Commercial leasing activity is under the jurisdiction of the State Board of Land Commissioners (the Board). OSLI admin-istrates 2 separate types of leases dealing with wind energy, a Temporary Use Permit and a Wind Energy Lease.

temporary use permits“TUP’s” are non-exclusive permits issued for the installation and monitoring of meterological towers and stations. Th ey are generally limited to a 5 year term at an annual rent of $1,200 per tower. Th ese permits do not guarantee or prioritize the permitee for future development of a project area. Th e process from application to fi nal approval is relatively short, typically two months.1. Once application and fee is received, notifi cation is sent to

existing surface lessees for comment;2. Wyoming Game and Fish is notifi ed to determine what,

if any, stipulations will apply if the location is in a Sage Grouse Core area;

3. Surface Impact Payments are made by the applicant to the surface lessee according to the surface impact payment schedule;

4. Preliminary approval is granted between 20 and 30 days by the Director of the OSLI after reciept of completed ap-plication package;

5. Final approval is made by the Board at the next regularly scheduled meeting.

wind energy leasesWind leases are made through a Wyoming Wind Energy Lease Agreement and provide the lessee with exclusive wind energy development rights of the state trust lands within the lease. Th e agreement is subject to any existing uses. Th ere are 3 phases in the agreement: 1. Intitial Phase for determining feasibility such as conducting wind data; 2. Construction Phase; and 3. Opera-tion Phase. Th e term of the lease is for the anticipated life of the project, usually 35 years and may be renewed for a period not to exceed a total of 75 years. A reclamation bond is required, and at the end of the lease, the land will be reclaimed. Th e process from application to fi nal approval usually takes several months.1. Once application and fee is recieved, notice for comment is

sent by the applicant to all lessees. 2. OSLI reviews the applicant for experience, fi nancial sol-

vency, business licensing, and procurement of transmission and marketing agreements.

3. OSLI determines that state lands applied for have adequate access and site control for the applicant.

Issues and Limiting factorsProcess and Procedures

market rates

Th ere are advantages and disadvantages to using standardized versus negotiated fees for compensation to State Trusts on those Trust Lands being leased for wind energy development. A com-parison of the BLM fee structure and the State fee structure will illustrate the diff erences in standardized fees and negotiated fees.

• BLM bases their rental fee on a 30% capacity factor, the ten year average of the 30 Year Treasury Bond (Jan 98 to Jan 08 is 5.27%) and an average price of $0.03 per Kilowatt-Hour:

• 30% x 8760 hours per year x 5.27% x $0.03/Kilo-watt-Hour x 1000 Kwatts/Mwatt = $4155

• Th e State receives a royalty percentage that usu-ally starts around 4%, the average price of electricity received for Wyoming generated power is $0.05247, average capacity factor is 35%:

• 35% x 8760 hours per year x 4% x $0.05247/Kilo-watt-Hour x 1000 Kwatts/Mwatt = $6435

4. In the event that multiple applications are received for the same parcel(s) or the State parcel is large enough to be a stand alone project, a competitive bid process may be off ered before leasing to the applicant.

5. OSLI reviews the subject land for potential confl icts and di-rects applicant to fully mitigate these confl icts. Such confl icts include those with existing leases, wildlife, cultural, historic, and other confl icts as identifi ed.

6. Determination is made whether the subject property is with-in the Sage Grouse Core area and appropriate stipulations are applied.

7. Negotiation and agreement to the terms and condi-tions of the lease to fair market value that include: 1. Annual rents per acre until operation; 2. An in-stallation fee based on generating (name-plate) capacity; and 3. Operating rent equal to the greater of a percentage of gross revenue, a rent based on generating capacity, or a rent per acre.

8. After full staff review, the Director of the OSLI will recom-mend that the application and lease agreement be approved or disapproved by the Board.

9. Final consideration is made by the Board at their regularly scheduled meetings (6 per year).

10. A Surface Impact Payment is negotiated between existing les-sees and the wind lessee for negative impacts to the state trust land and the leasehold estate. Th ese payments are paid fully to the lessee according to a schedule outlined in Chapter 6 of the Rules. Prior to surface distrubance, the wind lessee must have made the surface impact payment.

11. Th e State Wind Lease Agreement requires compliance with other governmental agencies. Typically, the Department of Environmental Quality and the Wyoming Game and Fish are most directly involved with Wind Energy leasing.

As with any developing industry, wind energy is not without critics. Issues with public acceptance or critiques of the industry, however, are not discussed here. Th e issues can be grouped into two categories: external (market and environmental factors which impede growth), and internal (policy clarifi cations and administrative issues).

External Factors

Transmission: Planned transmission lines will likely prog-ress beginning in 2014. Th ere will still be gaps in service, easement issues, and capacity/storage issues.

