Frequently Asked Questions

Frequently Asked Questions

One Energy prides itself on making wind simple. Review this page for answers
to frequently asked questions about One Energy and the wind industry in general.
Still curious? Contact us for more information. 
 

WHAT IS WIND FOR INDUSTRY®?

One Energy defines Wind for Industry® as a wind energy project designed to achieve a significant reduction of an industrial facility’s electrical consumption from the grid. These projects involve installing one or more utility-scale wind turbines and interconnecting them on the facility’s side of their electricity meter.

WHAT IS NET METERING?

Net metering is a series of state laws that provide, for a given customer with a given generator (usually a clean energy generator), that the utility company can only bill based on the NET electricity consumed at the end of the billing period. This means it does not matter when you use the energy or when you produce it, because you are only billed on the net difference. In some cases, utilities are required to pay for net excess generation. Laws vary widely throughout the country.

To watch a One Energy employee answer this question, visit our Considering Wind video series, where Erin explains:

Net metering is a billing mechanism that most utilities use to allow for on-site generation. Here in the State of Ohio, the public utilities have to allow for net metering. What that is saying is that you’re going to be putting a generation entity behind the meter on your side of the meter and the meter’s going to be able to run forwards and backwards. Your facility is going to be using any of the energy that the generation entity – so, in our case, for a Wind for Industry® project, the wind turbines – any power that’s being generated, your facility’s going to use.

But let’s say your facility can’t necessarily use all of that. The meter’s then going to flow backwards and all that power is going to flow back onto the grid. And with public utilities, and this net-metering billing mechanism, you’re only going to be billed on the net consumption that you use over the entire month. It can keep going back and forth throughout the entire month, but you’re only billed on that end net consumption at the end of the month. - Q4. What is net metering, and when is it available? 

View a PDF of this answer, along with other FAQs from Energy Managers 

Watch a video answer of this question on our Considering Wind series 

WHAT IS THE DIFFERENCE BETWEEN A kW AND A kWh?

A kW is a kilowatt and a kWh is a kilowatt hour. Both terms are common in evaluations, wind, power bills, and sales jargon. Both are misused quite often. A kilowatt is a unit of power, whereas a kilowatt hour is a unit of energy. For a practical example, consider a 100 watt light bulb. Now consider ten 100 watt light bulbs (10 * 100 = 1,000 watts = 1 kilowatt). Ten light bulbs consume 1 kilowatt of energy.

The problem is that there is a very big difference between turning those lights on for one minute and leaving them on for a week. To measure this difference we use power, which measures the energy used over a period of time. If you leave the ten bulbs on for one hour you have consumed one kilowatt for one hour, or one kilowatt hour. The kilowatt hour (kWh) is the most common way utility bills are calculated because it takes into account the total energy consumed. Some utilities also bill in part based on your peak demand, which is your peak energy usage during the month. Peak demand is measured in kilowatts.

HOW MUCH DOES A WIND TURBINE COST?

Generally, the utility-scale turbines in the larger megawatt class (1,000 kW+) cost $3.5 million installed, +/- 10% depending on the site. With a One Energy REA, however, having a project installed costs nothing. The customer only pays when their project delivers power. 

To watch a One Energy employee answer this question, visit our Considering Wind video series, where Jereme explains:

It’s funny. People always ask us, “what is it going to cost me?” And we tell them “just a little bit of your time,” and it’s almost hard to believe. The reason this works is because it saves you money right away, and because you have no up-front cost. But that’s not how things are typically done in business. We’ve crafted this entire project delivery model to make it where all you have to do is sign a contract, and you don’t start paying for power until we’re delivering it cheaper than you were able to get it before.

So it actually costs you nothing. I think the most expense we’ve ever seen a plant pay was for the ground-breaking ceremony they decided to throw for it. But beyond that, we bear 100 percent of the cost, and we have no means to bill you other than for delivering power. We have no other mechanism in the contract to bill you for anything other than the cost of power. That’s how you know it’s not going to cost you anything other than the savings you get in power prices. - Q7. What is this going to cost me?

View a PDF of this answer, along with other FAQs from Plant Managers 

Watch a video answer of this question on our Considering Wind series 

WHAT INCENTIVES ARE AVAILABLE?

