A Business Model to Stimulate the Economic Development of Rural or Devitalized Communities

A Win-Win Approach

An understanding of the connections between a variety of problems can sometimes lead to a common solution.

        Summary

Wind-Do has a decentralized approach to energy generation from wind turbines.  A variety of local actors working together can generate electricity and benefits, which will stimulate local economic activity.

The Wind-Do modular wind farm can be optimized in many ways. In addition to producing a target amount of electricity that is sold to the network, a significative amount of excess electricity will be generated. This extra energy is free, but must be used locally, for example providing heat for a greenhouse or for other industrial uses.  

By saving on energy costs, greenhouses can become more profitable in Northern countries. This could be one factor that leads to their construction.  In turn, local employment is created, and as the greenhouses are located where produce is needed, fruits and vegetables will be fresher and cheaper. In addition to enhancing the local economy and creating jobs,  this will reduce greenhouse gas emissions in many ways: less food transportation, clean electricity, and even carbon capture with winter culture.

  

             This is a win-win approach.

   

 Here are some examples of problems 

 that have common links:

Over time, many cities and villages have lost their economic vitality.

In Quebec, there are about 150 cities and villages with higher than average unemployment rates.  About half of these communities have a population of less than 500.  Young people tend to leave these villages, and the average age is often higher than for communities of similar size. 

To stimulate the economy and create jobs, the benefits of local activities must remain in the communities. To keep the youth in their community, either jobs or business opportunities must be created.

Climate change is likely to lead to problems of food security. 

Certain agronomists argue that 75% of the world's agriculture should be carried out in enclosed spaces by 2050, in good part due to climate changes.

The only way of significantly reducing the production of greenhouse gas is to reduce the production of energy from sources that produce those gases.

This implies a significant reduction in the burning of all carbon-based fuels, not only for electricity production, but also for heating and industrial processes. 

Not in my backyard.

Most people want green energy.  One current source is the use of giant wind turbines.  However, many people do not want them in their backyard. Energy production from the wind needs to minimize visual and noise pollution, and be widely distributed to more evenly balance its contribution to the grid.

The costs of clean energy have to be reduced. 

In many regions and countries, green energy currently costs more than that produced by burning carbon fuels. 

To favour rapid uptake, clean energy must be profitable even without subsidies, and it should be relatively simple to finance projects. The production of green energy should provide an interesting profit margin for those who invest and maintain the facilities. There are advantages with facilities that are at human scale, require relatively little training, need minimal capital and are easy to finance at a low interest rate.

         The Wind-Do Proposal 

Energy is at the centre of all human activities:

-    Energy production generates significative benefits and income.
-    Energy availability at low cost generates opportunities that are sources of economic growth.

Wind-Do proposes the installation of several mid-scale wind turbines grouped in a wind farm that can produce from one to a few megawatts.  These wind-farms can be the starting point of a development plan for remote or devitalized communities. 

Our wind turbines are the size of a tree, and so have little visual or noise impact.  The cost of each KWh produced is quite competitive, and does not require ongoing government subsidies.   To meet their production targets, very often the wind farms will need to be oversized.  There will be a surplus of electricity that is free, but this surplus must be used locally. 

Our wind farms may have a variety of business models:

-        A cooperative can be created to manage the wind farm and other related projects that are part of a revitalization initiative.  Profits are then reinvested in the local community.

-        A local business or entrepreneur could decide to be part of a wind farm close to his facility. The main production of electricity is used by the business to reduce its energy cost and/or to sell to the grid. The surplus production is given to a cooperative to empower a greenhouse.

-        An electricity producer such as Hydro-Québec could also be the owner of a wind farm. The surplus electricity can be used to stimulate the local economy.

The Economic Advantage for the Electricity Distributor:

-        The cost of electricity production, using the Wind-do approach, will be between 2 and 4.5 ¢/KWh.  Depending on the project and its particular situation, electricity could be purchased by the grid administrator at 4.5 to 7 ¢/KWh, a win win situation. The electricity distributor could decide to create and manage its own wind-farms, although it is unlikely to want to do this for small wind farms of a few megawatts.  This leaves the field open to small producers.

-        Our wind farms are small and spread over the grid, so the electricity produced can be linked into the network at a minimal cost.  Over time, and as experience is gained, the local electricity production could be increased, based on the community needs and the capacity of the grid interconnection.

-        A wide distribution of wind energy production in the network will facilitate the integration of this intermittent source for the grid manager. Distance between each farm make sure that wind variations will never create sudden changes in grid loads.

-        In Northern countries, the wind in the winter has 50-100% more energy, so the production will be highest during weather-related peak loads.

       Greenhouses and Wind Energy

One of the characteristics of the Wind-Do wind farms is that a good deal of surplus electricity will be produced (beyond the target that is set), but this energy must be used on site.  The availability of almost free electricity can spur a number of local economic activities that would be advantaged by very low cost energy.  Here are a few examples:  heating of commercial buildings, drying wood, commercial food preparation, the production of hydrogen, electricity storage to make it available at spot prices, or any industrial processes that need electricity or heat. 

The use of free electricity by greenhouses has a number of advantages:

-        Greenhouses in northern latitudes are hardly profitable due to heating costs. Our low cost energy will enable them to compete with food produced in the south.

