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Access
This permitting regulation category refers to the standards that apply to the service roads or construction roads of a wind project. Construction equipment for large, commercial-scale wind turbines can exceed the allowable weight and size for some rural roads and therefore counties may impose certain requirements in this category.
Aggregation
Bundling several wind energy projects together so that they are treated as one larger project (when purchasing turbines, interconnecting, or maintaining a project, for example,) in order to spread out costs over more turbines or projects. This can have the effect of improving project economics.
Alternative Minimum Tax (AMT)
AMT can be thought of as a different tax system with different rules and deductions; taxpayers must compute their taxes under both the regular tax and AMT rules and then pay the greater of the two. The purpose of the AMT is to prenvet those in the higher tax bracket from getting by from year to year tax free. A consequence is that many unsuspecting…
Anemometer
A device used to measure wind velocity as part of a wind resource assessment study. Cup anemometers are the standard type used today, with 3 cups spinning on a vertical axis. The anemometer typically is installed on a guyed tilt-up tower at the anticipated location and height of the potential wind turbine.
Anemometry Equipment
The set of meteorological measuring and logging devices used to collect wind data for a wind resource assessment study. Equipment set typically includes: tower, anemometer, wind vane, temperature sensors, heating device, and data logger
Appearance
These permitting regulations are designed to reduce the visual impact of a wind turbine, as well as minimize the impact on wildlife, especially birds. The most common requirements are for a white or grey color, and non-reflective finishes to minimize glare.
Asset/Equity Ratio
Total assets divided by shareholder equity. The asset/equity ratio is often used as a measure of leverage, or how well a project utilizes investment capital to realize return for investors.
Attractive Nuisance
A hazard that is likely to attract children, who are unlikely to fully comprehend the danger posed by the hazard. A landowner may be liable for injuries to children caused by the hazard even if the children are trespassing.
Avoided Cost
The rate that utilities are required to pay independent power producers according to the Public Utilities Regulatory Policy Act (PURPA). Avoided cost is the simply the cost that the utility would have incurred for producing the same amount of power. This is not a favorable rate to recieve as an independent power producer.
Business Metrics
A system of parameters or other quantitative assessments of a business that can be measured periodically and systematically. Business metrics are often used to keep track of how well a business is meeting its objectives.
Clean Renewable Energy Bonds (CREBs)
A CREB is a special type of tax credit bond providing rural electric cooperatives, municipal electric utilities, and government entities (including tribal councils) the equivalent of an interest-free loan for financing qualified energy projects. CREBs were created in the Energy Policy Act of 2005, and are largely modeled on the Qualified Zone…
Cogeneration
The simultaneous production of heat energy and electrical of mechanical power from the same fuel in the same facility. Cogeneration is achieved through the capture and recycle of rejected heat that escapes from an existing electricity generation process.
Commercial Scale Wind
Refers to wind energy projects greater than 100 kW where the electricity is sold rather than used on-site. This category can include large arrays of 100 or more turbines owned by large corporations, a single locally-owned wind turbine greater than 100 kW in size, or anything in between.
Commissioning
The process of connecting the turbine to the transmission lines and making sure it is operating within its normal or defined parameters.
Community Wind
Locally-owned, commercial-scale wind projects that optimize local benefits. Locally-owned means that one or more members of the local community has a significant direct financial stake in the project other than through land lease payments, tax revenue, or other payments in lieu of taxes. The term Community Wind refers to the method and intention of…
Community-Based Energy Development (C-BED)
2005 Minnesota law requiring Minnesota utilities to establish tariffs for wind energy projects meeting specific requirements for local ownership. The tariff sets a framework for negotiation of power purchase agreements between utility companies and qualifying community-based energy projects where the payment for energy in the first 10 years of the…
Cost-of-Service Ratemaking
A system for establishing prices in which a utility is reimbursed for the legitimate costs it encounters in serving customers, plus a specific percentage for profit.
Covenant
A promise in an indenture, or any other formal debt agreement, that certain actitivities will or will not be carried out. The purpose of a covenant is to give the lender more security. Covenants can cover everything from minimum dividend payments to levels that must be maintained in working capital.
Coverage Ratio
A type of accounting ratio that helps measure a company's ability to meet its obligations satisfactorily. A coverage ratio encompasses many different types of financial ratios. Typically, these kinds of ratios involve a comparison of assets and liabilities. The better the assets "cover" the liabilities, the better off the company is.
Debt Service Coverage Ratio (DSCR)
The ratio of net operating income to the amount of money that is required to make regular debt payments. A DSCR of greater than one means that the project is taking in enough income to cover payments on loans. A number of less than one means that the project will have to dip into reserves or other financial resources to cover debt payments. Lending…
Debt vs. Equity
An amount of money borrowed and owed by one party to another is considered debt. For example: bonds, loans, and commercial paper. Equity is a term whose meaning depends very much on the context, but in general, it refers to ownership in any asset after all debts associated with that asset are paid off.