Two areas of potential incentives are available for companies: the Energy Investment Tax Credit (ITC) and the Modified Accelerated Cost-Recovery System (MACRS). Many factors affect a company’s ability to utilize these incentives. These factors are covered in One Energy’s Initial Site Evaluation, which will provide a clear financial picture of a potential wind project.

To watch a One Energy employee answer this question, visit our Considering Wind video series, where Jereme explains:

If you decide to do this project yourself where you’re going to go ahead and fund it as the capital expenditure partner in this project and you’re going to own and operate it, you’re eligible for the Investment Tax Credit or the Production Tax Credit. The Investment Tax Credit is a one-time tax credit that’s designed to help defer the cost to create an incentive that is a direct one-for-one credit. There is also the Production Tax Credit, which is a 10-year tax credit based on production.

The Investment Tax Credit, or ITC, does not have a production requirement to understand it. So typically it’s a lower-risk option and typically, in lower wind resource sites, like Class 3 sites (which are typical of Ohio and a lot of the states from here east), you find that the ITC is more financially advantageous. That said, both the PTC and ITC should be analyzed. Both the PTC and the ITC are currently being phased out. Two or three years ago they were locked at 30 percent. They’re now being phased out over a 5-year period down to 0 percent. If you start a project in 2018, you’re eligible for an 18 percent ITC in what used to be a 30 percent ITC.

It’s important to understand that when you take the Investment Tax Credit, you reduce the depreciable basis of the project by half of the value of the Investment Tax Credit. That means you have to reduce the basis of the project before you depreciate it. Wind projects beginning in 2018 are eligible for either 5-year maker’s depreciation or for 100 percent expensing. You can elect either. But the ability to both write off the project earlier and the ability to get that tax credit whether you use the PTC or the ITC, create a tax-based incentive to make this project more financially attractive. - Q11. What tax credits am I eligible for?

View a PDF of this answer, along with other FAQs from CFOs 

Watch a video answer of this question on our Considering Wind series 

WHAT ARE THE HIDDEN COSTS?

Typically the following costs need to be factored into a purchase: equipment purchase, delivery, electrical equipment, foundation installation, electrical installation, turbine installation, grant writing, permitting, engineering, interconnection costs, warranty, maintenance, and insurance. One Energy only quotes complete prices, which include all of the above except insurance (which we help you obtain).

WHAT IS ROI AND HOW DO I CALCULATE IT?

ROI stands for return on investment, and it is as far from standardized as can be. Every individual, banker, and company has a slightly different procedure for calculating ROI and they should be clear on how they calculated it.

The most important thing is to make sure you know what numbers were used in the calculations and what numbers were not. Some companies want to see depreciation included, some do not; just make sure you know what was used. Generally there are three numbers that are good tools for evaluating the overall return on investment: Simple Return, Net Present Value (NPV), and Internal Rate of Return (IRR).

  • Simple Return is how many years it will take to break even (initial cost, divided by annual value). RESULT IS IN YEARS.
  • Net Present Value is the value you would have to have in your bank today to invest, at a given rate to equal the return you would receive. This number can vary widely based on what rate you use for time value of money (what else you could be doing with it). Always make sure you know what rate was used in your calculations and how it was chosen. RESULT IS A DOLLAR VALUE.
  • Internal Rate of Return is the equivalent rate at which you would have to invest your money to equal the same return. RESULT IS A PERCENTAGE.

To watch a One Energy employee answer this question, visit our Considering Wind video series, where Jereme explains:

The problem with modeling simple return is that in order to have simple return, you have to have had an initial expenditure. If you have no initial expenditure, you have no return, because you have no investment. A lot of companies struggle with this idea that there is no simple return, there is no internal rate of return, there is no good metric to use. You can use net present value (NPV). A lot of companies have a mechanism to do a net present value, and you don’t have an initial cost to show against it, so it’s just the present value of the future projected savings. So you can do an NPV calculation.

