The data is shown in excel file.
The control chart shows below:
You are a quality manager working on the Fox Island Wind Project. The project is now at the testing phase and will be handed over to operations soon. As a quality manager, you want to ensure that the electric power generation process is in control. For ten consecutive days, 5 times a day, you read the meter at specific times throughout the day to measure the output of the power plant. These data are stored in the attached Minitab worksheet. You will use the data and a Word document to answer the following questions:：
- What is the appropriate control chart to study the process variability (within sample variation)? Why? (4points)
- What is the appropriate control chart to study the process mean (between samples variation)? Why? (2points)
3. Is the electricity production in statistical control? Please explain. (6points)
- What is a rational subgroup? And why is it important when collecting data for process analysis? (4points)
- What advice do you have for the Fox Island Wind Power Project to maintain customer satisfaction? (2points)
Write a short report containing the answers to these questions. Successful reports will include:
- Evidence of research from academia and other reputable sources (Wikipedia is NOT a reliable source).
- References are correctly cited within the body of the paper. APA format is required for in-text citation.
- Examples of personal experience (work, life) that supports the research.
- All references cited correctly at the end of the paper (Reference page). APA format is required for reference pages.
- Use APA style for in text citations and your reference page (double spacing not required).
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810-129 The Fox Islands Wind Project (A)
2
online with three 1.5MW GE turbines capable of generating approximately 11,600 MWh per year.2
With the Fox Islands Wind project complete, Baker began to consider whether to pursue similar
projects elsewhere in Maine and the United States more broadly.
The Fox Islands
In 1603, Captain Martin Pring of Bristol, England named two islands off the coast of what is now
Maine the Fox Islands for the silver-grey foxes he observed there. The one mile-wide straight that
separates the islands is still known as the Fox Islands Thoroughfare; however, the northern island is
known today as North Haven and the southern island as Vinalhaven. The islands are approximately
12 miles east of Rockland, Maine in Penobscot Bay (see Exhibit 1 for a map of the Fox Islands).3
Today, North Haven is still best known for its sizable summer colony of prominent business and
political leaders from Boston, New York, and other major cities. The economy of Vinalhaven today is
most dependent on the lobster industry while North Haven is dominated by maintaining its summer
resort community.4 According to the 2000 U.S. Census, North Haven and Vinalhaven had 381 and
1,235 inhabitants, respectively, with a total combined land area of 37 square miles (23,648 acres).5
With no bridge connection to the mainland, residents rely on the approximately one hour and fifteen
minute ferry rides from Rockland as the primary method to transport goods and people to the island.
The Energy Challenge on Fox Islands
In 2008, the residents of the Fox Islands faced some of the highest electricity prices in the U.S. with
recent prices three times the national average. In addition to other economic and social factors, the
high cost of electricity threatened the sustainability of the year-round community on the island. In
Maine, year-round island communities had declined from over 200 to just 15 in 2008. Solving the Fox
Islands’ electricity problems was a crucial step in bolstering the sustainability of the community.
The total electrical costs on the Fox Islands were approximately $0.29/kWh in 2008. This price was
determined by two components, an energy charge and a delivery charge. The energy charge
represented the cost of electricity generation and was variable. Energy charges over the past five
years on the Fox Islands were approximately $0.11/kWh. Energy charges varied across the U.S.
depending on the fuel source used to generate electricity; for example, Kentucky and West Virginia
had low energy charges because electricity was generated using inexpensive coal (see Exhibit 2 for a
comparison of energy charges across the U.S.). In regions that relied on gas or nuclear power, energy
charges were higher. The second electricity price component, delivery charge, is a cost to consumers
that covers the cost of electricity transmission and distribution (T&D). Recent delivery charges on the
Fox Islands were approximately $0.18/kWh. The high delivery charges were the result of the few
(approximately 2,000) customers on the islands relative to the high fixed cost of the necessary T&D
equipment, which included a 10-mile umbilical cable from the mainland, power lines on the island
and maintenance and repair costs. With only 2,000 customers to cover these fixed expenses T&D costs
represented a significant component of electricity prices.
2 11,600 MWh per year calculated assuming three 1.5MW turbines and average yearly utilization of 29% (3 x 1.5MW x 8760
hours per year x 29%) = 11,600 MWh per year. George Baker’s utilization estimate was based on seasonal wind conditions and
equipment scheduled maintenance requirements as well as the ability to sell excess power to the grid.
3 Town of North Haven, Maine, “A Brief History of North Haven,”
http://www.northhavenmaine.org/content/4099/Brief_History/, accessed April 2010.
4 Ibid. and Vinalhaven Chamber of Commerce. “History,” http://vinalhaven.org/history, accessed April 2010.
5 U.S. Census Bureau website, “Census 2000 Data for the State of Maine,”
http://factfinder.census.gov/servlet/GCTTable?_bm=y&-geo_id=04000US23&-_box_head_nbr=GCT-PH1&-
ds_name=DEC_2000_SF1_U&-format=ST-7, accessed March 2010.
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The Fox Islands Wind Project (A) 810-129
3
Consumers on the islands purchased electricity from Fox Islands Electric Cooperative (FIEC, the
Coop), a community owned T&D co-op established in 1974 with the purchase of Vinalhaven Light
and Power. In 1976, with the help of a loan from the Rural Electrification Administration (REA), the
new co-op laid a 10-mile submarine electric cable between North Haven and Central Maine Power
Company’s lines at Rockport, on the mainland. The cable was energized in 1977. As a T&D company,
FIEC did not generate electricity, but only engaged in transmission as a regulated monopoly.
Historically, T&D and generation had been separated and regulated by government mandate in
Maine with fixed prices set by the government. In 2000, to increase competition and keep electricity
prices low for consumers, the industry was deregulated to allow competition set prices for
generation. In 2005, the old submarine cable was replaced with a new one. The co-op purchased all of
its electricity directly from the New England Grid.
Another unique feature of electricity on the Fox Islands was the seasonality of demand, with
consumption spiking in the summer months of July and August (see Exhibit 3 for energy usage
patterns on the island). Electricity in the summer was not driven by air conditioning usage, as few
people on the Fox Islands used air conditioning, but rather by summer residents who arrived and
began using electricity. Seasonal residents and year-round residents typically had different
viewpoints on the electricity challenge on Fox Islands. For seasonal residents, the high cost of
electricity was not a major concern as they were typically wealthy and only used electricity for a
couple months a year. Year-round residents on the other hand had to bear the costs of high electricity
all year and were typically more sensitive to prices than their wealthier seasonal neighbors.
The Genesis of the Fox Islands Wind Project
The wind project on the Fox Islands was the result of nearly eight years of research and planning
(see Exhibit 4 for a timeline of events). Dave Folce, the General Manager of the Fox Islands Electric
Cooperative began exploring the idea of wind power on the island in 2001 as a potential method of
mitigating high energy prices for island residents. Later that year, he also persuaded the University of
Massachusetts Renewable Energy Research Laboratory to begin a three-year study measuring wind
speeds near an abandoned quarry on Vinalhaven. Over the course of the three-year study,
comprehensive data was gathered on the average wind speed, direction, and frequency of wind from
a 40 meter high tower 40 located at the quarry site.
