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The sky's the limit: wind farms supplement traditional Montana power sources.

Wind energy is environmentally clean, the wind itself is free, and the technology is efficient. Yet neither Montana nor the United States can be powered by wind alone. Wind is a supplemental source of power, providing a vital contribution to the U.S. economy, environment, and energy independence, says Phil Stiles, operations manager for Invenergy, owner of the Judith Gap Energy Center.

"Wind power is the most efficient way to make electricity. The fuel costs are extremely low, the technology is mature, and maintenance of the machines is a manageable expense," Stiles explains.

A mechanical engineer with a master's degree in Renewable Energy Engineering, Stiles works in Invenergy's Chicago office. Invenergy is an investment company that works on the development, acquisition, and management of large-scale power generation. It owns the 90 wind turbines that comprise Invenergy's Judith Gap Energy Center, which lines both sides of Highway 191 between Harlowton and Judith Gap.

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Each turbine cost $1.5 million, from installation to operational readiness. One turbine can create enough power to supply about 600 homes with power. Invenergy estimates the total construction cost, including construction, supplies, and labor, at $180 million.

Through a contract with NorthWestern Energy, the default power supplier for most of western and central Montana's electricity, Invenergy adds their wind power to the mix of other fuels NorthWestern uses in its grid of underground and overhead supply lines.

For privately-held companies like Invenergy, wind energy is profitable. "It is the fastest growing segment of the energy industry," Stiles explains. Invenergy is one of the largest wind energy companies in the United States and is also active in Europe and Canada.

Stiles fully understands the limitations of wind. "You have to have a nice strong wind resource--not a problem in Montana. Yet even then, there will be 20 to 30 percent of the time that the wind will not blow."

Wind is currently only 1 or 2 percent of the national energy supply, but it could easily be 40 percent as the number of turbines increase throughout the United States, Stiles says.

Polls show strong public support for wind power. Almost nine out of 10 Americans (87 percent) support expanded wind farms, according to a 2005 poll by Yale University. In June, a Public Opinion Strategies conference called for 25 percent of the nation's energy to come from renewable energy sources by 2025. The group released poll results showing that 98 percent of Americans see shifting to domestically-produced, renewable energy sources as important for the country.

According to the Energy Information Administration, part of the U.S. Department of Energy, wind was the second-largest source of new power generation in the United States in 2005, after natural gas, and is likely to be so again in 2006. Demand for wind as an energy source, as well as concern for the price and supply of fuels, is driving the record growth in wind power.

One of the big issues with wind energy is reliability not the reliability of the turbines, but of the wind. It's a fact of nature that the wind does not blow all the time and that's why wind farms will never be able to provide more than just a portion of U.S. energy needs.

The fickle nature of wind requires energy suppliers such as NorthWestern Energy to coordinate backup supplies, meaning "free" wind isn't truly free. Besides the cost of developing the wind farm, the cost of wind power is blended with the cost of backup energy purchased on the spot in a process called "firming."

According to the industry group American Wind Energy Association (AWEA), U.S. wind energy installations now exceed 10,000 megawatts (MW) in generating capacity, and produce enough electricity on a typical day to power the equivalent of more than 2.5 million American homes. A megawatt of wind power generates enough electricity to serve 250 to 300 average homes. More information is available on the AWEA Web site: www.awea.org.

Even with high consumer demand, wind turbines supply less than 1 percent of the power used in the United States. According to the Department of Energy, a best-case scenario for wind turbines is that they could supply only 20 percent of U.S. energy needs.

Close to home, the Judith Gap Energy Center accounts for 7 percent of NorthWestern's energy portfolio, which also includes natural gas, coal, and hydropower from dams.

To gauge public interest and corporate commitment to wind energy, Montana Business Quarterly talked to people locally involved in the industry. From the power-plant specs and the economic benefits to power pricing and the industry's future, officials remain upbeat about using wind as a portion of Montana's electrical power supply.

