More wind power for Big Sky Country
Montana is in the top five of all 50 U.S. states for wind power potential, and BayWa r.e. tapped into that wind power potential in the Big Sky Country state in building the 25-MW Big Timber Wind Project.
By Diane Mettler
Getting into wind power by way of investment banking
Florian Zerhusen founded BayWa r.e. Wind LLC in 2001, and got an early start in renewable energy by way of investment banking.
In 1999, fresh from business school in Germany, he moved to San Diego and began work as an investment banker. "When I was working in corporate finance banking, we had a couple of oil and gas clients, through which I was exposed to the energy segments," he says. He soon realized how dependent the U.S. was on those energy sources and how there was minimal renewable energy used in the U.S. at the time. It was a niche which he found very attractive—and he knew he could fill that niche.
"In the U.S., renewable energy was in its infancy. In Northern Germany, where I grew up, there were plenty of wind farms."
In the 1990s, Germany was undergoing tremendous growth in using wind as renewable energy, leading the way into the 2000s.
"During my investment banking career, small cap companies that were trying to get funding would approach us," he says. "That gave me very good exposure and an idea of what people were doing in order to obtain funding for their companies."
Zerhusen wrote his business plan, went to Germany, and was able, at the young age of 25, to convince Germany's leading wind farm developer at the time, WKN, to become his first shareholder in 2001, to fund his plan—a partnership that lasted 10 years.
The first project was the Snyder Wind Farm in Texas, which was completed in 2007 and boasted the tallest tower height in the U.S. (approximately 344 feet) for ten years, which he sold to global utility giant Enel for over $100 million.
The company grew, and he obtained the board's approval to search for a new investor. In 2011, BayWa AG through its renewable arm acquired majority interest in the company.
Since then, the company has acquired, developed, and constructed many wind farms, which it placed in service and subsequently sold to large institutional investors such as Goldman Sachs and Macquarie or utilities like NorthWestern Energy and ConEdison.
Zerhusen is proud that the company has developed somewhat of a reputation for being a company that can take projects to the finish line, projects that other developers thought would be too difficult.
"Thanks to our parent company BayWa, we are in the financial position to acquire projects in late-stage status, complete development, and construct them within a relatively short time frame, on our balance sheet."
Montana may be known for its cowboys, Yellowstone Park, and grizzly bears, but it also has another great attribute—wind.
Montana rates as one of the top five states for wind capacity, and it's one of the reasons that BayWa r.e. acquired the Big Timber (previously known as Greycliff) 25-MW (megawatt) capacity wind farm project located in Sweet Grass County. Surrounded by three separate mountain ranges, the wind farm sits between the cities of Billings and Bozeman, within the rocky foothills of Dead Man's Canyon.
"The Big Timber project is blessed with a strong wind resource that is shared by much of Montana and its neighboring Plains states to the east," says Florian Zerhusen, CEO of BayWa r.e. Wind LLC.
Synoptic (continent-scale) weather patterns favor high winds in this area, as meteorological fronts move through the region. The Big Timber project is located in an area where these high winds are broadly channeled between mountain ranges and make it possible to design, construct, and operate a highly efficient wind farm.
When acquiring any project, there are many details to contend with. With Big Timber, a vital detail was working closely with all local governments to ensure requirements were met to move the project forward. "The County Commissioners' objectives were met in conjunction with our corporate goals," says Zerhusen.
The positive county relationship resulted in assistance on non-county related tasks such as help locating possible O&M building locations and a facility to hold the local job fair. BayWa r.e. finds job fairs a useful tool in securing local talent, and is requiring its contractors to include and search for qualified hires and companies which, in most rural areas, are hard to find.
No project moves into construction without a well-developed plan. BayWa r.e. is also aware that once construction starts, things inevitably happen and flexibility is a necessity. In the case of Big Timber, Mother Nature turned out to be an unexpected challenge. Winter weather and extremely high wind conditions on the project site were challenging, but the team was able to handle it through prior planning and good daily coordination with contractors on the site.
Weather became an issue again when there was an unexpected amount of snow during commissioning of the facility. Fortunately, it did not cause any significant delays. Crews followed the cold weather safety procedures put in place, while keeping the project on schedule and on budget. "Coordinating the various scopes of work performed by multiple contractors under time pressure is challenging for any developer or owner of infrastructure projects," notes Zerhusen.
