Crosswind Energy LLC
Crosswind Energy LLC
47902 170th Ave
Laurens, Iowa 50554
Recipient of 2005 USDA Value Added Producer grant.
Rural Wind Energy Company Adding to Electricity Supply in NW Iowa
The timing was ideal. In 2005, the use of wind was still a relatively new way to make electricity, and it was getting some legs. Turbines were being installed in areas across the Iowa landscape and elsewhere in the country.
Ten producers in northwest Iowa banded together to explore the idea of erecting turbines on their own farms. They formed Crosswind Energy LLC.
“We are still the original 10 members in the LLC,” said Philip Sundblad, President. “Each member owns a turbine. Originally, we thought we would put one on each farm. That didn’t work out, so we leased land in Palo Alto County where all the turbines are located. There is also a substation located there.” Each turbine is 2.1 megawatts.
By June 2007, Crosswind’s turbines were operational and an agreement had been struck with Corn Belt Power Cooperative in Humboldt, Iowa, to purchase all power generated.
“The electricity we supply is enough to power 6,400 homes. It goes into the total supply of Corn Belt,” said Sundblad.
What started this idea?
Sundblad said he had attended a couple of meetings sponsored by the Iowa Farm Bureau on wind energy. He saw a potential financial benefit in wind farming. “Plus, I got an excitement out of it. It was a neat thing to do. Obviously, it is clean, green.” He and other members of the small group mostly grow corn and soybeans on their farms; some raise cattle and hogs.
The LLC members invested in the turbine structures. Corn Belt, he said, required additional studies on the project, which the group carried out with assistance of a 2005 $87,000 Value Added Producer Grant. Burns & McDonnell, a Kansas City, Missouri firm, conducted the studies. Actual manufacturing of electricity and maintenance of turbines is handled by Suzlon Energy, an international company based in India. Suzlon constructed the turbines for Crosswind.
Like most other types of investments – biodiesesl, ethanol or a hog facility – profitability is projected to hit 10 years out, with the group now in its second year. “But, I don’t have to carry as much debt load” as with some of those investments, added Sundblad.
He said he feels good about the project because of the economics involved, the fact that wind power is still an up-and-coming industry, the newer technology involved, future possibilities and the idea of creating alternative fuels.
“Our group is always on the lookout” for future opportunities along similar lines. For example, it is looking at current studies about turning wind energy into anhydrous ammonia.
One of those studies is taking place at the University of Minnesota. According to a university website, $300 million of anhydrous ammonia, derived from fossil fuel energy sources, is now used as nitrogen fertilizer in Minnesota agriculture. The university’s Wind-to-Ammonia pilot project hopes to demonstrate that “using Minnesota wind to make nitrogen fertilizer for farmers could transform agriculture, wind and hydrogen economics overnight,” explained Rolf Nordstrom, who heads up the project.
One of the goals of Crosswind is to see scientific advancement – like the anhydrous generation – come into play. Sundblad said he also hopes the Crosswind model for an LLC will be replicated elsewhere. “It’s a snapshot of what can be,” he said. “I get calls constantly. Groups are interested.” He has worked with a couple of locally owned projects from other states.
He said LLC members are trying to influence additional legislation that will support similar projects. A state incentive now in place is “absolutely necessary” for smaller energy producers, he said, adding that it needs to be kept in place or improved on.
The group faced some challenges, too. “Just putting all of the puzzle pieces together. . . . We always felt we were plowing new ground,” Sundblad said. Most other wind projects are not locally owned, he explained. They are constructed by large, major utility groups. One that is similar is the Hardin Hilltop Wind Farm project in Jefferson, Iowa, which he called a “sister project.”
Sundblad would like to see the group’s business model explored by a group of perhaps 300 people who would come together and explore ways to invest in a wind project. “It’s a natural progression – like a biodiesel plant.” A federal production tax credit would need to be changed, he noted, because credits were structured for passive income not active income.
Iowa, he said, has taken some good steps in supporting wind energy generation. The state is number three in production, following California and Texas.
Sundblad predicted that future wind energy efforts may face tougher times and would need “deep pockets.” He listed reasons such as:
- The world supply of turbines is sold out until 2010.
- There has been a big increase in steel prices.
- Large companies are making it more difficult for smaller producer groups.
About USDA VAPG
VAPG funding has been offered by the USDA periodically since the early 2000s. A new round of funding is anticipated to be announced in the coming months. To be considered value added, projects must show how products are differentiated in specific ways from commodity crops. Typically, projects must also show how they may deliver greater returns to producers.
Independent producers, farmer or rancher cooperatives, agricultural producer groups, and producer-owned business ventures, including non-profit organizations, may apply. In previous cycles, applicants were required to be producers of the raw commodity who will maintain ownership of that commodity through the process of creating a value-added product. Grants have been available for planning projects (such as marketing and business plans and feasibility studies) and working capital projects (which might include wages or packaging supplies). (http://www.rd.usda.gov/)