When you’re modeling return, you have to model this as a savings project with no cost. Essentially, it’s an immediate savings to your OPEX. It’s an immediate below-the-line savings. And that’s how you have to actually compare it. And the out-of-pocket cost is zero. So the return is infinite. But a far better way to compare that or understand it is, what is the savings for doing nothing? - Q9. What is the return on this?

View a PDF of this answer, along with other FAQs from Plant Managers 

Watch a video answer of this question on our Considering Wind series 

HOW CAN I TELL HOW MUCH WIND I HAVE?

In general, the easiest way to get a rough idea of the wind you have at your site is to use a wind map published by the National Renewable Energy Lab. These maps provide fairly accurate 80-meter wind speeds. Remember all speeds are based on annual averages. These maps, however, are just a guide and can be inaccurate. To find a revenue-grade answer, a qualified firm will perform a site-specific analysis. They will evaluate the obstructions at your site, examine the topography, and use more detailed wind maps to provide a much more accurate number. If you are looking at a small turbine for your residence, accuracy is not a large concern. If you are considering a utility-scale turbine for your business, then you need accuracy that is proportional to the investment. One Energy uses proprietary tools to complete our revenue-grade wind assessments in-house. Our assessments are auditable, and are held to the same standards as the largest wind projects in the world. An accurate wind assessment is one of the most important factors in a project, as it is often one of the risks that cannot be mitigated.

WHAT PLANNING AND ZONING REQUIREMENTS ARE THERE?

Requirements vary widely by locality, region, zoning district, and state. To investigate what your local requirements are, talk to your local Planning and Zoning Administrator. One Energy will handle all planning and zoning requirements for your project.

HOW DO YOU CALCULATE HOW MUCH ENERGY A WIND TURBINE WILL PRODUCE?

Calculating potential energy production is much more complicated than simply multiplying the average wind speed by the rated power output of a turbine over the course of a year.

A wind turbine has a power curve that varies with wind speed. Wind can be modeled using what is called a Weibull Distribution Curve (similar to a normal distribution curve, without negative numbers). When a wind resource is modeled using the correct Weibull curve, each individual element of that curve must be multiplied by the corresponding element on the power curve. In short, this is not a simple calculation. The calculations should be shown to you, and whoever provides it to you must be able to explain it. For Wind for Industry® projects, we also include inflow angle, turbulence, air density, and a host of other complicated factors that need to be considered to properly model the turbine’s expected production.

To watch a One Energy employee answer this question, visit our Considering Wind video series, where Jereme explains:

We guarantee the turbine will be properly maintained, and we will use commercially reasonable efforts to continue to produce power. We deliberately don’t provide exact amounts of power production guarantees, because doing so involves predicting the wind, and taking the wind risk. We are very good at predicting the wind, but it’s very hard to give you a specified number without introducing more risk. And risk translates to cost.

The easiest way for us to do this is to guarantee that we will do everything possible to keep that turbine operating. From a practical point of view, we only get paid when that turbine operates and we only get paid when that turbine makes power. So we have every financial incentive to keep that turbine operating as well as possible. Historically, our fleet has availability across the fleet above 98 percent. And in some cases, approaching 99 percent. That’s a very high availability number, and it reflects the fact that we’re encouraged to make power, based on the way our contracts are set up. - Q21. Are there guarantees the turbines will produce power?

View a PDF of this answer, along with other FAQs from Plant Managers 

Watch a video answer of this question on our Considering Wind series 

WHAT IS THE INFLATION RATE OF ELECTRICITY PRICES?

We do not know. We can quote historical numbers, but they are just that, history. All of our calculations at One Energy are completed assuming ZERO inflation in electricity rates. While prices are likely to increase, we cannot tell you by how much. Make sure when you look at an ROI calculation, from One Energy or other potential partners, you know what inflation rate was used and why. A few percentage points can change the results by thousands or even millions of dollars.

To watch a One Energy employee answer this question, visit our Considering Wind video series, where Jereme explains:

As you look across the country, rate inflation has varied between 1 and 3 percent in most states. Ohio in the last 20 years has been a little over 2 percent. It’s important to understand that when we talk about rate inflation we’re talking about end-user retail-rate inflation. Often times people have heard “the price of power is going down; we’re seeing all kinds of low prices from generation; yay natural gas boom” and whatever else. And that’s great and the more price goes down at the generation the more it should translate to you, but it doesn’t.

