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Published March 28, 2010, 11:34 PM

Wind-farm pioneer ties family farms to Wall Street

A thick fog muffles Buffalo Ridge, the gusty plateau stretching diagonally from the Dakotas through southwestern Minnesota and into Iowa, and you can hardly see Dan Juhl’s crop of whirling turbines until the great white trunks are upon you.

By: Jennifer Bjorhus, Star Tribune (Minneapolis)

WOODSTOCK, Minn. — A thick fog muffles Buffalo Ridge, the gusty plateau stretching diagonally from the Dakotas through southwestern Minnesota and into Iowa, and you can hardly see Dan Juhl’s crop of whirling turbines until the great white trunks are upon you. They tower over Juhl Wind Inc.’s corporate headquarters, a garage-like building outside Woodstock, warmed by a stove burning hard yellow kernels of corn.

From here, worlds away from Wall Street, Dan Juhl runs Juhl Wind — one of a few publicly traded companies helping communities and farmers develop their own wind projects. As giant corporations, such as Iberdrola and enXco, battle to build some of the biggest wind projects this country has ever seen, the 58-year-old has become a national leader in his small niche.

Juhl Wind develops, manages and operates small wind projects owned by farmers, school districts and other community groups. It has started building and selling small turbines now but still expects most sales to come from its fee-based work. Development fees, for instance, are typically 3 percent to 5 percent of a project’s cost.

It’s been a winding road for the state’s wind pioneer. After coasting through the recession largely stuck in neutral, Juhl turns on its first wind farm in two years any day now. He has two dozen other projects in the pipeline that he’s determined to get through, even as banks remain tightfisted.

“Everybody’s reeling from the same problem,” he said. But he’s got a plan, asking suppliers to help finance new construction and having director Wesley Clark, a retired U.S. Army general, raising an equity pool from investors.

Juhl literally fell into the wind business by accident. Born in Crookston, he didn’t discover wind until after returning from Vietnam and moving to Alaska. Juhl, a guitar player, was playing in bars around Fairbanks in the oil boom days of the mid-1970s. The father of one of his guitar students refurbished old windmills — the kind from old farmsteads — and installed them for people in the bush, Juhl said.

Shock

One day, the father invited Juhl to help set one up. Juhl grabbed the wrong wire, and the shock knocked him to the ground.

“Something hit me,” Juhl said.

He continued playing, but knew he wanted to get deeper into wind. Then, in 1978, the Public Utility Regulatory Policies Act was passed, requiring electric utilities to buy renewable power from independent producers at the same price they’d pay for it elsewhere.

“That’s what made me blink to start the business,” said Juhl.

He eventually designed and built his own 25-kilowatt wind turbine but couldn’t find blades for the rotor in the U.S. He finally found the blades from a Danish maker called Aerostar and wound up working for the company until 1987.

Wind farms were just starting to catch on in Minnesota when Juhl returned to the state again, refurbishing small turbines and selling them to farmers and small businesses. It wasn’t until 1999 that Juhl’s first community-owned wind farm turned on in Woodstock. A year later, he finished his first farmer-owned project — two turbines for the Kas brothers down the road. After a few news stories about those, the fuse was lit, he said.

“Next thing I know, I’ve got every farmer in the country calling me,” Juhl said.

They’re still calling. Juhl has developed 14 wind farms, which generate 117 megawatts of electricity, enough to theoretically power some 70,000 homes.

With his sons now working alongside him, Juhl wanted access to more capital. He took the company public through a reverse merger with a New York shell company — a less expensive route to Wall Street for smaller companies, but a path that has its own risks. Shares are often traded only on over-the-counter bulletin boards, not on big exchanges, so it’s harder to get noticed. The reverse merger raised about $5 million from a handful of institutional investors.

That was July 2008, just weeks before the credit markets collapsed.

“Timing is everything,” Juhl sighed.

Juhl Wind is set to flip the switch any day now on the $40 million Grant County Wind Farm near Hoffman, Minn. — Juhl’s first project to come on line in about two years. In order to get it done, Juhl Wind had to get vendors — a local contractor and turbine maker he didn’t want to name — to defer billing.

Ed Persons, a retired University of Minnesota professor on a sheep ranch near Hoffman, said he’s one of about 28 people, mostly nearby farmers, who own the project. The farm’s 10 turbines are set to generate 20 megawatts of electricity that Xcel Energy is under contract to buy.

“I feel pretty good about it,” Persons said.

The Recovery Act stimulus package passed a year ago gave wind a boost by allowing developers to turn the existing federal 30 percent investment tax credit into a cash grant for 30 percent of a project’s costs 60 days after it becomes operational. Juhl has fingers crossed that lawmakers will extend the cash grant option, set to expire at the end of this year.

He continues to employ the “Minnesota flip,” where equity investors put up money at the start of a project to get special tax incentives and then, when the benefits are exhausted, flip the ownership back to local land owners and investors.

Juhl Wind is aiming higher, again. Company President John Mitola said he’s talking to investment bankers about underwriting a so-called “uplisting” of the company’s stock. Nasdaq would be a bounding leap for the stock, which was trading Friday about $1.87. That gives Juhl Wind a modest market cap of about $39 million. Shares will have to reach $3 to qualify for Nasdaq, said Mitola, a former utility executive who lives in Chicago.

State incentives

Although the company is still not profitable, revenue doubled in the third quarter thanks to the small turbines it sells. State incentives made the gear attractive to dairy farmers in Ohio, Mitola said.

“Next year, we’ll be profitable for sure,” Juhl insists.

Mitola is also optimistic. Clean tech remains popular with investors, he said, and the company’s year-end financials — due out soon — should please. It’s got Wesley Clark on the board raising funds, and last fall added Twin Cities businessman James W. Beck, the 65-year-old co-owner of a company called EMC LLC that does energy-efficient lighting. It plans to elect one more to reach the majority of independent directors required by Nasdaq.

Neither Mitola nor Juhl sees a thaw in their biggest hurdle — financing — anytime soon.

“I think that 2010 is going to continue to be an extremely difficult year for any long-term debt transaction,” Mitola said. “The banks are still pretty much paralyzed.”

Juhl said he plans to do more vendor financing to get some of the two dozen projects in his pipeline up and running. They include a 10-megawatt project in Chandler, Minn., and two 20-megawatt farms in Meeker County, Minn., all for local farmers. He wouldn’t say where Clark is at in establishing an equity pool from institutional and socially responsible investors.

Juhl powers on. It’s hardly the first rough patch he’s hit in his 30-year wind odyssey. And the breeze just keeps blowing.

“It’s a cash crop,” he said. “It just keeps doing it.”

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