"It's a once-in-a-lifetime opportunity to get a deal like this in a small town," comments Richard Moe, chairman of the Wheatland County Commission. "It puts us at the forefront of wind energy in Montana. We may not be there forever, but it's kind of fun."

How the Western Wind was Won

The largest wind power plant in Montana got its start just as the new century dawned. Big Sandy farmer Bob Quinn stumbled upon the idea thousands of miles away in Germany. A mere four years later, in 2004, he sold the idea and related research for the Judith Gap project to Invenergy.

"I was an organic farmer and still am," Quinn tells. Like his small organic grains, "wind is a renewable energy and it's a natural extension of sustainable agriculture."

In 2000, Quinn was in Europe selling grains and visited a distant relative in northern Germany who owned a castle that held information about Quinn's family history. Cousin Georg Graff von Wedel paid for castle renovations and upkeep by selling power generated by 10 wind turbines he built on the property.

With his business partner Jorg Beland, yon Wedel came to Montana looking for places outside of Germany to expand their operations. With Quinn's assistance, the pair traveled to Livingston, Butte, Helena, and Judith Gap to survey sites and talk to others already in Montana's small wind-energy business.

"They were very enthused by what they saw," Quinn remembers. In April 2001, they returned to place three 40-meter-tall wind turbines at various Montana locations: one at the Quinn farm near Lewistown, one south of where the Judith Gap Energy Center now sits, and one in Deadman's Basin east of Harlowton.

After 18 months of monitoring wind conditions, Quinn says, "It was apparent that Judith Gap was to be the focus."

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Their company, Windpark Solutions America, responded to a Montana Power Co. Request for Proposals (RFP), but didn't make the list of finalists. They then formed a joint venture in 2002 with Arcadia Windpower of New York to move the project forward.

January 2003 brought a second opportunity to take an RFP to NorthWestern Energy, the company that took over Montana Power's power transmission operations. For the 2003 proposal, Wind Park Arcadia had more expertise and financing. However, by fall that year, NorthWestern Energy went into bankruptcy. "Talks with NorthWestern stalled," Quinn tells.

By spring 2004, they were closer to inking a deal with NorthWestern but still needed more authority in the industry. "We needed a new partner for funding and to make NorthWestern more comfortable. That is when we found Invenergy," Quinn explains. It was summer and negotiations with NorthWestern began again.

"There was another RFP in fall 2004," Quinn says. In January 2005, they signed a purchase agreement and sold the entire Judith Gap project to Invenergy. "[NorthWestern] wanted someone who had experience building and running wind power in the U.S.," Quinn summarizes.

In March 2005, the Montana Public Service Commission approved, on a 4-1 vote, the agreement to sell the Judith Gap-produced wind power to NorthWestern Energy, a critical component to the project's success. The 20-year contract has Invenergy selling power to North Western Energy for $31.75 per megawatt hour.

The project anticipates generating about 135 megawatt hours (MWh) of electricity from 90 turbines, and will provide about 7 percent of the electricity needed to serve North Western's 300,000 customers in Montana. The site has the capacity to provide 188 MW on the line by adding approximately 33 more turbines.

The chosen site has outstanding and consistent winds and sits six miles south of Judith Gap in Montana's Wheatland County. The Montana Department of Natural Resources and Conservation agreed to lease Invenergy enough state-owned school trust land for 13 turbines. The remainder of the Energy Center sits on land leased from five private landowners. All the landowners, including the state, will share in the Energy Center's profits.

In spring 2005, D.H. Blattner and Sons, a Billings contractor, began construction on the Energy Center. By November, the first of 90 turbines came online.

Finally, the entire center was online Jan. 1, 2006. An initial test period was successfully completed on Feb. 16, meaning the project received commercial status. General Electric, Invenergy, and NorthWestern had to run 75 hours at a minimum of 95 percent of availability during testing.

In early 2006, The Judith Gap Energy Center officially began its full operation.

Site Specifics

John Bacon, the Energy Center's operations manager, oversees the day-to-day, on-site functions of the wind farm and makes sure work is in conformance with existing regulations and standards set by his employer, Invenergy.

