ARM is well-positioned and has the experience to provide financial, scientific, and technical guidance throughout the entire commercial wind energy development process. 

Whether the project involves only advisory service including the assessment of a property’s potential value through the completion of a desktop study and preliminary financial modeling, or whether it involves a formal wind resource assessment, zoning/permitting, environmental surveys, foundation studies, wind turbine selection/procurement, and PPA negotiations, ARM is prepared to maximize the value of your asset and provide high quality, cost-effective, client-focused professional consulting and engineering services.

 

 Large areas of the mid-Atlantic region have the wind speeds needed to support a commercial wind energy project.  Much of this land is located within state game lands, state forests, or parks, where commercial development potential may be restricted by competing land uses or conservation regulations.  Additionally, the large distance to existing electric transmission lines may preclude development of some of the remaining areas.

ARM Group can assist Owners of potentially suitable wind energy property in:

• Evaluating the viability of their property for a commercial scale wind project;
• Assessing the potential total development value of the property; and 
• Advising how to structure agreements to maximize the total development value.

ARM’s advisory and consulting services generally include, but are not limited to, the following:

 

Site Suitability Screening

 

Using a desktop analysis approach, ARM can evaluate the available land area, exposure to the wind, existing land uses, proximity to residences and property boundaries, and possible electrical interconnection points for the plant to identify areas that appear suitable for utility scale wind energy development.  Using available wind mapping, ARM can develop a preliminary financial analysis to determine whether a wind project may be financially viable and attractive.

The Chart below illustrates how each of the elements (events/milestones) of a commercial scale wind energy project feasibility/economic viability study contributes to the net increase in the total development value of a given property.  Each of the events/milestones listed on this Chart, and able to be executed by ARM, plays an important role in ensuring that Owners maximize the value of their asset.

 

 Development Alternatives Analysis

The Owner has several options to pursue the development of a commercial wind energy project on their property that would involve very different investment requirements and risk-reward structures.

 

1 — Lease/Royalty Approach

The simplest approach to develop the project is to offer the property for lease to a wind power developer.  This would require no investment on the Owner’s part, but would result in the minimum potential value for the property.

There are essentially three types (any combination) of payment arrangements that Owners can make with wind developers on lease agreements. Each type of payment has its own risk, which is proportional to the risk taken.

• First is a single upfront payment. As the value of wind is expected to increase over time this type may not be the best form of lease.
• Second is a fixed annual payment. This is less risky for the landowner but it may result in a smaller share of the turbine revenue.
• Third is a percent of the revenue from the energy sales. This type of lease carries the most risk, as the income will vary depending on the output of the wind turbines, but has the potential for a high return to the Owner.

A combination of any of the first three lease types could be utilized. One possibility may include a fixed payment per acre along with a share of the revenue from each turbine. To date the most common lease payment method has been a fixed annual lease payment.  A developer would typically offer about $2,000 to $4,000 a year for each wind turbine location as a lease payment or royalty.  The return to the Owner would thus depend on the developer’s estimate of the number of turbines that could be placed on the site, the value of the wind resource, and the cost of development.  Site-specific information provided by the Owner to support the viability of the site would be useful in negotiating a higher lease or royalty arrangement.

 

2 — Owner Development

The second option available to the Owner is to undertake self development of the property.  Under this scenario, the Owner would fund the site-specific studies required to prove the value of the wind resource and the feasibility and cost of project development.  Once the resource is proven, a long-term Power Purchase Agreement (PPA) would be sought with a utility or with a green energy marketer.  With a PPA, financing of the construction of the project could be arranged.  Or alternatively, the property/project could be sold to a developer at a much greater value to the Owner based on the financial benefits of a proven project.

 

3 — Equity Partnership with Developer

A third option is to participate as an equity partner in the development of the project.  This option has the potential to dramatically increase the Owner’s return on the property while managing risk by partnering with an experienced developer and sharing the investment.  There are a number of developers that may be willing to discuss an equity partnership arrangement.