Legislative and Regulatory Initiatives

Minnesota and Iowa lead the region in legislative action supporting cluster development. Minnesota has defined wind energy as an agricultural crop, enabling the establishment of cooperatives to harvest wind and making cooperatives eligible for low interest loans. Small cluster wind power projects (up to 2 MW in size) will become eligible for a 1.5¢/kWh incentive payment in July 1997. These projects can be owned by individuals or a wind energy cooperative. The state also has exempted small cluster development (up to 2 MW) from property tax. (Larger projects are no longer exempt.) Projects up to 5 MW are exempt from the power plant siting requirements, simplifying the permitting process.

Iowa has had a unique net energy billing law for several years. Most states with net billing laws limit the maximum size of the qualifying facility.⁶ Iowa, however, has no capacity limit. Consequently, large, utility-scale wind turbines can be installed at facilities with high electric loads. If the entire wind energy production is used by the facility, it only has to pay for excess consumption. The net effect is that the electricity produced by the wind turbine has retail rate value. If the turbine produces more electricity in a month than the facility uses, on the other hand, the utility is only required to pay the avoided cost rate for that energy. This cost is frequently just a quarter of the retail rate. While net billed wind turbines are not usually considered cluster wind projects, which sell their electricity to the utility, issues such as dispersed locations, siting and technical interconnections are much the same.

Responding to interest generated by the municipal utility in Waverly, Iowa, the state legislature created in 1996 an exemption to a state law that now allows multiple municipal utilities to co-fund a cluster wind power project. The federal government recently recognized the viability of cluster development as well. The Clinton Administration has earmarked $6.5 million in its 1997 budget for a "Wind Cluster Program," to be conducted through the U.S. Department of Energy.

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