Bacon is a 37-year-old Wibaux native who received his business degree from Dickinson State College in North Dakota. After college, he served a stint as economic director for Killdeer, N.D.

"When I was in college, I joined the National Guard's Helena unit and worked on helicopters. I liked the wind turbines," he said. Bacon went to work as a wind technician for Minnesota's Enxco, which used the same turbines as Invenergy does in Judith Gap.

After almost three years in Minnesota working on turbines, Bacon wanted to return to Montana. He contacted Invenergy and found out about the Judith Gap project.

One of the world's top turbine manufacturers, General Electric, built the 90 wind turbines used at Judith Gap. Each carries a warranty of five years, during which G.E. will provide personnel for turbine operations and maintenance. Bacon explains that after five years, the service contract will either go out for bid or Invenergy will take it over itself.

Bacon is the sole Invenergy employee, while G.E. has 10 full-time workers. They include one site supervisor, a lead technician, and an administrator who documents all work done on the turbines. The remaining seven workers are wind technicians, who provide preventive, scheduled maintenance. Including Bacon, three employees are new to Judith Gap, while others were locals trained by G.E. to maintain the system.

Bacon notes that every six months, each of the 90 turbines have to have their bearings greased and oil levels checked, filters changed in the gear box, electrical components assessed, and a general overall cleaning. That means four to five turbines receive this type of maintenance each week to comply with the six-month requirements.

Since joining Invenergy last November, Phil Stiles manages the business relationships and contractual relationships for the power plant. From his Chicago office, he oversees the land leases and the agreement with service providers, such as General Electric, the subcontractor and the service provider for the windmills.

"The windmills are able to work over 98 percent of the time the wind is blowing. We are making a ton of electricity," Stiles boasts. "On an annual basis, each windmill will make enough electricity for 600 houses. Multiply that by 90 windmills and that is 54,000 homes annually."

Invenergy's 20-year contract with NorthWestern calls for the Judith Gap Energy Center to provide 135 megawatt hours, the peak output when the wind is blowing strong. "Based on our wind studies, we think we will deliver 450,000 MWh this year. This is the largest wind farm Invenergy operates," Stiles notes. "And it has the friendliest neighbors."

When Invenergy was negotiating land leases for turbine placement, Stiles learned a lot about Montanans. "Farmers are extremely savvy," he says. "They know how to make the ground work for them. Now they are making the wind work for them."

Here's how Windpark Solutions America breaks down the mechanics of creating electricity with wind turbines:

The towers are built as high as possible to access the slightly faster and less disturbed airflow. The nacelle (a complicated gear box) houses the generator and computer-controlled engines for keeping the turbine facing into the wind. The rotor is made up of the blades and the hub, which connects to the generator via a drive shaft. The electricity produced is then processed by transformers at ground level to increase the voltage for safe onward transmission by powerlines.

Bacon notes that the large transformer at the substation in middle of the windpark boosts the power to 230 kilovolts--the same voltage that's passing through North Western's transmission lines.

Wind turbines do not produce any radiation or harmful emissions. They produce no greenhouse gases and no environmentally damaging matter. The noise the generators make is almost inaudible at ground level, although the swish of the blades can be heard nearby.

When the Wind Doesn't Blow

Wind speed constantly changes, causing headaches for both Invenergy and North Western. When operating at full capacity, the Judith Gap Energy Center can put enough power onto the grid to supply 30,000 homes with electricity.

But there are no guarantees with wind.

Every morning, Bacon does his regular weather analysis and calls North Western Energy from Judith Gap to report how much energy he expects to send online. To make the best forecast, he relies partly on the National Oceanic and Atmospheric Administration Web site. North Western is also adding three strategically placed meteorological towers to improve his predictions.

Once his calculations are reported, he spends the remainder of the day hoping he was correct. If not, North Western has to scramble.

