A gust of deals seen for Minnesota wind power - Finance & Commerce

Posted: 2:38 pm Thu, May 12, 2011
By Todd?Nelson

Juhl Wind Inc. last week said it had snapped up controlling interest in a 10.2 megawatt wind farm near its Woodstock, Minn. headquarters. (Submitted photo)

Major local player bets on acquisitions for growth

More wind farms could change hands in Minnesota as a homegrown player looks to juice revenue and investors mull exit strategies.

Juhl Wind Inc. last week said it had snapped up controlling interest in a 10.2 megawatt wind farm near its Woodstock, Minn. headquarters in a $400,000 deal expected to add more than $1 million in annual revenue.

?We?re keeping our eyes open for other potential projects,? CEO Dan Juhl said in an interview. ?From our position, there are quite a few smaller wind farms that have been in operation for quite a few years. Usually once the equity partners have exercised their tax values out of the deal, they?re interested in having someone buy them out.?

That?s just the scenario that led to Juhl Wind?s acquisition of? Woodstock Hills, a 17-turbine wind farm it developed in the late 1990s. The deal buys out two institutional investors described as significant companies in the energy business. An entity controlled by Dan Juhl retains a small stake in the project.

Juhl Wind is considered a leader in developing and managing community-based wind power projects - small, locally owned wind projects that the CEO said provide rural economic development opportunities as well as electricity.

The Woodstock Hills acquisition is Juhl Wind?s first and appears to be the most recent involving a Minnesota wind energy project since August, when John Deere sold its wind energy business to Exelon Corp. in a deal that covered projects in Minnesota and seven other states.

Juhl Wind expects the Woodstock Hills wind farm to continue generating $1.2 million in revenue from the sale of wind power to Xcel Energy under a long-term purchase agreement. Juhl?s top line could use a boost. It saw revenue drop 46 percent in 2010, to $6.3 million. It reported a loss of $2.2 million last year, an improvement over a $3.3 million loss in 2009.

The deal comes as Minnesota?s role as a national wind energy leader was reaffirmed by year-end data released by the American Wind Energy Association (AWEA).

Minnesota ranked fourth nationally, trailing Texas, Iowa and California, in wind power installations, with 2,192 megawatts of wind energy online at the end of 2010, according to the AWEA report. That?s enough to power 630,000 homes. The state added 507 megawatts of wind capacity last year, ranking fifth among states, and has 507 megawatts under construction.

Minnesota led the country through the first quarter of 2011 by adding 293 megawatts, according to AWEA?s first-quarter market report.

Last month, a controversial 78-megawatt, 52-turbine project planned in Goodhue County got a boost when a judge sided with the developer of the $179 million project in a dispute over proposed setbacks for the turbines.

More deals like the Woodstock Hills acquisition likely are on the way, according to Lisa Daniels, executive director and founder of Minneapolis-based Windustry, a nonprofit that promotes community-based renewable energy solutions, helping them develop and own community-based wind energy projects.

?There will be other projects coming right along from this point on that will follow suit,? Daniels said. ?So we should be seeing some more. It?s part of the rhythm of how these things were set up. I guess it?s a good thing.?

The motivation for equity investors to sell stems largely from the fact that the production tax credit they receive ends after 10 years, Daniels said. As other projects pass the 10-year mark, equity investors likely will follow suit and sell.

Mark Fritsch, a former Xcel Energy engineering and management executive and now president of energy industry consulting firm Current Compass, said he also expects Juhl Wind and other companies to have increasing opportunities to purchase wind farms.

?I expect that to be a growing piece,? Fritsch said. ?The first commercial wind farm in this country was in California in 1986. There?s been a lot of wind come in, in a fairly short period of time.?

Find state and national wind energy fact sheets and market reports from the American Wind Energy Association here.

Learn about state incentives for renewable energy and energy efficiency at this U.S. Department of Energy site here (click on Minnesota on the map).

This entry was posted on Thursday, May 12th, 2011 at 2:38 pm and is filed under Energy, Top Story. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

Source: http://finance-commerce.com/2011/05/a-gust-of-deals-seen-for-minnesota-wind-power/

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