The UMass study confirmed that the quarry site on Vinalhaven would serve as a “good, but not
great” site for windmill placement and three years of data was very helpful for moving the project
forward. However, in 2005, the submarine electric cable connecting the Fox Islands with the
mainland failed and made the future of wind energy on the islands uncertain. FIEC was forced to
borrow $4.0 million to replace the cable to make the necessary improvements to establish a good
connection with the mainland grid. While this event put the wind project on hold, ultimately it would
serve as a critical catalyst for the project. A secure and reliable connection with the mainland grid was
essential for a wind project on the island as the project would require power to be imported from and
exported to the grid.
By 2007, the overall increase in global energy prices coupled with a pro-wind political climate in
Maine paved the way for the development of the Fox Islands Wind project. In early 2008, the Fox
Islands Electric Cooperative formally requested assistance with the project from the Island Institute
and George Baker was introduced to the project.
George Baker
George Baker became involved in the Fox Islands Wind project through the Island Institute, where
he served as the Vice President for Community Wind. Baker had taken sabbatical from teaching at
Harvard Business School during which he studied the potential for wind projects. In 2008, Baker
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810-129 The Fox Islands Wind Project (A)
4
went on leave from HBS to become CEO of Fox Islands Wind LLC and pursue the project full-time. In
addition to his duties at Fox Islands Wind, he serves on the Maine Governor’s Task Force on Ocean
Energy, and is a member of the Advisory Board of Neptune Wind, an offshore wind development
company (see Exhibit 5 for biographies of Baker and other key stakeholders).
Building Community Support for the Project
In addition to evaluating the economic viability of wind energy, Baker needed to determine
whether the community would support the construction of three large wind turbines on the island
and build enthusiasm for doing so. As Baker evaluated the situation, he believed that strong
community support would be critical to the success of the project. Without support from the
community, opponents of the project would have a series of levers at their disposal to delay or
potentially halt the project. For instance, critics of the project could pressure public officials to block
the project or deter potential investors by causing them to think it would not succeed.
Risk of Concern from the Community
Unfortunately, problems launching several other notable wind energy development projects
suggested to Baker that community support might be difficult to obtain. Most famously, the Cape
Wind project, an offshore wind development off of Cape Cod, had drawn strong criticism from
people and groups in the Cape Cod area. These groups had banded together and, with the help of
powerful political connections, sought to stymie the project. Residents claimed, for example, that the
wind turbines would obstruct their views of Nantucket Sound, that bird species would be harmed by
the rotors of the wind turbines, that the turbines would interfere with airport activity and that fishing
would be harmed. Opponents of Cape Wind had delayed the construction of the wind turbines for
nearly a decade, despite the project’s being supported by most of the key decision makers in the state
government. The delays had imposed huge costs on the developers of Cape Wind.6
News reports also suggested that community concerns about wind turbines were becoming more
significant. Robert Bryce, an energy journalist wrote: “Lawsuits that focus on noise pollution are now
pending in Maine, Pennsylvania, and New Zealand. In New Zealand, more than 750 complaints have
been lodged against a large wind project near Makara since it began operating last April. The
European Platform Against Windfarms lists 388 groups in 20 European countries. Canada has more
than two-dozen anti-wind groups. In the U.S. there are about 100 such groups, and state legislators in
Vermont recently introduced a bill that will require wind turbines be located no closer than 1.25 miles
from any residence.”7
Baker hoped to avoid a situation similar to Cape Wind on the Fox Islands. On the contrary, he
wanted to move forward with widespread community support. As he assessed the situation, Baker
believed there were two distinct groups to whom he needed to appeal. The first group was full-time
residents of the islands. For many in this group, their electric bill was a significant expenditure, and
they were involved in the life of the islands throughout the year. Many would likely be focused on
finding ways to reduce their electric bill and would perceive this as largely an economic issue. The
second group was summer residents of the islands. This group was likely to be less concerned with
their electric bill as it was a relatively smaller expenditure for them. On the other hand, Baker
believed, many in this group would find the sustainability element of the project appealing.
6 Richard Vietor, “Cape Wind: Offshore Wind Energy in the USA,” HBS No. 9-708-022 (Boston: Harvard Business School
Publishing, 2008).
7 Robert Bryce, “The Brewing Tempest Over Wind Power,” Wall Street Journal, March 1, 2010.
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The Fox Islands Wind Project (A) 810-129
5
Initial Steps to Build Support
From the time that the project was in the initial planning stages (spring 2008), Baker focused on
developing community support from both groups. The primary means by which he planned to do
this was through frequent and open communication with the island residents. In Baker’s view, it was
vitally important that he, as the team leader, and others be accessible to island residents, especially
those who had concerns about the project. In other developments that had run into problems with
local communities, a key issue had often been that the island residents viewed the developers of the
project as outsiders coming in to exploit the resources (in this case wind) that the area offered. Baker
resolved not to allow this to happen in the Fox Islands development.
From the outset, the project had the support of several key “opinion leaders” in the community.
One was State Representative Hannah Pingree of North Haven. In 2007, she had voiced strong
support for the project in meetings with other community leaders and advocated for it in the
statehouse to the extent that state support was needed. In particular, Pingree convened a meeting of
island electric cooperatives and addressed an element of the state’s electricity deregulation law that
prohibited a T&D company such as FIEC from engaging in generation activity as contemplated in the
Fox Islands plan. Eventually, a special law was passed to permit the FIEC to operate wind turbines.
Baker’s principal means of building support in the community more broadly was through hosting
town hall meetings on the subject with both year-round and summer residents to communicate
directly with them and to ensure that the nature and details of the project were effectively presented.
Baker held more than a dozen town hall meetings beginning in the spring of 2008. By the time the
summer residents arrived that year, the backing of the year-round residents had been secured.
During the course of these meetings, residents expressed several concerns. One was that the
project was financially risky. With the cooperative already heavily indebted, some residents thought
that the debt needed to develop the wind project would be more than the cooperative could support
and lead to higher electricity prices. A second concern involved the blinking red lights required on
top of the turbines for aviation safety. Third, some residents were concerned that construction would
be disruptive. Very few people expressed concerns about the aesthetics of the turbines or about noise.
For his part, Baker tried to address each of these concerns by explaining how the project would
work and what steps were being taken to mitigate potential problems. Baker also focused attention
on the benefits of the project, chiefly lower electricity rates and making the community a model for
using renewable sources of energy, something that many island residents took pride in. The
important thing for residents was that they would be the primary consumers of the energy produced
by the turbines and that they would realize an economic benefit from them. By emphasizing the local
nature of his efforts, Baker blunted the objection to developers swooping into communities that had
been raised in other communities.
