Subd. 1. Definitions.

1. (a) The definitions in this subdivision apply to this section.

2. (b) "Qualified hydroelectric facility" means a hydroelectric generating facility in this state that:

   1. (1) is located at the site of a dam, if the dam was in existence as of March 31, 1994; and
   2. (2) begins generating electricity after July 1, 1994.

3. (c) "Qualified wind energy conversion facility" means a wind energy conversion system that:

   1. (1) produces two megawatts or less of electricity as measured by nameplate rating and begins generating electricity after June 30, 1997, and before July 1, 1999;

   2. (2) begins generating electricity after June 30, 1999, produces two megawatts or less of electricity as measured by nameplate rating, and is:

      1. (i) located within one county and owned by a natural person who owns the land where the facility is sited;
      2. (ii) owned by a Minnesota small business as defined in section 645.445;
      3. (iii) owned by a nonprofit organization; or
      4. (iv) owned by a tribal council if the facility is located within the boundaries of the reservation; or

   3. (3) begins generating electricity after June 30, 1999, produces seven megawatts or less of electricity as measured by nameplate rating, and:

      1. (i) is owned by a cooperative organized under chapter 308A; and
      2. (ii) all shares and membership in the cooperative are held by natural persons or estates, at least 51 percent of whom reside in a county or contiguous to a county where the wind energy production facilities of the cooperative are located.

Subd. 2. Incentive payment.

Incentive payments shall be made according to this section to the owner or operator of a qualified hydropower facility or qualified wind energy conversion facility for electric energy generated and sold by the facility or, for a publicly owned hydropower facility, for electric energy that is generated by the facility and used by the owner of the facility outside the facility. Payment may only be made upon receipt by the commissioner of finance of an incentive payment application that establishes that the applicant is eligible to receive an incentive payment and that satisfies other requirements the commissioner deems necessary. The application shall be in a form and submitted at a time the commissioner establishes. There is annually appropriated from the general fund sums sufficient to make the payments required under this section.

Subd. 3. Eligibility window.

Payments may be made under this section only for electricity generated:

1. (a) from a qualified hydroelectric facility that is operational and generating electricity before January 1, 2001; or
2. (b) from a qualified wind energy conversion facility that is operational and generating electricity before January 1, 2005.

Subd. 4. Payment period.

A facility may receive payments under this section for a ten-year period. No payment under this section may be made for electricity generated:

1. (a) by a qualified hydroelectric facility after December 31, 2010; or

2. (b) by a qualified wind energy conversion facility after December 31, 2015.

   The payment period begins and runs consecutively from the first year in which electricity generated from the facility is eligible for incentive payment.

Subd. 5. Amount of payment.

An incentive payment is based on the number of kilowatt hours of electricity generated. The amount of the payment is 1.5 cents per kilowatt hour. For electricity generated by qualified wind energy conversion facilities, the incentive payment under this section is limited to no more than 100 megawatts of nameplate capacity. During any period in which qualifying claims for incentive payments exceed 100 megawatts of nameplate capacity, the payments must be made to producers in the order in which the production capacity was brought into production.