October 2009

State News: August 2009


Blowing in the Wind

More states are looking to the skies to power homes and businesses—wind energy is fast becoming a renewable of choice across much of the American heartland. And states are
offering incentives for the wind industry to put up turbines in order to meet a percentage of clean energy resource standards.
By Mary Branham Dusenberry
States looking for a cleaner energy source have found it blowing in the wind.
Not only that: Growing the wind energy industry has helped states meet guidelines for renewable portfolio standards and has developed the economy. It is also helping to reduce the dependence on imported energy, particularly oil from the Middle East, according to those involved in state energy programs across the country.
Take Ohio, where Gov. Ted Strickland last year signed a renewable energy standard that represents the third most aggressive standard in the country, according to the U.S. Department of Energy.
“Wind seems to be the one that is closest to being ready to go to commercial scale, either in Ohio or outside Ohio,” said Mark Shanahan, the governor’s energy adviser.
And Ohio isn’t even one of the top states for wind energy potential. The wind corridor where it’s windiest are generally those states found in the center of the country, basically from Texas north through the Dakotas, according to the American Wind Energy Association.
But even states in the lower wind categories are getting involved with promoting wind as an alternative energy source—39 states have state wind energy programs, according to the association. Some states are also importing—or planning to import—energy created by wind in other states to meet their own renewable portfolio standards. Reaching that market, however, will take some major work on the electricity transmission grid, wind energy experts and advocates say.
Colorado has the sixth largest capacity for wind power with 1,069 megawatts installed, according to Mona Newton, wind program manager for the state. But it has so much more potential—but there’s a glitch.
“Why doesn’t Colorado have even more developed?” she said. “People will respond by saying transmission, transmission, transmission.”
In fact, transmission is one of the major roadblocks to really developing the wind. But along with the federal government, states are getting involved in these cross-border issues involving transmission because they recognize the benefits.

Standards, Other Reasons Spur Growth

Many states that don’t have high wind potential have adopted renewable portfolio standards—typically mandates that require a certain portion of electricity be fueled by renewable energy sources such as wind, solar and hydro. Twenty-eight states now have a renewable portfolio standard, according to Hans Detweiler, manager of state legislation and policy for the American Wind Energy Association.
“When you look at the U.S. electricity markets in terms of the size of markets, the states that have renewable energy standards are really a very significant majority of overall electric sales,” he said. “Renewable energy standards have been very successful market drivers around the country.”
But some of the states with significant wind don’t have such mandates to prompt utilities to use renewable energy. And those states are chugging along because of voluntary efforts.
In Kansas, for instance, Gov. Kathleen Sebelius and utilities entered into a voluntary standard to provide 10 percent of electricity from wind by 2010 and 20 percent by 2020. They beat that goal last year, according to Lt. Gov. Mark Parkinson.
“We were underutilizing our wind resource until two years ago,” Parkinson said.
The state did offer incentives, including a property tax exemption, that has helped spur the growth, he said. In addition, the federal tax credit is a major incentive across the country.
He believes Kansas is attracting substantial growth in the wind industry because of high wind potential and the fact that costs have dropped.
“The wind is so strong in Kansas that it makes economic sense for the utilities to build and own wind farms,” Parkinson said. The cost of a new wind farm, he said, is almost as cheap as a new coal-fired plant.
And that’s one thing that has spurred development in Oklahoma, which also doesn’t have a renewable portfolio standard. “It went on basic economics,” said Steve Stadler of the Oklahoma Wind Power Initiative. “When somebody looked at the back of the napkin calculations, they found out they could make money. That’s when the tune of our utilities turned around.”
From a business perspective, then, it just makes sense. T. Boone Pickens, an oil millionaire who launched a campaign last year to promote wind energy, said the United States needs to start looking at its own resources.
“There’s no question when you look at wind and how it’s distributed around the world, we have the best wind and the most consistent wind of anyplace in the world,” Pickens told State News. “It’s a great resource for us.”
Pickens believes there are so many reasons to promote the use of wind energy, as well as other renewable and domestic energy sources. His biggest motivator is security for the country. By using domestic resources, he said, the U.S. is not at the mercy of volatile markets overseas.
The U.S. imports about 70 percent of its crude oil, Pickens said. “Over half of that comes from countries that are not very friendly to us … so the security of the country is now at risk,” he said.
Pickens laments the absence of a federal energy policy and the yearly increase of oil importation. While he promotes the need for action on the federal level, Pickens believes the benefits for states merits action on that level as well.
“Each state has citizens in that state who use energy,” said Mark Ward, senior vice president of Mesa Power, Pickens’ company. “They’re all affected by the price and availability.”

Incentives Lead to Benefits for Communities

But that’s not the only benefit for states; many have seen the economic development that comes along with the wind industry. And that has helped more than a few communities.
Nolan County, Texas, and its largest town of Sweetwater, were losing population in the early part of this decade. There were few jobs and the county was losing businesses—and losing its tax base, according to Tim Fambrough, county judge executive. But that was before Mesa Power contacted county officials about incentives. The county hadn’t established wind energy incentives at that point, but worked up a tax abatement policy in 2001.
Since then, Mesa and other energy companies have constructed 1,300 wind generators in the county, which provided a boost to the local economy. Nolan County has the highest concentration of wind energy in the country. Fambrough said the growth of the industry has helped stop outmigration of Nolan County residents, as well as bring in jobs.
“A lot of local people have gotten jobs in maintenance of wind generators, in the construction of them, which resulted in lots of growth in Sweetwater,” he said.
And the county’s tax base grew from more than $500 million to just under $2 billion.
Texas allows localities to create tax abatements for such projects, but it also allows school districts to create tax exemptions for companies developing wind projects, according to Dub Taylor, director of the state energy conservation office.
“If a wind farm comes in and say it’s a $500 million investment … if they can essentially pay a much-reduced property tax bill for the first 10 years then that has an obvious economic advantage to the wind farm operator,” he said.
The school district might just get 10 percent of the tax revenue for up to 10 years. “But 10 percent is better than 0 percent. The additional jobs and economic development activities related to construction and maintenance and operation were the long-term benefits that would create revenue and provide benefits to the school,” Taylor said.
On top of that, some states are hoping to draw manufacturers of the wind turbine parts to their states. Ohio, for instance, has instituted a jobs stimulus package, with an important piece related to advanced energy, Shanahan said. It also offered incentives to the utilities to provide the produced power into the electric grid.
He said Ohio is actively negotiating with a number of wind energy companies that produce the turbines or towers.
In wind-rich North Dakota, the economic benefits multiply. Ryan Rauschenberger, manager of energy business development for the state, said the towers and blades are also manufactured in North Dakota. So when a wind farm is developed in the state, two of the three major components of the wind tower come from inside the state, Rauschenberger said.
“It has a tremendous economic impact,” he said.
Sweetwater, Texas, Mayor Greg Wortham, who heads the Texas Wind Energy Clearinghouse, is quick to point out that even states without significant wind capacity can benefit from the industry.
“There will be substantial amounts of work done in regions that will never have substantial wind capacity,” he said. States like Ohio and Michigan, he said, will benefit because of the strong manufacturing history in those states.
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