Baker said that the town hall meetings helped him to develop a rapport with many of the Fox
Islands residents and made it easier to deal with objections that arose. The Fox Islands project was
not free of negative rumors in the community regarding such issues as financing andconstruction
problems. However, Baker had established credibility in the community and people were either
willing to come directly to him with concerns, or people who heard rumors were willing to talk to
Baker directly, which enabled him to proactively allay concerns before the rumors spread.
A Vote of Cooperative Members
By the summer of 2008, Baker and his team were ready to proceed with the project and start
making significant development expenditures. Before continuing, the wind project needed the
approval of FIEC to confirm the alliance between the two. Although the board of FIEC had the
authority to approve the project on its own, they were mindful of the importance of the community’s
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810-129 The Fox Islands Wind Project (A)
6
support and decided that their approval alone would not be sufficient. Instead, the Coop arranged for
the proposed wind development to be submitted to a vote of all cooperative members, essentially all
residents of the island. This would afford the community a formal opportunity to express its view on
the project. The vote was held in August 2008 and cooperative members approved the project by a
vote of 384 to 5.
According to Baker, the vote was “hugely important.” The margin of the vote helped to cement
public enthusiasm and enabled Baker and others to show vendors and regulators that the project had
the people’s support. Before the vote, Baker had avoided making announcements about the project
off the islands. “There are a bunch of anti-wind people in Maine, and we didn’t want to fire them
up,” Baker said. Once the cooperative members’ support had been secured, however, they put out a
press release announcing the results and that they needed turbines to proceed.
Anxious to proceed quickly lest public support wane, Baker focused on four key tasks. First was
working with the Vinalhaven Planning Committee to revise an ordinance governing wind power on
the islands. The ordinance had been written to make it difficult to build wind turbines on the islands
as a means of giving the community leverage against any possible for-profit wind developer.
However, given the structure of the wind project and the strong support within the community, the
Planning Committee began working on changes to the ordinance. Second, Baker and his team needed
to work to finalize the financing for the much larger construction and completion phase of the project.
Third, Baker had to work to satisfy both the new town ordinance and the Maine Department of
Environmental Protection’s (DEP) permitting process. The Fox Islands Wind project was the first to
be reviewed under the Department’s Small Wind Certification process, which focused on safety, the
amount of shadow flicker produced by the rotor blades and the sound emitted by the turbines. After
review, the DEP approved the project.
Fourth, Baker worked to locate the wind turbines themselves. At the time, there was a three-year
waiting list for turbines. In the aftermath of the vote, EOS Ventures, a firm that provides design and
construction services for renewable energy projects, began working with Baker and helped him to
persuade GE to deliver turbines by the summer of 2009, far sooner than the waiting list suggested
was possible. Getting the turbines quickly was essential to maintaining momentum for the project in
the community. The show of community support for the project was helpful in engaging EOS and GE
in the effort to procure turbines.
Managing Community Relations Through the Construction Phase
By the spring and summer of 2009, construction on the wind turbines was progressing quickly.
According to Baker, the community “could have [had] lots of issues” with the disruptions caused by
the construction process. For instance, as a result of material deliveries to the site, the main
North/South artery on Vinalhaven was frequently obstructed for “weeks on end.” However, the
construction and logistics team made a concerted effort to educate residents about the project
beforehand so that they were prepared for the process. “We put in a lot of work so there would be no
surprises,” Baker said.
Several examples demonstrate the degree of support the project received from the community.
Approximately 200 people gathered when the barge carrying the rotor blades arrived and cheered the
truck as it pulled onto the island. One resident who lived on a sharp corner around which
construction vehicles were having a hard time turning agreed to have the road temporarily expanded
into his yard. Perhaps most memorably, according to Baker, when a truck became stuck on the main
road one day and it took several hours to arrange to have it moved, traffic began to build up on either
side of the road. Eventually, islanders on one side of the truck began trading vehicles with islanders
on the other side of the truck. In general, employees of Cianbro, the construction company, made a
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The Fox Islands Wind Project (A) 810-129
7
concerted effort to be part of the community while on the island, which contributed to goodwill in
the community.
By November 2009, the project was complete and ready to be dedicated and placed into service.
As they had throughout the process, a large portion of the community rallied behind the wind project
and hundreds of people attended a celebration (see Exhibit 6 for photos).
Post-construction Community Relations Challenges Emerge
However, after the turbines began to operate, Baker said “within days, a small number of
neighbors started expressing concerns about the sound [being produced by the turbines].” These
neighbors claimed that they had been told that they would not be able to hear any noise from the
turbines. Although the Maine Department of Environmental Protection had considered and
approved the noise level being emitted by the turbines, sound had not been a significant concern
expressed by residents during the planning phase. The turbines were operating within the
parameters of the DEP’s noise requirements (see Exhibit 7 for the requirements and Exhibit 8 for the
change in noise level by distance from the turbine tower). According to news reports, “approximately
a half-dozen neighbors say the noise has been so disruptive that it makes it impossible to live normal
lives – that they can’t sleep at night and that the noise is harming their health.”8 The concerns created
a challenge for Baker. Although the project was not obligated to take any steps to address these
concerns, the community ownership model demanded that he work to understand, communicate and
come to agreement about the best course of action.
Baker began to work immediately. In order to assess the situation, Baker asked the concerned
neighbors to complete logs of the sounds levels and when it bothered them in order to understand
the nature of the problem better. Perhaps there were certain triggers of noise that could be easily
addressed. In addition, he worried about what the reaction to noise would be in the summer, when
people spent more time outside. Gentler summer breezes would likely reduce the noise somewhat
but further comments were not inconceivable.
Beginning on February 1, 2010, the cooperative launched a month-long experiment in which the
turbines will be slowed down randomly at night in order to test whether that would address
residents’ concerns. The changes in turbine speed would be varied in order to test reactions to a range
of speeds. Residents were again asked to keep detailed notes about what kind of noise they heard
and the degree to which it bothered them.9 In addition to slowing the turbines down, another option
available to Baker was to modify the gearboxes and generators themselves. Such changes would be
expensive and highly specialized because they involved equipment that had already been designed,
built and installed, however. They could also compromise the overall effectiveness of the turbines.
A local journalist reporting on the situation spoke to other island residents in addition to those
who had commented on the noise. He reported that the town manager, Marjorie Stratton, “said that
what she hears on the street is that islanders still feel good about the project and…the project is doing
exactly what it was predicted to do.” Stratton said that it is important to balance the interests of the
vast majority of customers with those who live close to the turbines: “We can’t do everything to serve
these 25 customers that are close by. We have to serve all of the customers.” Furthermore, based on
“conversations with about 20 islanders,” the reporter found that the vast majority of the people he
spoke with continued to support the project, though they had some sympathy for those reacting to
the noise.10 One of the people who lived near the turbines, Cheryl Lindgren, described the noise as a
8 David A. Tyler, “As electric co-op conducts sound experiment, Vinalhaven residents debate solution to turbine noise issue,”
The Working Waterfront, February-March 2010.