Sage Grouse: Th e Core Area was realigned in August 2010. Th is has opened 4 project areas fully and several more par-tially. It has also, however closed off several planned project areas.

Condemnation: Th e Wind Energy Task Force is currently assembling recommendations concerning condemnation authority and scope. Transmission and collector easements are the central concern, as the free market seems to be eff ec-tive for facility locations.

Tax Implictions: Current Federal Subsidies are designed to expire in 2013. Whether or not these credits are extended, this asserts a level of uncertainty into the industry. Th e es-tablishment of a viable statewide wind and transmission program prior to this date would provide additional security for future investors.

Internal Factors

Inspection and Auditing: Related OSLI staff includes 3 range managers and 1 commercial leasing manager. Site inspections and compliance, thorough remittance audit-ing, and production verifi cations are beyond staff capabil-ities at the present levels. Given the current rate of growth wind leases exhibit, coupled with the number of facilities set to construct in the next 36 months, this may become a concern.

Th e OSLI has redesigned its website. Beginning in mid-2011, State Trust land sites that exhibit strong potential for future wind development or other commercial purposes will be listed on the site as “available for leasing.” Th ese sites include larger assemblages of State trust lands which do not confl ict with Sage Grouse core areas, established wildlife corridors, or existing lesees. Th ese sites are also situated to take advan-tage of planned transmission capabilities, and all are in Class 4 or higher wind areas. Th e RFP process has met with mixed success, and this ‘listing’ method may off er the same results more effi ciently. Also contemplated is a web-based platform for project applications which could solicit comments from non-traditional stakeholders and the general public. More information can be obtained by contacting Don Th reewitt, Commercial Leasing Manager, at 777-5762, or dthree@wyo.gov.

Policy Analysis and Industry researchTh e Wind Energy industry is relatively nascent in its current form. New industry-guiding information is released on a virtually daily basis, from varied disciplines including: engineering, fi nance, policy, meteorological science, utility development, and the like. Simply keeping cur-rent information, methods and market data is a daunting task. Th e OSLI has been and continues to rely on industry experts for information relative to commercial wind development, and does not engage any signifi cant primary research or policy advice.

1. Don Th reewitt, Commercial Leasing Manager, Offi ce of State Lands and Investments. 307-777-5762, or dthree@wyo.gov2. UW Ruckelshaus Institute Publication: “Commercial Wind Energy Development in Wyoming: A Guide for Landowners” at www.uwyo.

edu/enr/ienr/info.asp?p=118573. OSLI website, wind energy leasing: http://slf-web.state.wy.us/staging/estate/wind.aspx4. American Wind Energy Association: www.awea.org General information and basics on wind energy5. National Renewable Energy Laboratory Wind Research: http://www.nrel.gov/wind/6. US Department of Energy, Wind and Water Power Program www.windpoweringamerica.gov7. PHOTO CREDITS: p.1 Wind Turbines: Tom Corser, 2005; p.2 Sage Grouse: Jim Laybourn; remaining photos: D3, 2008-2010.

additional Resources:

Pre-Qualifi ed Wind and Commercial sites:

• Wind Energy leasing on State Trust lands is enabled through W.S. 36-5-114 through 36-5-117.

• All necessary permitting of Commercial-scale wind farms is administered through the Industrial Siting Division, Department of Environmental Quality.

• Th e rules and regulations of the Board of Land Com-missioners allows for wind energy development through Temporary Use Permits (Chapter 14) and Wind Energy Leasing (Chapter 6).

• Th ere are currently 25 wind leases on state lands which contain a sum of 50,052 acres. OSLI entered into the fi rst 5 wind leases between October 1997 and December 2004.

Summary and facts

Th e Offi ce of State Lands and Investments (OSLI) has the fi duciary responsibility to its benefi ciaries to manage trust assets using a total asset management approach. OSLI’s two key directives consistent with traditional trust principles: 1. long-term growth in value, and 2. optimum, sustainable revenue production.

• Most wind leases are structured for progressive rev-enue over the lease term. For example, base rent would start at ~$6/acre for the fi rst 5 years, and increase to ~$12/acre for years 11-15. Operating rent follows a similar progressive schedule based on a percentage of actualized production.

• Based on a 1.5 Mw model generator, annual income per turbine: $9,652.

• Th ere are 11 projects currently in lease negotiations as of April 30, 2011, totalling approximately 56,500 acres.

• Total reciepts for 2009: $365,934.• Total reciepts for 2010: $497,876.• Total income to date for all currently leased lands: $2.1

million.• Estimated annual revenue, once operational, of cur-

rently leased lands: $105.74/acre.• Current average income per acre: $17.34.• Th e State of Wyoming currently ranks 11th nationally

in total installed wind capacity at 1099 Mw.

wind Resource development:

a Primer

April 2011 update

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