United Wind introduces third-party leasing to Kansas wind energy market

Source: By Morgan Chilson, Topeka Capital-Journal • Posted: Tuesday, March 15, 2016

A New York startup is pushing into the distributed wind energy market in Kansas and other Midwestern states, backed by significant international dollars and the opportunity for landowners to use third-party financing to tap into wind energy.

United Wind’s WindLease program, which has just been launched in Kansas by a company consultant located in Topeka, eliminates the substantial initial investment farmers and property owners would have to make to purchase a wind turbine, said CEO and co-founder Russell Tencer.

Instead, farmers can sign a 20-year lease agreement with United Wind, which would install and maintain the turbine, Tencer said.

“What that means is with the financing that we are able to raise, United Wind can ourselves pay for the turbine installation, and package the whole thing up in a way that the customer is only paying a monthly lease payment and has none of the aggravation or risk or worry about maintaining the turbine,” he said.

United Wind has drawn national attention for its successful financing efforts. Reuters reported in February on the company’s fundraising venture with Toronto’s Forum Equity Partners, which invested $200 million in the company. That announcement was quickly followed by others. Statoil Energy Ventures, an arm of Norway’s largest energy provider Statoil ASA, invested $3 million in the company’s efforts, for instance.

United Wind was formed by the merger of Tencer’s first company, Wind Analytics, with the wind turbine company Talco Electronics.

“At Wind Analytics, we developed our own proprietary system to figure out how to assess distributed scale wind conditions so we could ultimately tell property owners how much energy they could produce,” Tencer said, adding that the system is being used by United Wind to help farmers and others see the benefit from a wind turbine.

Distributed wind energy, unlike power generated at large wind farms which is often sold back to the utility, involves installing wind turbines to offset local energy consumption. It is utilized more frequently by farmers, homes and even businesses.

According to the U.S. Department of Energy’s 2014 Distributed Wind Energy Report, distributed wind projects in the United Sates accounted for almost 1 gigawatt of energy generation from nearly 784,00 wind turbines in the country. The report said large-scale turbines continued to increase in 2014, but that smaller and mid-size turbine sales slowed after record sales in 2008 through 2012.

Tencer hopes to change that by simplifying the process of putting in a turbine. The company, which has signed just under 200 projects, hopes to finance 1,000 wind turbines in the next two years with the investment dollars it has received.

It is difficult to assess exactly what kind of savings a farmer could see after installing a UW turbine because of varying wind levels, varying energy usage and other factors that differ greatly between properties, Tencer said.

“We typically see savings for homeowners in the $15,000 to $30,000 range over our lease. For farms and rural businesses, it’s typically on the order of $150,000 to $300,000,” he said.

Tencer said it is time for wind energy to get the investment that other quadrants of renewable energy have, including utility-scale solar, distributed solar and utility-scale wind.

“It’s really the only part of the market of renewables that’s had a lack of finance capital,” he said of distributed wind. “Aggregating projects and being able to attract bank financing basically brings scale, and with scale, we’re able to bring down our costs, which in turn allows us to offer better pricing to customers, which in turn broadens the market. Instead of these one-off projects that you’ve seen historically with distributed wind, (we can) make this category catch up and be competitive with other forms of renewables.”

Kurt Koles is the new salesperson who will work out of the Topeka area. Eventually, Koles said, an office will be established. Right now, he is on the road, talking with farmers and introducing them to the concept of leasing a turbine.

Tencer said United Wind has recently started selling in Colorado and Arkansas and will be moving into other Midwestern markets in the coming months. He said he is unaware of any other company that offers a 20-year operating lease for wind turbines.

He expects to eventually have employees in the Kansas area, pointing out that with installation and a 20-year obligation to maintain the turbines, employees with construction experience will be needed.

Elizabeth Yeager, assistant professor in Kansas State University’s department of agricultural economics, said farm operations can vary significantly on their energy usage, but many farmers may see the benefit of a wind turbine. In talking with farmers statewide, she said she isn’t aware that many have been purchasing turbines on their own.

Dairy farms and hog producers use significant amounts of electricity, as do some grain farmers who might have dryers installed to dry grain.

With tight commodity prices and other factors affecting farm revenue, Yeager said farmers might be open to turbines that would cut their costs. She spent part of the week out talking with farmers and found a lot of uncertainty.

“There’s a lot of concern about what’s going to happen with global demand, global markets; there’s concern about the strengthening of the dollar, concern about where interest rates are going to go and a lot of concern about the general outlook of prices right now,” she said.