9 Ibid.
10 Ibid.
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810-129 The Fox Islands Wind Project (A)
8
“repetitive ‘whump, whump.’” Upon hearing the turbines for the first time, she said, “I can feel this
sound. It’s going right through me. I thought, ‘Is this what it’s going to be like for the rest of my
life.’”11
With regard to visual pollution, rather than being upset about the new addition to Vinalhaven’s
topography, island residents were “just ecstatic” about the turbines, Baker said. They became a
source of pride for many residents. Vinalhaven resident Gery Torborg told a reporter “This is
fantastic. I think they are beautiful,” as the turbines began to operate.12
As he reflected on the steps he took to build community support and the community’s reaction to
the wind project, Baker wondered how to address the concerns that had been raised and how to
apply what he learned in this project if he were to try to develop other projects elsewhere. In further
developments, he might be more susceptible to being labeled an “outsider” than he had been on the
Fox Islands, where he had become well known to much of the community.
Financing the Project
Capital Costs
In addition to building community support, obtaining the financing for the Fox Islands Wind
project or for any other wind project was no trivial matter. A typical onshore wind installation was
estimated to cost approximately $2,000/kW. According to industry research, the turbines accounted
for 60-65% of the total cost, with transportation costs making up 5-10% and transmission lines,
interconnect and sub-station construction being responsible for 10-15%. Construction costs generally
accounted for the remaining 15-20%.13
The Fox Islands Wind project’s capital requirements were expected to be far greater than typical
wind projects (on a per kilowatt basis). A typical project could be expected to be much larger, with
total generation capacity usually in excess of 100MW. Fox Islands Wind would be building three
1.5MW turbines for total generation capacity of 4.5MW. The project would therefore be negatively
impacted by its lack of scale. Additionally, the cost of installation would be substantially higher due
to its location on a small island unconnected to the mainland. Baker’s team initially estimated that
total installation costs would be twice the mainland cost. The economic downturn of 2008-2009 did
bring some relief to price pressure on the turbines, however. At their peak in 2008, turbine prices had
increased to $1,800/kW with wait times of around 24 months. By 2009, industry experts estimated
that prices had fallen 30-35% due to the collapse in commodity prices, limited financing and market
oversupply.14 Baker’s team initially estimated that its turbines would cost approximately $1,500/kW.
Figure A Initial Fox Islands Wind Capital Cost Estimates
Total Cost Per kW
| Turbines Installation Total |
$6,750,000 5,850,000 $12,600,000 |
$1,500 1,300 $2,800 |
Source: Fox Islands Wind Investor Presentation.
11 “Wind power overpowers its neighbors,” Letvineyardersdecide.org,
http://letvineyardersdecide.org/wind/index.php/2010/01/wind-power-overpowers-its-neighbors/, from Kennebec Journal
and Morning Sentinel, January 24, 2010.
12 David A. Tyler, “Islanders awed by wind turbines,” The Working Waterfront, December 2009-January 2010,
http://www.workingwaterfront.com/articles/Islanders-awed-by-wind-turbines/13533/.
13 Simmons & Company International, “2009 Alternative Energy Review,” p. 43.
14 Simmons & Company International, “2009 Alternative Energy Review,” p. 35.
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The Fox Islands Wind Project (A) 810-129
9
Wind Power Economics
The economics of generating wind power is characterized by high upfront capital costs and very
low marginal operating costs. While average costs (which include capital costs) had come down
substantially over time, it was still believed that wind power was uneconomic when compared to
more conventional hydrocarbon energy sources such as coal or natural gas (see Exhibit 9 for a
comparison of levelized costs of electricity). To achieve parity with conventional sources, capital costs
would need to decrease substantially or hydrocarbon pricing would need to increase, either directly
or through some form of carbon pricing.
As it was unclear when or if wind power could become economic on a standalone basis, both the
states and the federal government had developed incentives to promote wind power generation,
primarily in the form of production tax credits (subsidies for generation) and renewable portfolio
standards (RPS), in which the state mandates a minimum supply of renewable energy be purchased
by electricity providers. The renewable energy could either be generated in-state or be purchased
from out-of-state generators through renewable energy credits (RECs). Renewable energy credits are
tradable commodities that represent proof that one MWh of electricity was generated from an eligible
renewable energy source.15 This market allows for separation of the “greenness” from the “energy.”
Baker expected to take advantage of the current renewable energy production tax credit of
$0.021/kWh. However, production tax credits exhibited some volatility due to their dependence
upon periodic renewals by Congress. Production tax credits had been allowed to lapse three times in
recent history: in 1999, 2001, and 2003 (see Exhibit 10 for impact of PTC lapses on wind installations).
Baker also intended to sell the RECs generated by the project to further increase the economic
viability of the project, although prices for RECs exhibited high amounts of price volatility.16
The economic feasibility of the Fox Islands Wind project was bolstered by the fact that households
on the island paid substantially higher electricity bills than households on the mainland. A wind
project on the mainland was likely to remain uneconomic in the near term compared to conventional
power sources there, but island residents had few other alternatives for reducing their electricity bill.
Traditionally, island communities separated from the grid had been supplied by standalone diesel
generators, but island residents had found these lacking in the past. Fuel costs were highly variable,
and the generators were disruptively noisy as well as incredibly inconvenient.17 Diesel power was
also considerably more expensive. According to a University of Massachusetts study, diesel
generators on another island produced energy at approximately $0.39/kWh, a substantial premium
to residents’ already high rates.18 New England’s latitude and weather likely precluded the
widespread use of solar power. Tidal power held some promise, but Baker believed the technology
was several years from being viable.
15 Lori Bird, “Overview of Renewable Energy Certificate (REC) Markets,” National Renewable Energy Laboratory, January 8,
2008, http://www.ftc.gov/bcp/workshops/carbonoffsets/presentations/lbird.pdf, accessed April 17, 2010.
16 According to NREL, REC prices in 2006 ranged from $5 to $55 per MWh. Lori Bird, “Overview of Renewable Energy
Certificate (REC) Markets,” National Renewable Energy Laboratory, January 8, 2008,
http://www.ftc.gov/bcp/workshops/carbonoffsets/presentations/lbird.pdf, accessed April 17, 2010.
17 According to an article in Rural Electrification Magazine, low voltage generated by the diesel generators was terribly
destructive to many appliances. Additionally, businesses that needed large amounts of electricity needed to notify the
powerhouse in advance to ensure enough generators were running. Frank K. Gallant, “A Good Job for Vinalhaven,” Rural
Electricification Magazine, October 1983, http://www.foxislands.net/aboutfie.htm, accessed March 2010.
18 Gabriel Blanco, James F. Manwell, and Jon G. McGowan, “A Feasibility Study for Wind/Hybrid Power System Applications
for New England Islands,” Renewable Energy Research Laboratory, University of Massachusetts, p. 16.
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810-129 The Fox Islands Wind Project (A)
10
Additional Challenges
Baker faced substantial challenges beyond those of financing a more conventional wind farm.
