Putting customers first makes Sunflower No. 1 in wind power

Land-lease payments to farmers are one reason rural communities are often supportive of developments like the Smoky Hills Wind Farm in western Kansas. (Photo by TradeWind Energy, LLC)

Choose a goal, pursue it single-mindedly and everything else will fall into place, like the wind power purchase that turned Sunflower Electric Power Corporation into a renewable energy leader.

Customer service was the goal when the west Kansas power wholesaler signed a 20-year contract with TradeWind Energy, LLC for 50.4 megawatts from the Smoky Hills Wind Farm. The contract will provide Sunflower member systems a hedge against volatile energy markets and higher-cost fuels like natural gas, said Sunflower Spokesman Steve Miller. "Cooperatives always work to serve the best interests of the people at the end of the line—that is the cooperative way," Miller explained. "What the end-user is interested in is reliable, least-cost electricity."   

The deal puts Sunflower out in front of other Kansas utilities, with more than 11 percent of its peak demand to be supplied by wind energy.  According to TradeWind CEO Rob Freeman, it also helped move the Smoky Hills development forward. "We were trying to get purchases to 100 MW to get the economy of scale," he said. "Shortly after we signed with Sunflower, we got commitments from Kansas Board of Public Utilities and Midwest Energy Inc."

Many pieces to successful agreement

Sunflower tried to purchase wind-generated power in 2003, but the agreement fell through when the project investor was unable to follow through on construction. "We had a good relationship with the community and the developer, but the investor/developer relationship fell apart in the end," said Miller. "Still, it was excellent background for pursuing the current deal. It gave us experience putting together a favorable renewable energy purchase contract."

TradeWind's Smoky Hills Wind Farm proposal was one of many Sunflower received in response to a request for proposals it issued in 2006. "The Smoky Hills project had the ability to be online by the end of the year, which was important to us," said Miller. "Also, it is located in and around communities our member cooperatives serve, and the energy was very competitively priced. Sunflower's board policy does not allow renewable energy purchases to increase our member wholesale rates."

Miller acknowledged that closing the deal was like putting a puzzle together one piece at a time. "The project had to be economical for Sunflower, which required a significant amount of financial modeling and assumptions," he said. "The facility couldn't exceed our capability to add intermittent resources to our load/resource mix. Also, the developer had to obtain turbines and other necessary equipment to complete the project in time for the investor to receive tax benefits."

Support stems from community's trust 

Support from the local community and permitting agencies is another critical aspect of a wind deal, and Smoky Hills was not without opposition. Environmental groups expressed concern about the impact of the facility on wildlife and the undisturbed grasslands in the region. Other opponents observed that developers make most of the money from wind farms while communities absorb the costs in higher electricity prices and depreciated land values.

"The fact is, consumers are becoming more sophisticated about the shortcomings of every type of resource," Miller said. "The right answer is a mix of everything."

On the whole, he added, western Kansas residents are supportive of wind development, especially farmers who see land-lease payments as a valuable source of revenue. TradeWind will make payments in lieu of property taxes to the two counties over several years. Lincoln County commissioners plan to use the money for long-term economic development investments in the county of 3,600 people.

Miller attributes the support for Sunflower's generation expansion plans to their long-standing relationship with communities in the region. "They know the character of our organization and that we take our responsibility to our member cooperatives and the consumers seriously," he said. "At a public comment meeting in Garden City, the community leaders told an AP reporter, 'these projects belong to all of us.'"

Transmission needed for development

The Smoky Hills Wind Farm and Sunflower's power purchase represent a positive step in the state's development of its wind energy potential—third in the nation. Historically, Kansas enjoyed cheap electricity rates, and state utilities had a huge amount of excess capacity. "Today, Sunflower’s excess capacity is gone, but we are partnering with other cooperatives to meet our systems’ generation needs," Miller observed.

Transmission issues are probably the biggest challenge to developing wind energy in Kansas, Miller believes. "When the maximum capability of the wind resource reaches a certain percentage of a utility's peak load, the load/resource mix hits an operational limit. Western Kansas is already bumping this limit," he said. "Wind farms in Kansas will need access to larger markets outside the state, and that will require transmission system upgrades."

One such transmission project is planned in conjunction with the expansion of Sunflower's Holcomb Station. The high-voltage lines connecting the station to eastern Colorado will also be able to deliver wind energy to larger markets in the West.

Freeman agreed that additional transmission would help Kansas develop its wind resources, but acknowledged that many competing interests must first be resolved. He pointed out that Gov. Kathleen Sebelius and Lt. Gov. Mark Parkinson are working to bring together utilities and regulators to increase the state's use and development of renewables. "They have made great strides," he said. "It won't be smooth sailing, but I'm optimistic."

Electric cooperatives, especially ones with renewable energy purchasing experience, will be major players in that process because they have earned their customers' trust. And keeping that trust is the most important thing to Sunflower Electric Power Corporation. "That's the mission of cooperatives, and we can't lose sight of our mission," declared Miller.