Monday, January 12, 2009

Compensating for Wind Rights Within Windfarms

If we use the rectangles, as suggested in the previous post, as our first definition of area for which wind resource rights should be compensated, we also need to recognize that within a given windfarm there may be areas that fall outside the rectangles and that should be compensated. The simple rule should be: if there is any wind resource stranded within the perimeter boundary of a windfarm that could not reasonably be developed because of the existence of the surrounding windfarm, that stranded resource must be compensated for by the interfering windfarm. The perimeter can be defined by applying the 5rd x 10rd rectangles to the outer turbines and simply drawing the lines to the other outer turbines. All land within that is unlikely to be used for wind because of the larger windfarm should be compensated at the same acreage rate as all other land in the windfarm.

It is simple and fair.

Sunday, January 11, 2009

Wind Pool Areas: Circle v Rectangle

Greg Brokaw, a horse guy from south central North Dakota, called to discuss circles and rectangles. A discussion was happening down in Spring Lake Township about who and how wind resource rights should be paid. One thought was that every acre within a distance equal to 5 rotor diameters from the tower should be equally compensated. This would therefore be a circle definition to compensated wind rights. Greg, an astute reader of this blog, thought a rectangle was best. He even suggested that rectangle be 5 rotor diameters across and 10 rotor diameters long with the long side pointed into the prevailing winds. I agree with Greg.

In determining the correct wind resource pool configuration from which wind resource compensation should be paid, it is important to recognize that typically there are two different prevailing wind directions, one in summer, the other in winter. Often, in the central U.S. these directions are near opposites. Windfarm developers recognize this when they space turbines 4 or 5 rotor diameters apart perpendicular (line running from southwest to northeast) to the prevailing winds and 8x or more apart downwind from the prevailing winds (northwest and south-southeast). Not all directions from a turbine are equal and they are not equally valued by the industry. A rectangle of approximately 5x rotor diameter wide and 10x rotor diameter in length, skewed so that the long side faces the dominant wind direction, better represents wind resource value than a circle. A circle that provides the same compensation equally in all directions of equal length from a tower unfairly discounts those who provide the most valuable resource in order to compensate those providing the least value.

In the above sketch, let us assume that each tower is providing $6,000 for resource use and that 25% of that amount or $1,500 is for real estate upon which the tower sits and 75% or $4,500 is for the wind resource. If one uses a 5x rotor diameter circle around the tower to define each wind resource pool eligible for compensation, then each of the 124.23 acres within the circle (using an 80m rotor diameter) is paid $36.22. Why should an acre four times rotor diameter laterally to the Southwest be paid the same as one to the Southeast when the wind hardly ever blows from the Northeast and when another turbine can be placed at the same lateral distance from the first? It makes no sense; however, some believe the circle is simple and therefore should be used. I contend that a rectangle is even more simple to calculate and certainly a better reflection of value.

I suggest a good wind resource pool print is the rectangle skewed toward the prevailing wind direction. It does recognize closer placement of turbines laterally to the prevailing winds and it doesn't dilute the pool shares needlessly. A rectangle would for an 80 meter rotor would contain 79.09 acres with each paying $56.90. A rectangle is more fair, pays better and is easier to plot.