First, the size of the project was larger than the current size of the cooperative. With assets of around
$11 million, the Fox Islands Electric Cooperative would be more than doubling its size with a single
transaction. Securing debt financing for such a large transaction would likely be difficult, particularly
given how difficult financing was to obtain following the 2008 financial crisis. Second, the
cooperative had very limited resources and obtaining funds to support the pre-development work
necessary for approval and financing to be obtained presented a challenge. Finally, the Fox Islands
Electric Cooperative was a non-taxable institution; thus, production tax credits (PTCs) were worthless
to the project directly, substantially reducing the viability of the project.
Baker needed to find a tax equity investor willing to fund a substantial portion of the project. Tax
equity investors were investors, often from unrelated industries, who would contribute equity to the
project in exchange for the tax benefits associated with the project. However, the financial crisis had
decimated the tax credit market as corporations often had substantially less taxable income to be
offset by tax credits. According to industry sources, the production tax credit market grew from
approximately $600 million in 2005 to more than $5.2 billion in 2007. In 2008, however, the market
declined sharply to $2.5 billion. Never a market with an abundance of players, the tax credit market
was believed to have only four active participants in 2008, down from eighteen previously.19
Solving the Pre-development Challenge
Early projections suggested that the project would require approximately $300,000 of predevelopment work (lawyers, bankers, engineers, consultants, etc.). In a traditional for-profit project,
the sponsor would fund these costs up front as part of its equity commitment. However, as a
cooperative, FIEC lacked the resources to begin the pre-development work. Baker had several options
available to him: because of the cooperative’s community-based non-profit status and the “green”
nature of the project, he could petition for grant funding from a foundation or other similarly-minded
institution. Receiving grant funding would likely require substantial time, and Baker could not be
certain of grant approval. Moreover, a grant conflicted with one of his motivations; Baker wanted to
establish the viability of supplying wind power to Vinalhaven without grants. As such, he devised a
creative financial instrument, a “contingent promissory note,” which promised to pay 10% interest
per annum when the project received permanent financing but nothing if the project did not proceed.
Baker noted that although the return was probably below-market for the risk investors were taking,
“These weren’t disinterested private investors; these were island individuals who were really
interested in doing this. These were foundations that made investments out of their endowments
because they were interested in us.” There were additional benefits as well; obtaining financing in
this manner gave Baker speed and flexibility in moving the project forward. The contingent
promissory notes allowed for smaller amounts to be raised as needed.
Tax Equity Financing
Tax equity investors received a return on their investments primarily through two sources. The
first source was through the production tax credits. The PTCs currently in place allow for a $0.021
production tax credit per kilowatt-hour of generation for the first ten years of a project’s life. Since the
Fox Islands Wind project was expected to generate approximately 11,600 MWh annually, this could
be expected to produce a tax credit of around $243,600 per annum for the equity sponsor.20 The
19 Chadbourne & Park LLP, “Project Finance Newswire,” January 2009, p. 27. Many tax equity investors were financial
institutions such as Lehman Brothers, AIG, Citibank, JPMorganChase, Bank of America, MetLife and New York Life, as well as
institutions such as GE.
20 $0.021 x 1000 (MW/kW) x 11,600 = $243,600.
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The Fox Islands Wind Project (A) 810-129
11
second source was accelerated depreciation. Under IRS guidelines, the equity investors were allowed
to depreciate most project costs using a five-year, double-declining-balance depreciation method.21
According to tax experts, this generally allowed 90-95% of the cost of a wind project being
depreciated within six years.22 Accelerated depreciation provided value to the tax equity investor by
postponing tax payments for several years.
Because the cooperative did not pay taxes, Baker needed to find a willing tax equity investor with
taxable income to offset. In exchange for a ten-year stream of tax deductions, the investor would
provide an upfront equity investment. To accomplish this, Baker needed to create a taxable entity,
Fox Islands Wind LLC (FIW), to own the project assets. FIW would be primarily (99%) owned by the
tax equity investor, with the de minimis residual owned by FIEC (see Exhibit 11 for full corporate
diagram). The tax equity investor would also receive a dividend of $25,000 per annum. After ten
years, ownership of FIW would “flip,” and the cooperative would buy out the tax equity investor’s
interest. The tax equity investor would receive no further economic benefits.
Baker reached out to three well-known institutional tax equity investors but quickly found them
to be uninterested in financing such a small project. Continuing his pattern of creating a community
project, Baker met with a local Maine company, Diversified Communications, a privately-held,
family-owned business that operates in the broadcasting, exhibition, publishing and emerging-media
industries. The company had strong community ties within Maine, having been founded by former
Governor Horace A. Hildreth, Sr. in 1949. The company was enthusiastic about the project and
committed $4.3 million subject to an agreed-upon target rate of return.
Debt Financing
Baker had several debt financing options. He considered bank financing, but found interest rates
to be high, in the 8-10% range. There were also government-sponsored financing programs that could
be investigated. One option was the Clean Renewal Energy Bond (CREB). The Energy Policy Act of
2005 provided electric cooperatives with the ability to issue CREBs to finance renewable energy
projects. Under this program, the federal government provides the purchaser of the bond with a tax
credit in lieu of an interest payment. While a CREB program was an option, it had two main
drawbacks. First, the program was allocated through a competitive process; Baker could not be
certain of success, and there was a considerable waiting period. Second, the CREB could not be issued
by a taxable entity, meaning FIEC would be unable to use tax credits to induce a tax equity partner.
The second government-sponsored financing option Baker considered was a loan from the Rural
Utilities Service (RUS), an agency of the United States Department of Agriculture (USDA).23 The
RUS’s mandate is to bring public utilities to rural areas through public-private partnerships. The RUS
was already the cooperative’s lender. The RUS was hesitant to lend to a newly-formed for-profit
subsidiary but was eager to provide financing to a renewable energy project. By educating the RUS
about the complicated structure and the rationale behind it, Baker was successful in securing a $9.5
21 Under the five-year, double-declining balance method, 40% (2 times 100% divided by 5 years) of the book value is
depreciated annually.
22 Patricia G. Hammes, Mitchell E. Menaker and Robert N. Freedman, “Putting the Wind (Back) to Work,” New York Law
Journal, July 6, 2009, http://www.law.com/jsp/nylj/PubArticleNY.jsp?id=1202431933621&slreturn=1&hbxlogin=1.
23 The RUS was originally created as the Rural Electrification Administration (REA) in 1935. In 1994, the REA was reorganized
into the RUS. The United States Department of Agriculture, Rural Development, “The Story of Rural Electrification: 1935 –
Present,” http://www.rurdev.usda.gov/tx/Legislative%20Seminar/USDA%20Rural%20Development%20-
%20Rural%20Electrification.pdf, accessed September 3, 2010.
