Wind farms had popped up in various places around Minnesota. Power created by wind is something that many tried to capitalize on within the state. However, it turned out to be an economic lower for approximately 360 landowners and farmers.
These individuals had invested in two rather modest wind farms more than ten years ago in Minnesota. The corporations that own the power projects had to file for reorganization bankruptcy in U.S. Bankruptcy Court in Minnesota. The owners stand to drop the investment and the wind farms may have to be shut down, according to the filings.
This is the first bankruptcy filing out of the nearly 100 wind power projects operating in the state.
However, it is said that this is an industry that is not for the faint of heart because these are energy facilities that are sizeable and the contracts with the utility companies are long-term. Because of the long-term nature of the contracts, the wind farms are expected to produce. However, a lot of things can go wrong.
One of the farms went online in 2002 and they were able to make a profit until 2012. Basically, it was operating well, according to financial records. The electricity was sold to a Minneapolis energy company.
The company told federal regulators that the turbines were in need of major repairs, but money issues came about and the company was no longer able to keep up with the maintenance of their turbines. This resulted in malfunctioning that caused a reduction in production. To make matters worse, the company got into a situation with the Federal Energy Regulatory Commission for not filing specific paperwork in 2006. This caused them to pay a $1.9 million regulatory fine that has left any potential purchasers uneasy about acquiring the farm.
The company’s attorney has said that the company should be excused from their lapse in filing. Some of the owners had invested in another plant, which was sold in 2010 to another biofuel business. None of the owners are very knowledgeable in the power sector, except through their ownership and the way they have been operating the facilities. However, federal regulators do not accept the lack-of-knowledge argument.
It has been said by one industry expert that there is concern about whether or not the small0owned wind farms have set aside enough money to maintain their wind generators. If the wind generators do not work properly, then a lack of funds can cause them to break down without repair and that can interfere with productivity. If productivity is reduced, then the utility companies suffer. If the utility companies suffer, then they ultimately pass that suffering on to their consumers.
In the mid-2000s, Minnesota policy on wind farms changed. Any direct subsidies paid by the state ended and some of the wind farm owners say this is what has hurt them.
Although the two farms are the very first wind farm bankruptcies, it is expected that they may not be the last as others may see financial difficulties if they have not set aside the necessary funds for maintenance of their turbines.