"This is one of the intricacies of the resource," explains Claudia Rapkoch, director of corporate communications for North Western Energy. "We have to have a resource backup supply. We purchase it currently from the market. It's one of our default supply activities." When North Western has to spend extra money to "firm" the power on their transmission grid, the default supply customers bear the cost, she adds.

"Overall cost of windpower is higher because of the firming the resource, a balancing. There is a cost associated with that," she adds. "Anyone who receives electricity from North Western pays--typically most of North Western's residential customers." Rapkoch says the best firming resource is natural gas.

North Western often has to make mid-day decisions to satisfy immediate electrical demand that surpasses the company's supply--which has suddenly become inadequate because the wind simply isn't blowing enough power into the grid. Industry leaders know it's the consumers who will pay the added cost.

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Rapkoch notes: "From an engineering perspective, there is no way to replace open-market purchases with a firming base load, such as all coal, all gas or all hydro. What's most important to us as a transmitter and default supplier is that we have to integrate so it doesn't cause damage or undue costs to our customers. [Wind power] has caused us more problems, but it is manageable. It is not unreasonable under these circumstances.

"Our agreement calls for us to purchase between 135 and 150 MWh, though actual delivery depends on the wind itself," Rapkoch explains. "It's not a steady resource. Our transmission system has what's called a balancing agreement for our distribution system. We put on and take off [power] equally at any given time. We balance on hourly or minute-by-minute basis. We have to have enough electricity going on the system as is going off. And, we have to have a reserve.

"One of the difficulties we first encountered with Judith Gap, and it's not unusual, despite very best planning and engineering you never really know what that system is going to do until you put it online. We've been coming up with our own analysis. Variability is greater than what was first anticipated."

North Western's goal is a diversity of fuel options. "As a component of the portfolio, [wind] is a great resource," Rapkoch says. Because it is also popular with the public, it's becoming a state-ordered resource. The 2005 Montana Legislature mandated that by 2015, North Western must buy 15 percent green power, such as wind, solar, geothermal, or new, small hydroelectric projects.

Blowing into the Future

"In the beginning, I didn't know anything about wind," admits Bob Quinn, who gave birth to the idea of Montana's largest wind farm, at Judith Gap. What he ultimately learned is still expanding, with Wind Park testing the possibilities of more wind facilities across Montana. "Teton Ridge east of Choteau is promising, perhaps 13 turbines," Quinn reports. He said they are exploring and negotiating where the 20 megawatts of energy would connect to the North Western power grid already in place.

He notes that getting turbines probably won't happen until 2007. Wind Park is in "heavy negotiations" to secure turbines. "It's very difficult," Quinn explains, "because it's such a seller's market to them. They say, 'Show us the money and we will show you the turbines.'"

"So we have to ask the bank for money for the turbines. They say, 'Show us the turbines and we will show you the money.'" Quinn equates it to "a chicken and egg thing."

Windpark's prospecting in southeastern Montana is too premature for comment, Quinn notes.

More wind power could also come from the Judith Gap Energy Center one day. From his Judith Gap office, Bacon states: "Here we have capacity for 188 MW on the line, but we only have 135 MW installed. We could put another 30 to 35 turbines out here." However, it may not be a cost-effective investment for Invenergy. The price of each turbine ($1.5 million including installation) and the cost to transport a large crane to the site may outweigh any profit potential.

"Invenergy looks at any new projects being 100 MW or higher," Bacon notes. Any new wind projects would also have to fit in with the plans of the company that eventually purchases North Western Energy. "We don't look at it as being anything to be concerned about," he adds. "Our [20-year] contract is in place."

On an acre of land atop Gore Hill at Great Falls International Airport, private developers own six 380-foot-tall wind turbines. Those machines are reportedly producing enough power to satisfy purchase agreements for 160 MWh of electricity sold to Idaho Power Co. A transmission agreement with North Western Energy has been signed to transmit the power via overhead lines.

This "Horseshoe Bend" project is Cascade County's first large-scale wind farm. The private wind-development project is owned by United Materials of Great Falls, while Energy Development Group of Helena is the project developer.