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810-129 The Fox Islands Wind Project (A)
12
million 20-year loan at an expected rate of 4.25% per annum. The loan was sized at the maximum
allowable under RUS regulations to allow flexibility for cost overruns.24
Construction Financing
Baker had achieved the permanent financing necessary for the Fox Islands Wind project, but he
still needed to find bridge financing to cover the cost of construction as the RUS only lent against
completed projects. Although in theory a bank could look at the financing commitments lined up, the
large size of the project relative to the cooperative’s existing assets made banks hesitant to provide
bridge financing. Again, Baker needed to be creative; an existing privately-owned non-profit called
the National Rural Utilities Cooperative Finance Corporation (CFC) was dedicated to supplementing
RUS lending, but the CFC only lent to cooperatives. Given the unfamiliarity of the CFC with this type
of project, Baker again needed to work closely to describe the details of the project to obtain the $9.0
million construction loan. First, a structure by which the CFC lent to the cooperative and the
cooperative in turn lent to FIW had to be devised. Second, an education of the construction process
and required uses of funds prior to construction was required to convince the CFC to fund the $1.5
million down payment to GE to hold the August 2009 turbine delivery date.
Subsequent Developments
An unexpected but favorable boon to the project occurred in February 2009, when President
Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA), which provided the
option of a 30% investment tax credit for developers of clean energy. The stimulus plan greatly
improved the economics of wind power financing and quickly increased the availability of wind
financing nationwide.25 The tax credit also greatly improved the economics for Diversified
Communications, which agreed to increase its equity investment to $4.8 million initially and $5.0
million by the end of the project.26 Figure B shows the final all-in costs of the project.
24 The RUS requires a minimum times-interest-earned ratio of 1.05x. Times-interest-earned is defined as (operating income
plus interest) divided by interest.
25 Russell Gold, “Wind Farms Set Wall Street Aflutter,” Wall Street Journal, August 31, 2009,
http://online.wsj.com/article/SB125167463443070949.html.
26 Because the 30% investment tax credit is based on the project’s total costs, the return to the tax equity investor increases with
debt-funded cost overruns. Diversified Communications agreed to increase its investment by $200,000 to a total of $5.0 million
in order to bring its total return closer to original projections.
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The Fox Islands Wind Project (A) 810-129
13
Figure B Final Fox Islands Wind Project Sources & Uses
Sources (Permanent Financing)
Total Cost Per kW
| RUS 4.25% 20 year loan Tax equity contribution Total |
$9,500,000 5,000,000 $14,500,000 |
$2,111 1,111 $3,222 |
Uses
| Total Cost $600,000 7,600,000 5,000,000 1,300,000 $14,500,000 |
Per kW $133 1,689 1,111 289 $3,222 |
Pre-development costs GE turbines Construction Property & escrow Total |
Source: Fox Islands Wind Presentation to the Gulf of Maine Research Institute.
Final project costs were higher than expected for several reasons. First, pricing for turbines turned
out to be higher than budgeted. Although prices fell dramatically during 2008, Baker had limited
leverage to renegotiate price with GE because it was crucial to obtain delivery and installation ontime due to the looming onset of bad weather. Second, the project incurred approximately $500,000 of
cost overruns due to an error in forecasting the electrical grounding of the base.
Operating the Project
The completed wind project generated slightly more than half of the island’s electricity use during
the year. During the winter, when winds blow substantially stronger and electricity use was lower
(fewer residents), the project produced excess electricity. During the summer, the island would need
to import energy. To facilitate the efficient management of this variability, the cooperative entered
into a 20-year power purchase agreement (PPA) with FIW. Under this agreement, the cooperative
buys power from the FIW in exchange for paying FIW’s operating and financing costs (see Figure C
below). The cooperative, in turn, entered into a sale and purchase agreement with the Vermont Public
Power Supply Authority (VPPSA), its historic partner for electricity purchases, to sell VPPSA its
excess electricity and buy from VPPSA any deficit at wholesale prices (see Exhibit 11 for a diagram).
Figure C Fox Islands Estimated Annual Operating and Financing Costs
Total Cost Per kWh
| Financing costs Insurance Operations & maintenance Lease and other payments Total before RECs REC sales Total |
$770,000 50,000 95,000 30,000 $945,000 (354,960) $590,040 |
$0.066 0.004 0.008 0.003 $0.081 (0.031) $0.051 |
Source: Fox Islands Wind estimates. Cost per kWh is equal to cost divided by expected annual generation of 11,600 MWh.
Totals may not add due to rounding.
An additional source of savings for the island’s residents was the sale of Renewable Energy
Credits (RECs). Baker negotiated the sale of the project’s RECs at a five-year fixed rate of $30.60 per
MWh to Cape Light Compact, an energy services organization serving Cape Cod and Martha’s
Vineyard. As part of the REC sale, FIEC cannot claim that the energy it produces is “green” as the
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810-129 The Fox Islands Wind Project (A)
14
“greenness” is sold along with the REC, but the community benefits by a savings of approximately
three cents per kWh for its power generated by the project.
Extensibility Issues
Baker hoped that the Fox Islands Wind model would make wind energy generation projects more
actionable on other island communities across Maine. Many community members, investors,
philanthropists, and municipalities expressed interest in exploring wind generation on neighboring
islands. As Baker wondered how to extend this model, he made note of some key considerations.
Equipment
In order for Baker to consider bringing his wind solution to other islands he would have to first
secure additional wind turbine units. High demand for wind turbines resulted in long waiting lists
for equipment. For instance, lead times for GE’s popular 400-foot, 1.5MW turbines were three to four
years. Wind power could be harnessed using smaller turbines, though more turbines required more
land, construction and transportation costs, and also increased noise levels. The larger turbines were
in demand for a good reason: a two times increase in turbine blade length generates a four times
increase in power. Given timing constraints, however, was it appropriate to wait until larger turbines
could be acquired, or should the Vinalhaven model be replicated using more, smaller turbines?
Site Selection
Wind turbine power output is a cubic function of wind speed, thus a doubling of wind speed
increases power by eight times. Since wind speed is such a critical factor of turbine power output,
careful measurement must be done to select the appropriate wind site. The Vinalhaven site, with
average wind speed of 5.3 meters/second (m/s) at 40 meters and 6.5 m/s at 80 meters, would only be
classified as “marginal” to “fair” under the U.S. Department of Energy standards.27 In comparison, a
9 m/s “superb” site would generate 2.7 times more energy than the Vinalhaven site. With much of
the Maine coast averaging wind speeds between 6.5-8.5 m/s, the region is a strong candidate for
wind energy (see Exhibit 12 for Maine wind speeds and Exhibit 13 for Maine wind projects).
Land leasing or acquisition was another important consideration. Each turbine was required to be
distanced from surrounding structures by at least 1.5 times its height. For each of the 400-foot-tall
1.5MW Vinalhaven turbines, this translates to a circle with a radius of 600 feet, which would contain
the equivalent of 26 acres or (see Exhibit 14 for turbine site selection). With concerns around noise
pollution, the site radius would likely need to be increased substantially in future projects. Property
devaluation was another real concern. Although a recent study funded by the U.S. Department of
Energy revealed that wind power projects had a negligible impact on property values,28 many Maine
residents remained skeptical. Could these site selection requirements lead to difficulties in land
acquisition?