The 25-MW Big Timber project is truly in a sweet wind spot in Sweet Grass County. Surrounded by three separate mountain ranges, the wind farm sits between the cities of Billings and Bozeman, within the rocky foothills of Dead Man's Canyon.
Ideally wind project construction project begins with civil work such as roads, laydown yards, crane pads, and foundation before actual installation of the turbines commences. Parallel to this effort, electrical work can be done, with cables being laid down within the wind park. These collect into an on-site substation where the energy is bundled at typically 34,000 volts before being stepped up to connect into the local transmission line. Each wind turbine can easily require more than ten truckloads of various components, such as tower segments, nacelle, blades, and tools. This requires very careful logistics and timing to avoid the potential idling of up to 100 trucks.
For the Big Timber project, BayWa r.e. constructed and operated out of a laydown yard, which was centrally located within the project boundaries. With only one landowner, coordination was fairly straightforward, although the company was required to work with several surrounding landowners. The ranch manager for the property was the main point of contact, and project management personnel communicated with him on a weekly basis.
Due to the rocky site, some blasting was required as part of building the turbine foundations. The highway system in Montana made it possible to transport the turbines without difficulty; only nominal improvements were required to the last 10 or 15 miles of roadway. The teams installed a substation in addition to 14 GE 1.79-megawatt turbines with a 100-meter rotor diameter and a hub height of 262.5 feet.
More detailed preparation was required regarding the transportation of the electricity and joining it to the existing power grid. The project interconnects with a 161-kv line, which is a sizable line, but very manageable. There's a lot of coordination required between the various contractors and utilities from the planning, administrative support, and the technical work overall, says Zerhusen.
The project was completed on time, within budget, and began generating electricity in the first quarter of 2018. Since then, Big Timber has been producing power as forecasted.
Mother Nature turned out to be an unexpected challenge with the Big Timber wind project. Winter weather and extremely high wind conditions on the project site were challenging, but the team was able to handle it through prior planning and good daily coordination with contractors on the site.
According to its business plan, BayWa r.e. typically sells the interest in its project once the project is commercially placed in service, meaning it is generating energy. It continues to be involved by managing the asset. It sold the Big Timber project to New York utility ConEdison. The project is selling its energy to NorthWestern Energy for the next 25 years under a long-term energy contract. Another example: in 2015, BayWa r.e. sold its 80-MW Beethoven project in South Dakota to NorthWestern Energy, after it was placed in service.
"Most of our projects have been on budget and on schedule," says Zerhusen.
"In general, I think the industry is doing a pretty good job about executing its projects on schedule."
He attributes the successful construction to detailed planning, a focus on communication with all involved, the support from the local community, and the financial commitment of its parent company. Everyone involved in the project, from development and project management to construction contractors to trade specific labor personnel and state and county officials, all played a crucial part in contributing to the success of the project, he says.
Development of a strong team working toward the same goal of completing the project safely and on time is essential. Prior planning is the key to a successful project, he says.
Zerhusen is proud of how the industry is supporting the planet.
"Every project that competitors or we place in service is a good step towards helping the environment. We as an industry still make up a small percentage of the overall U.S. energy generating portfolio, wind energy specifically." Wind and solar combined make up about 10 percent of energy production in the U.S.
"In the big picture, it's a very small number actually, but it's definitely 10 percent less coal or gas or nuclear energy that is needed to generate electricity, which from an environmental perspective, is a good thing," says Zerhausen
And there is more to come, specifically from Bay-Wa r.e.
In North America, BayWa r.e. is currently preparing its 100-MW Strauss project in California and the 250-MW Amadeus project in Texas for construction, with others in the pipeline to follow. Globally, its parent company is developing wind and solar projects in many countries.
The international trading conglomerate BayWa AG pools all of its renewable energy activities in its subsidiary BayWa r.e. (renewable energy), which is predominately active in the wind and solar industries.
Headquartered in Munich since the company's inception in 1923, BayWa AG is a publicly traded company generating an estimated annual revenue of 17 billion Euros.
With over 1,700 employees working in BayWa r.e. globally, the group has developed and constructed over 2 GW and actively provides asset management for over 5 GW. BayWa r.e. acquires, develops, constructs, and operates renewable energy projects as well as distributing PV components on a wholesale basis.
BayWa r.e. Wind LLC is responsible for the group's North American activities in the wind sector. The company has been active in the U.S. since 2001 and was acquired by BayWa AG in 2011.