The Horseshoe Bend turbines are visible from Black Eagle and are identical to the G.E. turbines being used at the Judith Gap Energy Center. The wind project will produce enough energy to provide power to an estimated 2,400 homes.

Perhaps the largest project being developed is the proposed Valley County Wind Energy Project about 30 miles northwest of Glasgow. Wind Hunter LLC is in negotiations with the Bureau of Land Management and state of Montana to lease enough property to build a windfarm twice as large as the Judith Gap Energy Center. When built to full capacity, 300 turbines would produce 500 MWh of electricity.

The American Wind Energy Association (AWEA) also lists two other projects in the works across Montana. They are a single turbine operation on the Blackfeet Reservation owned by Glacier Electric Cooperative and the Martinsdale Wind Farm owned by the Martinsdale Hutterite Colony and which produces 0.175 MW of electricity.

The Springwater Hutterite Colony, situated about four miles south of the Judith Gap Energy Center, has published plans to install 26 towers across 2,000 acres of farmland.

In April, the U.S. Department of Agriculture announced it will provide a $26,000 grant to Bear Paw, a local economic development organization that helps administer economic development programs in Blaine, Chouteau, Hill, Liberty and Phillips counties and the Fort Belknap and Rocky Boys Indian reservations.

As more windfarms come online, turbine manufacturing companies are creating jobs. Yet suppliers that manufacture the turbine components can't keep up with the demand. Individuals who want a turbine for use in a rural area are standing in line with billion dollar corporations to purchase the mechanical components needed to harness the wind.

The Timeline

2000--Bob Quinn, a Big Sandy organic farmer, was introduced to wind power when he visited distant cousin Georg von Wedel in Germany. The two, along with Jorg Beland, teamed up to form Windpark Solutions America. The Judith Gap area was one of several Montana sites they monitored.

2002--Windpark Solutions America worked with Arcadia Windpower of New York to prepare a proposal to North Western Energy.

January 2005--North Western inked a deal for the wind power with Invenergy, the Chicago. based company that purchased the project from Windpark Solutions and Arcadia Windpower.

Spring 2005--Blattner Construction, a Billings contractor, broke ground on the project.

November 2005--The first of 90 turbines came online.

Early 2006--The Judith Gap Wind Energy Center began operating at fall capacity.

Wind Turbine Information

Manufacturer: General Electric

Blade length: 126 feet of fiberglass

Tower Height: 262 feet

Nacelle Weight: 108,000 lbs. generator and gear

Blade Speed: Ten to 20 rpm

Cut-in Wind Speed: 7.8 mph

Full Production Wind Speed: 33.5 mph

Cut-out Wind Speed: 56 mph

Concrete Foundation: 48 feet wide by 7 feet deep

Amy Joyner is a reporter for the Montana Business Quarterly.

RELATED ARTICLE: Economic benefits of the Judith gap energy center.

Now that the $180 million wind farm has been built and most construction workers have returned home, Wheatland County and the surrounding area are starting to see the second phase of economic benefit. During the next 40 years, the Judith Gap Energy Center is expected to infuse the economy with another $25 million to $30 million in tax money.

According to the Wheatland County Department of Revenue, tax receipts from the Energy Center will be shared by two mill levy districts. According to preliminary figures, the value of equipment and property owned by Invenergy is $170,378,800. That amount is taxable at 1.5 percent of the value as a new and expanding industry.

An example of the impact on the county can be seen when multiplying the taxable value of $2,555,682 by the 2005 mill levy (0.44082). That mathematical gauge, based on the 2005 mill used for one district, means that Wheatland County would see $1,126,595 in revenue. The current year's mill will probably be a bit lower because the wind farm raised the county's overall anticipated tax revenue.

That amount is just about what Invenergy expects to pay, says Phil Stiles, operations manager for Invenergy, owner of the Judith Gap Energy Center.

Because most land is leased, Invenergy does not pay property taxes on much land, but does pay for improvements made to the land and their operating equipment. "It's a great investment in rural Montana," Stiles adds.