Community Support
Baker acknowledged that overwhelming community support was a key ingredient for the success
of Fox Islands Wind. The enthusiasm and resolve of Fox Islands residents helped to make financing,
permitting and turbine acquisition much easier. Many residents had been intrigued about wind
energy even prior to Baker’s committed efforts to advance the idea. This pull-based model solidified
community support. Could such a project succeed in a push-based situation, where an island
27 US Department of Energy, “Maine 50m Wind Power”, http://www.windpoweringamerica.gov/pdfs/wind_maps/me_50m.pdf, accessed
March 2010.
28 Ernest Orlando Lawrence Berkeley National Laboratory, “The Impact of Wind Power Projects on Residential Property Values in the
United States,” http://eetd.lbl.gov/ea/EMS/reports/lbnl-2829e.pdf, accessed March 2010.
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The Fox Islands Wind Project (A) 810-129
15
community has to be persuaded of the merits of wind energy? George Baker knew that other island
communities, plagued by high electricity costs, were closely monitoring the Vinalhaven project.
Developing strong relationships was also a crucial piece of the community story. Trust and
existing relationships made it possible for Fox Islands Wind to borrow $1.5 million from the CFC to
cover a 20% down payment for the wind turbines. Based on little more than a handshake with Baker,
EOS and Cianbro worked for months on the project with no formal contract. A pair of supportive
individuals also offered the land lease for the site to the project at a bargain rate. Baker wondered
how replicable these key relationships were.
Noise Complaints
Although most of the residents of Vinalhaven considered the wind project to be a resounding
success, a small but vocal majority was bothered by the turbine noise (see Exhibit 15 for turbine noise
sources). Baker was concerned that the complaints could escalate to shroud the economic and
environmental success of the wind project. More importantly, this controversy had the potential to
delay or derail further wind developments on neighboring islands by sapping community support.
With local media and wind energy critics watching closely, Baker knew he had to act quickly to
mitigate the concerns. Despite commissioning noise studies and reducing output on one turbine to
comply with DEP noise standards, Baker considered taking additional action. Fox Islands Wind
could offer to buy the properties of those affected residents, insulate their homes or further scale back
turbine power output. Baker wondered whether island ratepayers would support such actions.
Financing
Financing was a key ingredient to the success of Fox Islands Wind. Tax equity credits, favorable
financing terms and “green” philanthropists who were committed to the project helped to make it
financially viable. But could this type of financing be replicated? Even though the expected returns on
tax equity were favorable enough to attract investors, and funding sources were now better informed
about this project, the 10% contingent promissory note was subsidized by “green” investors and
interested summer residents. Although Baker expected the next project financing to be easier, would
Fox Islands Wind be viable without tax subsidies and low-interest government loans? What external
conditions were necessary in terms of energy costs, wind and public policy?
Looking Ahead
Beyond his expectations, George Baker had become deeply involved in the Vinalhaven
community. As Baker leaned back and put his cowboy boots on his desk, he reflected on the history
of Fox Islands Wind. He was amazed at what had been accomplished in a short time, especially since
he had no prior industry experience. Baker educated himself through extensive reading and close
cooperation with strong partners. His past experience as a teacher helped him to communicate the
details of the project to residents clearly and to build support. Baker had found leading a project
enjoyable. Walking through Vinalhaven and being thanked for his efforts was especially rewarding.
Baker also envisioned what the future held in store. Was this a one-hit wonder, or could this
model be extended to benefit other island communities? Then, his phone rang. It was the mayor of a
neighboring island who had expressed interest in a wind project. “George Baker,” he answered.
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810-129 The Fox Islands Wind Project (A)
16
Exhibit 1 The Fox Islands of Vinalhaven and North Haven
Source: United States Environmental Protection Agency, environment map of Vinalhaven and North Haven,
http://www.epa.gov/myenv/MYENVIEW.results2?pQuery=&minx=-69.16065&miny=44.10374&maxx=-
69.05766&maxy=44.15918&mw=750&mh=290&ve=13,44.13142,-69.14310&pText=04841,%20ME&pFilter=undefined,
accessed April 2010.
Exhibit 2 Average Residential Price of Electricity by State, 2008
Source: U.S. Energy Information Administration, “Annual Electric Power Industry Report,” Figure 7.5,
http://www.eia.doe.gov/cneaf/electricity/epa/epa_sum.html, April 2010.
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The Fox Islands Wind Project (A) 810-129
17
Exhibit 3 Energy Usage on Fox Islands
Source: Fox Islands Wind LLC.
| Exhibit 4 2001 |
Timeline of Key Events in the Fox Islands Wind Project University of Massachusetts begins a three year wind study on Vinalhaven |
| 2003 | Bill Alcorn and Del Webster buy the 73 acre Swenson’s Quarry site to be used as a wind farm |
| 2005 | Fox Islands Electric Cooperative installs a new electrical umbilical connecting the islands to the mainland |
| 2007 (spring) | Island Institute convenes a meeting of the island electric cooperatives to discuss wind power on the islands |
| 2007 (fall) | Fox Islands Electric Cooperative funds a feasibility study of a wind project at Swenson’s Quarry |
| 2008 | George Baker takes a leave of absence from Harvard Business School and begins to focus on the Fox Islands Wind project in Maine |
| 2008 (spring) | Community meetings to discuss wind project begin on North Haven and Vinalhaven, feasibility, engineering and environmental studies begin |
2008 (July) Ratepayers on both Vinalhaven and North Haven voted overwhelmingly 382-5
to authorize the Fox Islands Electric Cooperative Board to proceed with
developing detailed plans to erect up to three turbines on a site in the middle
of the island
2009 (June 8) Site construction commenced
2009 (November 17) Several hundred islanders gathered at the project site to celebrate the
successful, on-time completion of the project
Source: Fox Islands Wind LLC.
Power Generated and Consumed: 2004
(Three 1.5MW wind turbines)
0
200
400
600
800
1000
1200
1400
1600
1800
Jan Feb Mar April May June July Aug Sept Oct Nov Dec
kwh
| Power Generated |
| Power Consumed |
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810-129 The Fox Islands Wind Project (A)
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Exhibit 5 Biographies
George Baker
George P. Baker is the Herman C. Krannert Professor of Business Administration (on leave) at the
Harvard Business School. For the past two years, Baker has been on leave from HBS, serving as the
Vice President of Community Wind at the Island Institute, a Rockland Maine based non-profit. He
has been the driving force behind the Fox Islands Wind Power project in Vinalhaven Maine, and
serves as the CEO of Fox Islands Wind LLC. He has also worked with numerous other communities
to explore and develop community wind on the Maine coast. He serves on the Maine Governor’s
Task Force on Ocean Energy, and is a member of the Advisory Board of Neptune Wind, an offshore
wind development company.
At HBS, Baker teaches in the MBA program, as well as in the doctoral program. Prior to joining the
faculty at Harvard, he worked both as a consultant with Temple, Barker and Sloane, and as a
marketing manager with Teradyne Inc. Baker holds a Ph.D. in Business Economics from Harvard
University and an MBA from the Harvard Business School. He lives in Rockland Maine and Newton
Massachusetts with his wife, Lauren Jennings, an attorney.
