During a 2004 strategic planning session members of the Iowa Lakes Electric Cooperative (ILEC) board asked the question; “how can we participate in the wind energy industry.” It seemed like a logical question given the service territory for ILEC encompasses some of the best wind resources in the country, and in recent years board members had watched the biggest players in the industry move into their region and capitalize on the excellent resource.

According to Rick Olesen, Vice President of Operations & Engineering, there were many reasons why such an endeavor appeared unlikely. However, in spite of a 2004 investigation that proved wind projects were a “no-go” from a business standpoint the interest in wind energy remained high for both board and cooperative members alike. It was this interest and overall persistence that lead to a number of unique win-win partnerships that changed a negative business case into a positive one. Today, ILEC is a successful player in the wind energy industry; owning and operating two 10.5MW wind projects called Lakota and Superior.

So how did they do it? The success of these projects marks many firsts for a rural electric cooperative utility. Rick Olesen hopes that by telling the ILEC story other cooperatives may be inspired to achieve similar success.

In 2007, ILEC received $43 million of financing through the Clean Renewable Energy Bond (CREB) program, which provides below market interest financing to electric cooperatives and government entities. According to Olesen, the provision of this funding was a critical turning point in the economic feasibility of the wind projects. The primary benefit of the CREB program is that public entities receive the bonds at “zero” percent interest. The revenue or cost savings from the renewable electricity systems are then utilized to pay off the bonds. In the case of ILEC, CoBank purchased the bonds, and became one of the projects many win-win partners.

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Unique Partnerships Led to Wind Development Success for Iowa Lake Electric Cooperative

AWEA I Utility Case Study

Iowa Lakes Electric Cooperative (ILEC)

Win-Win Community Partners

ILEC leaders recognized early on that to be successful they needed to be partners in the communities they serve and help strengthen local economic development. Over the past 25 years ILEC has done their part, assisting in the development of seven industrial parks, nominating 22 organizations to receive the Iowa Venture Award, and working closely with the Iowa Area Development Group to garner eight loans and grants totaling $2.5 million. The loans and grants resulted in over $10.2 million in capital investment and 430 jobs throughout their territory. In addition ILEC’s Revolving Loan Fund has made nine loans leveraging $5.4 million in projects and creating over 100 local jobs.

Awards

2011 Wind Cooperative of the Year Award – ILEC was recently awarded the 2011Wind Cooperative of the Year Award. This award honors one electric cooperative each year for its leadership in wind power. This award is sponsored by the U.S. Department of Energy’s Wind Powering America initiative and in partnership with the National Rural Electric Cooperative Association.

Iowa Lakes Electric Cooperative (ILEC)6The production and sale of the wind energy was another area that required a unique partnership. IELC is a distribution cooperative that operates under an “all requirements power contract” with Basin Electric. ILEC buys 100% of its wholesale power from Basin Electric. Under this contract ILEC is not allowed to generate or sell wholesale power. However, according to Olesen, a unique substation transaction provided a way around the all power contract constraint, and allowed ILEC to operate as an independent power producer (IPP). For both wind projects, the energy generated is brought directly into nearby substations at the low bus side, sold to Basin Electric, and then purchased back from Basin Electric by ILEC at the higher class A rate.

Another “win” for the project was the opportunity to leverage the existing distribution and substation resources. Utilizing the existing infrastructure saved ILEC approximately $5 million in project costs that would have been spent on a new standalone collection system. The electricity generated by both wind farms is transmitted through ILEC’s underground electric distribution system directly to near-by substations.

With CREB funding secured, and the power purchase agreement in place, ILEC then proceeded with final project design, interconnection documentation, and negotiations with turbine manufacturers. Each project included 7, 1.5MW turbines, and generates an estimated 10.5MW. Both projects were completed and commissioned in April of 2009. Together the projects generate over 72,000 Mwh’s annually. In 2011 the total was over 76,000 Mwh’s and a 41.5% capacity factor.

To date the wind projects are continuing to keep economic benefits in the local community through land lease payments, as well as thru partnering with the Iowa Lakes Community College for needed skilled technicians. Two wind technicians from the Iowa Lake Community College have been hired to assist with operations and maintenance of the wind projects in 2012.

To assist in the economics of the renewable generation, the renewable energy credits (green tags) are sold to Basin Electric Power Cooperative.

1501 M St. NW, Suite 1000 I Washington, DC 20005 I 202.383.2500 phone I www.awea.org

AWEA I Utility Case Study

Iowa Lakes Electric Cooperative

702 South 1st Street

Estherville, IA 51334

www.ilec.coop

Company Profile

Iowa Lakes Cooperative is a consumer-

owned electric distribution co-op that

serves over 12,500 farms, homes,

businesses and industries in northwest

Iowa. Iowa Lakes is headquartered

in Estherville, Iowa, and draws power

across 4,700 miles of line, supports

a system demand of 120MW and

sells approximately 640,000 MWhrs of

electricity annually. Iowa Lakes service

territory covers an eight county region

with excellent wind resources.

ILEC Wind Projects

Superior Wind – 10.5MW

Lakota Wind – 10.5MW