West Texas is, of course, well known for its huge stockpiles of petroleum – but that’s not all. Scattered among the oil wells are thousands of wind turbines dutifully harnessing wind energy to produce electricity for Texas and across the nation. This alternative source of energy has become less expensive to produce and is being actively developed by a myriad of industries.
At the Moster Craft law firm, we are proud to offer diversified energy services including wind power to a myriad of industries from small startups to large enterprises.
Cheaper than Coal and Gas Based Power Plants
Wind Power is finally less expensive than traditional power sources which can make it a great investment for our clients. Bloomberg New Energy Finance reports that wind generated electrical power costs less than conventional turbines which are dependent on oil or coal. This is a huge milestone. Critically, wind power is an economically stable resource given its separation from volatile market conditions such as the cost of oil. The effects of Covid and the rise of inflation and oil prices in 2021 attests to the problems with traditional energy sources and escalating costs. Wind power offers an escape from the unstable market forces.
Economics of Wind Power
Don’t even think about it unless you understand the economic model. Wind Power requires a major investment upfront to build the turbines, electrical connectivity, and traverse environmental and legal requirements. This can be moderated by tax incentives and creative bank financing. The key, however, is the significant drop in capital requirements once wind turbines are operating. There is no requirement for the use of fossil fuels to sustain operations. Once you get over the hump, it is clear economic sailing in the world of wind power generation.
The legal side of wind energy requires sophistication and knowledge. Do not go to a “one horse shop” and seek out vetted experience. Come to Moster Craft to understand the legal environment and what is required from acquisition of the technology, construction, land lease, State and Federal requirements, zoning restrictions, and contractual arrangements with existing power companies which will purchase wind generated energy. We know the drill – so to speak!
We are the “Real Deal” in Wind Energy
As we have said before, we are ready to scale down or up depending on the needs of our clients. Wind energy is not the wave of the future but an established business enterprise in Texas. This area requires the involvement of experienced attorneys who understand the intricacies involved in launching wind energy projects. It is critical that your counsel understand a variety of integrated legal disciplines including land-use and environmental compliance, regulatory law, real estate, and zoning law, and other critical areas.
We encourage our clients to acclimate themselves to the business model and economics of wind energy at inception. Many are unaware that 75% of the costs of wind energy are related to the upfront investment in turbines, foundations, electrical equipment, and the technology to connect the wind energy source to the power grid. Therefore, the business plan must anticipate a very steep investment which is mitigated over time.
Technologies related to offshore production and land use of wind energy. Offshore turbines generate only 1% of the total output but present interesting business opportunities. The balance is generated by terrestrial wind turbines and wind farms which are ubiquitous in West Texas and other parts of the country.
Two other factors affect the ultimate viability of wind energy which must be anticipated in the business model. The first is the variability of the energy source itself, i.e., inconsistent weather patterns which determine the amount of wind available to push the turbines. Consequently, any business model must account for fluctuations or major variations in output based on weather conditions.
The other major factor which presents a technological challenge is the loss of electrical energy in converting the wind turbine to the power grid. This has been a major obstacle and is still in development, however, it presents an opportunity for new intellectual property and acquisition for our clients.
As discussed above, the initial startup issues must be handled with care to ensure the success of the venture. Towards that end, the firm advises with respect to federal and state grants, financing, and tax incentives available for use in the project. The availability of these funds as a realistic source of financing is essential to the success of the endeavor and the expectations of investors who might be involved.
Wind energy is not just about the future because it is here now. At Moster Craft, we are all about making wind energy a reality for our clients.
A word of caution to our clients – do not get involved in the wind power industry unless you get experienced legal advice. We are here to help with the below issues and more:
• Wind power development and land acquisition/lease acquisition.
• Project development and startup.
• PPA’s – power project agreements.
• Credits and offsets.
• Regulatory Law and Compliance.
• Licensing and technology.
• Land use and environmental compliance.
• Tax incentive and structuring.
• Federal and State grants and financing.