Matthew R. Simmons
Matthew R. Simmons graduated cum laude from the University of Utah and received a Masters
degree with distinction in Business Administration from Harvard Business School. He then served on
the faculty as a research associate for two years. In 1974, he founded Simmons & Company
International. Simmons serves on the Board of Deans Advisors of Harvard Business School and is
past President of the Harvard Business School Alumni Association. He is a board member of the
Island Institute, which focuses on the Gulf of Maine and its 15 year-round island communities. He
also serves on the Board of Directors of Houston Technology Center and the Center for Houston’s
Future.
Simmons serves on The University of Texas’ M.D. Anderson Cancer Center Foundation Board of
Visitors (Houston) and is a Trustee of the Bermuda Institute for Ocean Sciences. He is a member of
the National Petroleum Council, Council on Foreign Relations and The Atlantic Council of the United
States. In addition, he is past Chairman of the National Ocean Industry Association. Mr. Simmons is a
Trustee of the National Trust for Historic Preservation and the Farnsworth Art Museum in Maine.
Hannah Pingree
Representative Hannah Pingree was sworn in as the 99th Speaker of the Maine House of
Representatives on December 3, 2008. Pingree has sponsored bills that help island communities to
develop wind energy projects.
Prior to serving in the Maine Legislature, she was a fundraiser for the U.S. Senate campaign of Chellie
Pingree, her mother. She also worked for two years in New York City as the political director and
“Election 2000” producer for iVillage.com, the largest political internet site for women. In addition to
serving in the Legislature, professionally, Hannah runs a capital campaign to build a new public
school facility on North Haven. Hannah is an honors graduate of North Haven Community School,
Brown University and was a 1998-99 Fellow for Leadership in Public Affairs for the Coro Foundation
in New York City. In the Legislature she represents 11 islands and coastal towns. She grew up on the
island of North Haven.
Source: Fox Islands Wind LLC.
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800-988-0886 for additional copies.
The Fox Islands Wind Project (A) 810-129
19
Exhibit 6 Photographs of Construction and Opening
Photo by Suzanne Pude/Island Institute (2009) Photo by Peter Ralston/Island Institute (2009)
Photo by Peter Ralston/Island Institute (2009) Photo by Peter Ralston/Island Institute (2009)
Source: © Peter Ralston/Island Institute, 2010, http://www.pralston.com/, and Suzanne Pude/Island Institute,
http://www.islandinstitute.org.
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800-988-0886 for additional copies.
810-129 The Fox Islands Wind Project (A)
20
Exhibit 7 Excerpt from Maine Department of Environmental Protection Noise Requirements
(1) Sound From Routine Operation of Developments.
(a) Except as noted in subsections (b) and (c) below, the hourly sound levels resulting from
routine operation of the development and measured in accordance with the
measurement procedures described in subsection H shall not exceed the following limits:
(i) At any property line of the development or contiguous property owned by the
developer, whichever is farther from the proposed development’s regulated sound
sources:
75 dBA at any time of day.
(ii) At any protected location in an area for which the zoning, or, if unzoned, the existing use
or use contemplated under a comprehensive plan, is not predominantly commercial,
transportation, or industrial;
60 dBA between 7:00 a.m. and 7:00 p.m.
(the “daytime hourly limit”), and
50 dBA between 7:00 p.m. and 7:00 a.m.
(the “nighttime hourly limit”).
Source: Maine Department of Environmental Protection, “Rule 06-096, Ch 375, Section 10:C, Sound Level Limits,”
http://www.maine.gov/sos/cec/rules/06/096/096c375.doc, accessed April 2010.
Exhibit 8 Variation in Wind Turbine Noise by Distance from Turbine
Source: Anthony Rogers and James Manwell, “Wind Turbine Noise Issues,” Center for Energy Efficiency and Renewable
Energy, University of Massachusetts at Amherst, http://www.npp.ca/images/WindTurbineNoiseIssues.pdf,
Figure 7, p 12, March 2004.
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800-988-0886 for additional copies.
The Fox Islands Wind Project (A) 810-129
21
Exhibit 9 Estimated Levelized Cost of Electricity Comparison
Wind Natural Gas
| Capacity (kW) | 1 | 1 |
| Hours in a year Capacity factor Availability Interest rate Depreciation years Depreciation cost Operating cost (% of capex) Capital cost Fuel cost ($/Mcf) Heat rate Interest (+) Depreciation (+) Operating cost |
8,760 32% 95% 6.0% 25 $72 2.00% $1,800 |
8,760 88% 95% 5.0% 30 $32 2.00% $950 $4.00 7,500 $48 $32 $19 |
| $108 $72 $36 |
Annual cost of system $216 $98
Energy produced (in kWh) 2,663 7,323
Fuel cost ($/kWh) $0.000 $0.030
Capital recovery + O&M ($/kWh) $0.081 $0.013
Total dispatch cost $0.081 $0.043
PTC subsidy ($0.021) ($0.000)
Total $/kWh $0.060 $0.043
Source: Hammond, Pearce W., Burt Y. Chao, Brian D. Gamble, “Onshore Wind Farm Capital Cost Breakdown,” Perspectives
and Outlook on Clean Energy,” Simmons & Company International, June 11, 2010, p 41.
Exhibit 10 Impact of PTC Lapses on Wind Installations
Source: American Wind Energy Association, “Windpower Outlook 2009: Wind: A leading source of new electricity
generation,” January 17, 2008, p 4,
http://www.awea.org/newsroom/releases/awea_market_release_q4_011708.html, accessed April 2010.
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800-988-0886 for additional copies.
810-129
22
Exhibit 11
Source: Fox
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800-988-0886 for additional copies.
The Fox Islands Wind Project (A) 810-129
23
Exhibit 13 Wind Power in Maine, March 2010
Name Capacity
(MW)
County Status
Kibby Mtn. 132 Franklin Partial operation
Rollins Mtn. 60 Penobscot Proposed
Stetson Mtn. 57 Washington Operating
Record Hill 55 Oxford Proposed
Oakfield 51 Aroostook Proposed
Mars Hill 42 Aroostook Operating
Longfellow 40 Oxford Proposed
Stetson II 25.5 Washington Under construction
Fox Islands 4.5 Knox Operating
Beaver Ridge 4.5 Waldo Operating
Source: Casewriter.
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800-988-0886 for additional copies.
810-129 The Fox Islands Wind Project (A)
24
Exhibit 14 Turbine Site Selection on Vinalhaven Island
Source: National Resources Council of Maine, http://www.nrcm.org/documents/VinalhavenMap.pdf, accessed March 2009.
Exhibit 15 Examples of Noise Sources, Receivers and Propagation Paths
Source: A. Rogers, J. Manwell, S. Wright, “Wind Turbine Acoustic Noise”, University of Massachusetts at Amherst Renewable
Energy Research Laboratory, January 2006.
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800-988-0886 for additional copies.