Historically most customers have not seen a rate decline at their retail rate. That’s because the bill’s more complicated than generation rate alone. Your rate is made up of other tariffs that can be added on top of that. It’s important that you understand when you’re looking at it, to look at your kilowatt-hour rate as a marginal cost including all tariffs when you do trending and understand that the actual rate you pay in most cases has continued to go up or to stay level even though wholesale prices of generation may have gone down in certain areas in the country. - Q6. What has rate inflation been historically?

View a PDF of this answer, along with other FAQs from CFOs 

Watch a video answer of this question on our Considering Wind series 

WHAT ABOUT TURBINES THAT MOUNT TO ROOFTOPS?

The power contained in the wind is proportional to the cube of the speed of that wind. In other words, if you double the wind speed, you can get eight times the power. If you mount the turbine on your roof top at 30 feet high, it will get 20-30% less wind speed than the same turbine at 100 feet, and it will get HALF of the power due to the reduced speed. In most cases, rooftop wind turbines have lost before they even begin. In theory, a wind turbine can remove 59% of the energy from the air, and some wind turbines have already shown in practice to remove above 50%. There is a reason utility companies put their turbines on tall towers and use a three-blade design. Each utility-scale wind turbine captures more than an acre of air. If you want those kinds of results, you need that kind of scale.

WHICH TURBINE MANUFACTURERS DOES ONE ENERGY WORK WITH?

Only the best. No one turbine or one manufacturer is right for everyone. Each product and provider has its pros and cons. Based on your goals, One Energy will help you select the best turbine for your project. One Energy utilizes relationships from our previous large utility wind farm projects to negotiate the best price for your project.

To watch a One Energy employee answer this question, visit our Considering Wind video series, where Jim explains:

Ultimately, One Energy controls the design of each of these turbine projects. We rely on engineers and third-party expertise for certain aspects of the design: structural, foundation, as well as tower design. And we don’t manufacture our own turbines, so we rely on our suppliers for that type of design. But each of our individual Wind Campus® designs is ultimately controlled by One Energy. - Q4. Who controls the design?

View a PDF of this answer, along with other FAQs from Construction Managers 

Watch a video answer of this question on our Considering Wind series 

WHAT QUESTIONS SHOULD I ASK A POTENTIAL WIND CONTRACTOR?

When selecting a partner for your project, it is paramount that your organization ask the following questions:

  • Will you show us a copy of your safety plan?
  • Will you show us a copy of your quality plan?
  • How many wind turbines has your team installed? What size turbines has your team installed? How many total megawatts has your team installed?
  • What crane and rigging experience does your team have? How many crane picks above 100,000 pounds has your team constructed?
  • What training will the lead person installing the turbine at my site have?
  • What varieties of turbines (both manufacturer and size) does your company install? How do you decide which turbine is best for my project?
  • Who on your construction team is trained in tower rescue? What rescue equipment will your construction team have on site?
  • Will you explain how a wind turbine generates electricity and delivers it to the grid?
  • Who handles grants, state filings, FERC, PILOT, and EIA filings?
  • Who is responsible for securing local construction permits and attending local community meetings?
  • Other than signing completed paperwork, what exactly do I need to do in order to get a wind turbine installed?
  • What kinds of power quality problems could result from a wind turbine?
  • Where can I obtain insurance for my turbine and how can your company help me?
  • What is the average inflation rate of electricity in my area? What inflation rate number did your team use in your calculations? What REC value did your team use in your calculations? How can I audit your team’s raw financial calculations?
  • How does our corporate tax rate affect the return on investment for a wind turbine?
  • Do you have errors and omissions insurance, not just general liability insurance?
  • Will you explain net present value and internal rate of return? Can you explain how they can determine which wind turbine to install?
  • Will you explain how to model wind speeds at different heights and how to use the Prandtl and Power Law Models?
  • What is Net Metering and why does it matter to me?
  • Will you provide resumes for your project team? Will you provide information about your company and any engineering and/or construction firms that will be involved in the design, evaluation, and construction of my project?

Download a printable 20 Questions for Potential Contractors PDF


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