Stiles also confirmed a rough figure for the annual wind assessment tax that Invenergy will pay to Wheatland County. The county will receive an estimated $1.2 million per year for the first 10 years, and that will increase over the next 10 years.

Wheatland County is already receiving about $65,000 a month from Invenergy in impact fees, money paid to the county for road maintenance and other county services. Over the next three years, that could add $800,000 more to the county's coffers. That impact fee is in addition to taxes.

Landowners, private and state, will receive annual royalties as both a minimum payment and a share of the Energy Center's profits from the electricity sold. Many landowners are able to double-dip their income by continuing to graze livestock under the spinning turbines. Though lease agreements vary, Stiles was able to say that for the 8,300 acres on which the Energy Center operates, minimum payments totaling $348,000 are written into contracts with state and private landowners.

To secure the state land leases, Invenergy has reportedly agreed to add $20,000 to the school trust for a one-time installation fee. The state stands to make $50,000 to $75,000 a year over the next 10 years under lease agreements for use of school trust lands. Future revenue payments based on power production could bring another $35,000 to $50,000 annually.

After the first seven months of 2006, Invenergy made its first royalty payments of $238,876. That amount was based on a percentage of the minimum payment. On-site Energy Center supervisor John Bacon notes that this year, five private landowners will share $348,000 of the expected minimum payment, and that's before production-based royalties are added.

Invenergy also works with the Wheatland County commissioners on an endowment fund, which earns 1.5 percent of the value of the Invenergy project over three years. Commission Chairman Richard Moe explains that the county puts the money in a wind-energy account.

"It accumulates interest," he tells. "There's a consensus to leave principal alone and spend only the interest." An agreement is awaiting signatures from two area schools and the county, which will all be beneficiaries. Moe adds: "When it's done. It will be about $2.4 million."

"It's a once-in-a-lifetime opportunity to get a deal like this in a small town," Moe comments. "We love it. It's impressive to look at. It puts us at the forefront of wind energy in Montana. We may not be there forever, but its kind of fun."

He admits that the handful of small-scale wind farms being developed in western Wheatland County have little financial consequences to the county.

John Bacon, the Energy Center's operations manager, is quick to point out another key component to local economic growth--the annual salaries and compensation of $375,000 for 11 full-time employees. The sole Invenergy employee is Bacon, while General Electric has 10 full-time workers.

Third-party contractors provide another boost to the rural area. "We bring in third party contractors from time to time to complete work. They usually stay in local motels and eat at local restaurants," Bacon notes.

Generally two to three people travel to Judith Gap every six months. "If it is a big project, they have brought in as many as 15 people for about a two-week stay. It depends on the work to be completed," he adds.

One such subcontractor was Rope Partners, a two-man team that spent one week in June climbing, cleaning, and repelling from the wind towers. "They like to climb," Bacon asserts.

In March and April, G.E. sent additional teams of 15 workers to complete a two-week, on-site retrofit, which was part of a nationwide overhaul of all such G.E. turbines.

Invenergy's community contributions are enjoyed by local charities as well. Bacon reports that the company donated $2,500 this year. "We helped the science fair with Billings Clinic. Invenergy likes to do anything that has an educational value to it," he explains. Donations also went to the 'Senior Sober' graduation party in Harlowton and the Judith Gap baseball team--aptly named 'The Turbines.'

Phil Stiles, operations manager for Invenergy

Phone: 312-224-1400

County Treasurer's Office

Rosemary Steele--Treasurer

Pat Langston--Deputy Treasurer

Phone: 406-632-4892

Chris and Linda--Assessors

Phone: 406-632-4894
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Title Annotation:NorthWestern Energy
Comment:The sky's the limit: wind farms supplement traditional Montana power sources.(NorthWestern Energy)
Author:Joyner, Amy
Publication:Montana Business Quarterly
Article Type:Cover story
Geographic Code:1USA
Date:Sep 22, 2006
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