In a traditional windfarm development, only the farmer with the turbine would get money through the tower lease payments. But Von Ohlen and the other farmers wanted their project to be different. The farmers with the turbines are still the only ones to get lease payments. But everybody who bought into the original project gets a share of the revenues based on how many acres they own.

The theory, by joining the project, you allow more turbines to be built, and you should still be compensated for that. Again, the farmers banded together to benefit all of them, instead of letting the power company decide -- through tower placement -- who benefits and who doesn't.

In November 2005, the project started delivering energy.

Some projects have lease payments of $9,000 per tower, but at Trimont, the farmers get just $3,000 to $5,000. In most other projects, the payments end there. Here, there are additional land payments of $10 to $25 an acre, which are a share of the energy profits. Those payments help put the Trimont farmers ahead of other projects.

"We came up with a plan where everybody benefits regardless if you get a turbine or not," Von Ohlen said. "It tends to make everybody happy."