In our last newsletter, we introduced Goodhue Wind’s favorable position in the final stage of the transmission interconnection review process. We expect to receive an interconnection agreement within months.
In this issue, we will talk about Power Purchase Agreements or PPA’s.
A PPA is an agreement to sell power to a utility. Typically, it is a 20 year contract, however the length can range from 15 to 25 years. Goodhue Wind is hopeful that it will soon obtain a PPA.
“This is a very important piece of the project, as it will increase the certainty for construction and operation in late 2010 as planned,” noted Jack Levi, Co-Chair of National Wind and senior developer for Goodhue Wind.
“We are working hard to win a contract with a utility that is landowner friendly,” Levi added, “and who aims to be a long-term partner of the community.”
Once the project is operational, Goodhue Wind’s goal is to retain long-term ownership of the wind farm and sell the electricity it produces as agreed in the PPA.
Over the course of a twenty-year PPA, the wind farm’s owners will receive a portion of the revenues from the sale of electricity. A PPA provides a guaranteed and steady revenue stream to the wind farm, as the price for the power is fixed per megawatt-hour generated. Therefore, a PPA gives the wind farm’s owners the comfort that their payments are backed by a credit-worthy source.
Detailed wind analyses based on data from Goodhue Wind’s on-site meteorological tower are used to estimate wind farm productivity. These figures can then be multiplied by the final PPA price to estimate yearly project revenues over the life of the PPA.
