President of Milan and Appleton bank is finding his small wind energy initiative comes with a large cost
MILAN -- Small wind can come with a big price tag.
Just ask Erik Thompson, president of the Prairie Sun Bank of Milan and Appleton.
He's been working to erect a small wind turbine as an opportunity to market the bank, promote renewable energy, and gain first-hand knowledge of the economics of wind power.
He believes that experience will be helpful to the bank's farm customers. He'd like to encourage small wind development on the farms of western Minnesota served by the Prairie Sun Bank, with offices in Milan and Appleton.
First, he'd like to get the bank's 20-kilowatt Jacob's wind turbine up in the sky and spinning.
The turbine's 120-foot-long tower has been lying prone in an alfalfa field one mile north of Milan since last April, waiting to be erected. Thompson initially hoped to erect the tower on the edge of Milan and feed its power to a house.
He ran into resistance. A city council member voiced concerns about the noise of whirring blades and the aesthetics of a tower. The city council eventually adopted an ordinance allowing small wind turbines. It sets an annual permit fee that is the same as the city requires for adult businesses.
With the clock ticking on a grant application, price increases slated for wind turbine equipment, and what he took as a slap in the face, Thompson decided to move on. He ordered the tower and had it shipped to property owned by his philanthropic foundation just one mile north of Milan.
It's a very visible site for motorists, ideal for erecting the tower with the bank's marketing theme: "Powering the renewal of our communities.''
The site is also only 4,500 feet from an Otter Tail Power transmission line.
It's a costly 4,500 feet, Thompson has learned.
Public Utilities Commission regulations require that Otter Tail Power charge the full costs for connecting wind turbines to the grid. Since the site has no existing connections, Otter Tail Power must charge for the costs of running a line 4,500 feet across Minnesota Highway 7 to its existing distribution line.
Estimates range from just over $11,000 for going under the road to over $12,000 for going over it.
Either option represents about five years of revenue from the turbine.
The turbine is projected to produce 29,000 kilowatt hours of power a year, or roughly enough to power four or five houses a year.
Thompson is exploring his options before connecting the turbine to the grid. One includes the possibility of feeding its power to batteries and using the site as a demonstration site for new battery technology. Another option is to develop an electrical customer at the site, such as a business or house that could use the turbine's power.
The bank president estimates that the project will carry an overall cost of $80,000.
The bank's costs are reduced by a $14,219 grant awarded the project by the United States Department of Agriculture's Rural Development. The project is also eligible for a tax credit for its depreciation costs.
He calculates that the small wind project will produce a payback in 15 years or so. Once it is paid off, he intends to donate the tower to a non-profit entity.