Juhl Energy has built its business around developing, owning and operating utility-scale wind. But market conditions have changed, and now the Minnesota company is expanding its reach, including into microgrid finance.
Unregulated subsidiaries of large utilities have come to dominate utility-scale wind power in the US. That prompted Juhl Energy’s executive team to seek out business development opportunities in new markets.
Capitalizing on its experience in distributed wind, solar and cogeneration systems, the company has moved into hybrid, commercial, industrial and community microgrids that range from under 2 MW to in excess of 5 MW.
Microgrid Knowledge spoke with Juhl Energy about market conditions for microgrid finance and the company’s plans as it expands into this specialized, fast-moving market niche.
A one stop shop for mid-scale microgrid project finance
Essentially, Juhl takes on projects in which it can leverage and capitalize on its strengths and that of partners. The company might serve as a microgrid investor, owner or operator, or it might handle all aspects of a project for others — from investment through construction.
“Generally speaking, we try to get ourselves in a position where we can get projects done as efficiently and quickly as possible by investing our own capital and using our own balance sheet,” said Clay Norrbom, managing director of Juhl Clean Energy Assets, the company’s investment and finance group. “We’ve found that in many cases getting bank financing is inefficient, particularly when it comes to smaller scale projects [up to 5 MW]. We have the potential to go in as a single investor and perhaps add leverage in the future.”
On larger projects, Juhl looks to put in equity and bring in debt, if and when it makes sense. “We want to be a one-stop shop for microgrid project finance, more specifically mid-tier commercial, industrial and community-scale projects,” Norrbom said.
Hybrid microgrid stepping stones
A couple of early projects served as mile markers and helped guide management in developing a course for Juhl’s microgrid finance and business development plans, Norrbom said.
Juhl became one of, if not the first, to design and deploy an industrial-scale, behind-the-meter wind-solar power system with its work at the Honda Transmission Manufacturing plant in Russells Point, Ohio.
Working with GE, Juhl also helped develop the nation’s first integrated, community-scale, wind-solar power system, the $10 million, 5.6 MW Red Lake Falls Project in Minnesota. Connected to the utility grid, the Red Lake Falls wind farm incorporates two, 2.3 MW GE 116-meter turbines and 1 MW of solar photovoltaics.
“Both projects could be considered building blocks that have led to our getting more widely and deeply involved in investing in, designing and building on-site microgrids that incorporate wind power along with various other sources of distributed, clean power generation,” Norrbom said.
Wind and solar have two very distinct features, company president John Mitola added. “Solar gives you peak power supply, but wind gives you a lot of energy, so that’s why need they need to be applied appropriately. Solar can provide a lot of energy in areas where’s there’s lots of sunshine. But north of the Mason-Dixon Line, wind is typically the main generation source and solar is used to meet peak needs — it provides a great deal of value in that regard.”
Both projects were developed at a time when microgrids were gaining credibility and legitimacy and just beginning to be discussed more widely in the power industry community, Norrbom said.
“These were early days, before interest in microgrids had reached today’s levels. We believe Red Lake Falls was the first, or at least one of the first, true hybrid platforms for both wind and solar. At that time, you had wind power and you had solar power, but you didn’t see both on the same site. GE put together the systems and master controller that integrates and automatically controls the two together,” Norrbom said. “So if in the extreme, for instance, wind generation is at its peak and solar is at its peak, the system knows to limit itself so as to meet actual load.”
Furthermore, just one inverter is used for both wind and solar energy generation, said Mitola. That “eliminates the need for some equipment, and some upfront costs,” he said, adding that GE has a master controller Juhl likes because it integrates wind and solar to optimize power production and delivery to the grid.
Original equipment
The company tends to favor using original manufacturer’s equipment from the same provider when designing, engineering and building core aspects of microgrid systems, particularly the primary source of generation, Mitola explained. The hybrid wind-solar microgrid platform Juhl developed in partnership with GE makes use of GE’s microgrid controller and is designed to match an industrial plant’s peak usage cycle.
At present, Juhl’s Power Engineering Cooperative is designing a fully integrated, hybrid microgrid for Ford Motor’s new global headquarters in Dearborn, Michigan, Mitola said. A subsidiary of Detroit Edison is the owner and operator of the microgrid, which incorporates heating and cooling.
Juhl is also in the midst of completing deals for three other projects. Mitola could not divulge further details due to confidentiality agreements.
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