The 9-megawatt (MW) PáTu wind project is a small, community-owned wind farm nestled among 850 MW of wind power behemoths: the Klondike and Biglow Canyon wind farms in Sherman County, Ore. The wind farm, which consists of six GE 1.5-megawatt (MW) turbines, was developed by Ormand and Jeff Hilderbrand on land their family has been farming for more than a century. The project is the first community-owned wind farm in Oregon, and one of only two on the entire West Coast.
PáTu began producing power in December 2010 and recently signed two long-term agreements to sell its renewable energy credits (RECs) to Seattle-based REC marketer OneEnergy Renewables (OER) and Seattle City Light, Seattle’s municipal utility. The agreements are the first of their kind in the region and will hopefully serve as a model for future community wind development.
RECs are the “environmental attributes” of renewable energy generation. Separate from the actual megawatt-hours (MWh) produced, an REC represents the tangible but otherwise not marketable benefits of one megawatt-hour of renewable energy – the carbon not emitted, the mountaintop not removed, the oil not spilled, etc. Creating a market for RECs evens the playing field for clean energy in a market dominated by dirty energy sources. For many projects, securing an REC contract can mean the difference between financial viability and bankruptcy.
According to OneEnergy Renewables CEO Bryce Smith, negotiating a 20-year REC contract for a small local project like PáTu presented unique challenges and opportunities. “It’s nice for people in the Northwest to be able to drive and see the projects their RECs are coming from,” Smith said. “But, PáTu is a 9-MW project, which is small. The smallest wind technologies are getting better; but it’s still hard to make them pencil, when you have customers who care not just about where the RECs come from, but the economic feasibility as well. A lot of utility customers are interested in supporting local projects as best they can, but that is hard to do in the current REC market.”
The key to making local projects like PáTu work is collaboration. In this case, PáTu worked with a brokerage firm Karbone to negotiate a contract that enables the wind farm to sell RECs to OER until 2015. In 2016, Seattle City Light will begin purchasing the facility’s RECs to comply with Washington’s renewable portfolio standard. “You have to get very creative in order to make these projects work,” Smith said. “It takes cooperation and you have to be willing to build relationships with lots of folks. As a developer, we understand what it’s like to be in PáTu’s shoes and to have to sell the RECs for 20 years to get the project financed. We can help smaller developers, like the Hilderbrand family, get these projects done. And, from a practical perspective, these sizes of projects can work nicely in small communities.”