Debt-to-Capital Ratio
A measurement of a company's financial leverage, calculated as long-term debt divided by long-term capital. Total debt includes all short-term and long-term obligations. Total capital includes all common stock, preferred stock, and long-term debt. This capital structure ratio can provide a more accurate view of a company's long-term leverage and…
Decommissioning
The process of dismantling a turbine and restoring the site to pre-project conditions.
Decommissioning
Decommissioning as a permitting regulation refers to the process for removing a wind energy conversion system once the project has reached its end. There are a variety of methods used to regulate this area of wind development, from requiring a bond or financial guarantee before a permit is issued to simply requiring a written plan for removing the…
Demand
The amount of electricity drawn from an electric system at a given time, measured in kilowatts.
Demand-Side Management (DSM)
The process of managing the consumption of energy. DSM programs include, for instance, offering discounts on new, high efficiency appliances so that consumers get rid of their older, less efficient models.
Depreciation
An accounting method used to attribute the cost of an asset over the span of its useful life. The cost, of a portion thereof, can be assigned as a loss on the project's balance sheet to reduce the tax base of the project.
Deregulation
As it pertains to the electricity industry, deregulation is the process of opening up electricity markets to competition between power producers with the notion that competition will help lower electricity rates for consumers.
Discount Rate
1) The interest rate that an eligible depository institution is charged to borrow short-term funds directly from a Federal Reserve Bank. 2) The ineterest rate used in determining the present value of future cash flows.
Distributed Generation
A small-scale power generation technology that provides electric power at a site closer to customers than the central station generation. The term is commonly used to indicate non-utility sources of electricity, including facilities for self-generation.
Distribution Cooperative
An electric cooperative that purchases wholesale power and delivers it to consumer members.
Distribution System
The poles, wires, transformers, breakers, fuses, and other associated equipment, used to deliver electric energy from a bulk power supplier to the consumer. Typically, the distribution system is defined as power lines and associated equipment where the operating voltage is less than 69 kilovolts.
Dual Line Feed
A dual line is a second, redundant transmission line connecting a turbine to the grid that allows your project to generate power even if the first line is taken out of service.
Due Diligence
Do your homework! Due diligence means that you have looked at a particular investment from as many angles as possible to best understand the risks, rewards, and opportunity costs. Lenders, investors, contractors, and equipment suppliers will be much more willing to work with you if you can demonstrate that you know the lingo and understand the…
Easement
The right to use the real property of someone else for a specific purpose.
Electric Cooperative
A form of utility in which all users own shares. Electric cooperatives are common in rural areas that are expensive to serve because of long distances between users. Frequently, the government contributes in various ways to rural cooperatives to reduce costs to individual owners/users.
Electrical
These permitting regulations address the feeder lines and communications lines used to connect the wind turbines to the other project infrastructure, in order to minimize the visual impact from these components. Currently, the common industry practice currently is to bury these electric lines; however there may be certain geological conditions that…
Energy Policy Act of 1992 (NEPA)
A federal statute that, among other things, established additional forms of non-utility generators. It also permitted non-generator-owning municipalities to purchase wholesale electricity, thus opening the door to municipalization, which allows municipal governments to take control over providing electric service to electric consumers.
Energy Policy Act of 2005
The first time since 1992 that the federal government revisited national energy policy. The Energy Policy Act of 2005 included an extension of the Production Tax Credit (PTC) through the end of 007, the creation of Clean Renewable Energy Bonds, and many other provisions.
Environmental Impact Statement (EIS)
A thorough study of each proposed electric utility project with potential for significant environmental impacts. Includes evaluation of alternatives and impact mititgation.
Environmental Quality Board
A state agency that adopts environmental rules, monitors their effectiveness, and revises them as appropriate; provides technical assistance to interpret and apply rules. (This varies from state to state).
Escrow
A financial instrument held by a third party on behalf of two other parties in a transaction, The funds are held by the escrow service until the service receives the appropriate written or oral instructions or until obligations have been fulfilled by participating parties. Securities, funds, and other assets can be held in escrow.
Farm Bill, Energy Title, Section 9006
For the first time in U.S agriculture policy, the 2002 Farm Bill included an energy title that established a variety of programs to support farm-based renewable energy grant and loan guarantee program administered through the U.S Department of Agriculture - Rural Development. The Farm Bill is on a 5-year cycle and there is talk about additional…
Federal Energy Regulatory Commission (FERC)
An independent regulatory agency within the U.S Department of Energy that has jurisdiction over interstate electricity sales, wholesale electricity rates, natural gas and oil pipeline rates, and gas pipeline certification. It also licenses and inspects private, municipal, and state hydroelectric projects and oversees related environmental matters.
Flip Models/Flip Dynamics
One example of a business model structure which brings in a tax-motivated equity partner to effectively own the project during the period when the PTC and accelerated depreciation are available (i.e., the first 10 years of the project's life).
Generation and Transmission Cooperative (G&T)
A power supply cooperative owned by a group of distribution cooperatives. G&Ts generate power or purchase it from public or investor-owned utilities, or from both.
Geographic Information System (GIS)
A system for capturing, storing, analyzing, and managing data and associated attributes which are spatially referenced to the earth.
Green Energy
The process of selling the "green" or environmental attributes of a product.