-        Local vegetables will be fresher, often cheaper and be healthier than imported ones.

-        Local production will favour food autonomy and security, stabilize prices and increase the diversification of the production with local species.

-        Most of the local jobs that would be created require little education.

-        Part of the greenhouse could be used as a community garden or coffee shop.  

A basic Wind-Do wind farm is designed to supply one MW of nominal power.  Based on wind availability and configuration, it will provide 3-4.5 GWh of electricity to the grid each year.  In most cases, the wind farm will produce 1 to 2.5 GWh of free electricity, which can only be used on site. It is possible to heat and light a 1,250 square metre greenhouse with an annual surplus of one GWh.

The Wind-Do GSG heat storage system allows on demand use of surplus heat, at a cost below 1¢/KWh.

         Community participation

A general scenario is proposed below.  Various combinations or options could be customized for a given community.

The creation of a local cooperative would allow the participation of the local population in their economic development.

This cooperative would not be a financial institution, but rather an investment club.  The group could include entrepreneurs, small or large businesses, angel investors and even VC funds; anyone interested in local development. 

The business plan needs to insure the profitability of the cooperative.

Ideally, the cooperative would be the owner of the wind farm.  To support the development potential of the COOP, the wind farm annual benefit should be $100K or more. With a sale price of 2 ¢/KWh higher than the production cost, a sale of 5 GWh per year would be required.  This can be accomplished with an initial connection to the grid of 1.5 MW.

A local greenhouse could create 2 to 4 fulltime jobs and several part time ones.  A typical wind farm with a connection of 1.5 MW would generally produce 2.5 GWh of electricity surplus.  This could meet the needs of a greenhouse up to 3,000 square meters, which could be profitable even with local sales.

The greenhouse should include activities that enhance  the community, but do not compete with existing activities.  For example, the greenhouse could house a garden coffee shop, a restaurant, a vegetable market, or any other useful activity for the community. 

The cooperative should start with local funds of $100K, which could be reached by having 100 investors contribute $1,000 each for a share in the cooperative. Adaptations could allow unemployed people and those on welfare or retired people to contribute and participate in other ways.  Members of the cooperative should have the right to:

1-     Work 2 hours a week in the greenhouse in exchange for a basket of vegetables (which would reduce their weekly expenses).

2-    Work an additional 2-5 hours per week and be paid minimum wage (which will not reduce their government support). This income could also be used to pay for a share in the cooperative.

3-    Receive dividends.  A minimum of 10% of the annual benefits should be distributed to its members.

Individuals and companies could buy additional shares, with the understanding that the cooperative's initiatives would be with local business, including micro-loans and the funding of new projects.

The local availability of low cost energy, as well as the economic potential associated with the COOP, would contribute to the local economy.  Over time, this activity could attract new residents. 

     A prerequisite 

In order to obtain a surplus, a basic amount of electricity has to be sold.  Every state and province has its own rules. In Quebec for example, only Hydro-Quebec can sell electricity, so a basic requirement is that they purchase the primary electricity production from the wind-farm cooperative.

   Useful contributors

Several organizations and corporations could contribute to this approach to community revitalization, for example:

-        The Ministry of Municipal Affairs could provide some financial aid to devitalized communities that wish to carry out feasibility studies.

-        The Ministry of Finance could lend the money required to build greenhouses and wind farms.

-        Credit unions could hold the mortgage, guide the creation of the cooperatives, and participate in their management.

-        A distribution agreement could be drawn up for the greenhouse's production (IGA, Metro…).

-        Other sponsors could contribute to this revitalization activity, while pursuing their own commercial development. (Subway, Couche-Tard…)

     Project Partners

The main project promoter is Wind-Do Inc.  The development of greenhouses would be assumed by Serres Harnois.

Other project partners are needed.  In Québec, these could be:  1)  an investor or lender, such as the Ministry of Finance, Investment Québec, or a bank...  2) a Cooperative like Desjardins or an agricultural COOP,  3) a contractor to build the foundations, and if needed, additional buildings.  Etc…

  

A range of project partners will help to accelerate the creation of cooperatives and enhance the local economy and jobs.

  

    Conclusion

The scenario proposed here does not resolve all the problems identified at the beginning, but its implementation can help to reduce several of them.

-        Economic stimulus of remote communities will enhance living standards, help keep the youth in the community and favour the integration of newcomers.

-        The wind farm and greenhouse activity will create 2 to 4 permanent new jobs, and dozens of part time ones that will energize the community.

-        For off grid communities, wind power can replace diesel generators, reduce the associated greenhouse gas emission, and lower the cost of electricity generation.  Instead of money flowing to the oil producing countries, it stays in the community.

-        The addition of a local greenhouse can increase the availability of fresh produce and for a number of remote communities, lower its cost.  The greenhouse could also become a local meeting place.

-        The local cooperative is likely to be a source of learning about entrepreneurial activity.  Youth could use this knowledge, and the financial potential of the local investment club, to create their own projects.

Please feel free to contact us for additional information.

François Gagnon  ing.ind.                                            

     C.E.O. of Wind-Do Inc. 

     fg@wind-do.com            

Duncan Sanderson Ph.D. 

    V.P. Community Relations of Wind-Do Inc.   

    ds@wind-do.com