Wind Energy for Rural Economic Development

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Wind Energy for Rural Economic Development

It’s tough to make a living on the family farm. In recent years, net farm income decreased as dry conditions in much of the country reduced the forecasted yields of corn, soybeans and wheat. Lower commodity prices combined with higher fertilizer and natural gas prices forced farmers and ranchers to pursue income from off-farm sources – as much as 94% of their total income in 2003, according to the U.S. Department of Agriculture. High unemployment rates also affected rural families forced to work off the farm. Bankers foreclosed on farm loans in record numbers – for example, Colorado’s foreclosure rate on farm loans was 30% in 2002. As young people move to the city to pursue an alternative way to make a living, the traditional rural American way of life is disappearing.

But there is a bright spot on the rural economic development horizon: wind energy. The wind industry contributes to the economies of 46 states, and the outlook for regional economic growth from wind energy is positive. Wind energy projects provide new jobs, a new source of revenue for farmers and ranchers, and an increased local tax base for rural communities. And wind energy is homegrown energy that helps secure our energy future during uncertain times while reducing pollution and conserving our precious water resources.

In fact, achieving the goals of the U.S. Department of Energy’s Wind Powering America program during the next 20 years will create $60 billion in capital investment in rural America, provide $1.2 billion for farmers and rural landowners, and create 80,000 new jobs. Wind energy is the fastest-growing energy source in the world, and your rural community may be able to reap the benefits.

Jobs
Wind energy projects create new jobs in rural communities in manufacturing, transportation, and project construction.

New projects in the Great Plains prompted Denmark’s LM Glasfiber to open a rotor blade manufacturing plant in North Dakota. Wind turbine tower and component manufacturing plants have created new jobs in several states, including Washington, North Dakota, Nebraska, and Wisconsin.

Local labor is often used for project construction, like building roads and erecting turbines. Once the projects are complete, jobs are created in the operation and maintenance of the projects. The wind power plant in Lake Benton, Minnesota, is now the second largest employer in town. Construction on Iowa’s major wind farms provided 200 six-month construction jobs and 40 permanent operations and maintenance jobs at an average wage of $16 per hour.

Wind energy projects generate more new jobs than conventional fossil fuel projects. According to a study by the New York State Energy Research and Development Authority, wind energy produces 27% more jobs per kilowatt-hour than coal plants and 66% more jobs than natural gas plants.

Prowers County Economy Reaps Rewards from Colorado Green Wind Farm
The economy turned around for the depressed rural communities in Prowers County when construction began on the Colorado Green Wind Farm in 2003. At the height of construction, subcontractors employed nearly 400 workers, providing a boost to local businesses. Local companies that provided services also benefited.

  • Herling Construction built 25 miles of roads and excavated 108 turbine foundations.
  • Mortensen employed 87 people to pour 35,000 yards of concrete.
  • Gate City Steel employed as many as 14 people to install 45,000 pounds of rebar in each foundation.
  • Christensen employed 46 people at the height of construction to install 20 miles of underground cable and build the substation.
  • Wilson Construction employed 25 people to install more than 50 miles of buried cable and 44 miles of poles and cables to the new substation.
  • Ridge Crane devoted two cranes to the project for three months.
  • All-Rite Paving & Redi-Mix, Inc. supplied concrete for 32 miles of poles and for the substation.
  • Country Acres Motel and RV Park, which provided housing for the construction workers, was booked solid for months.
  • Wallace Gas and Oil provided up to two truckloads per day of fuel and lubricants for the vehicles and heavy equipment on the site.
  • The Hay Stack Steak House experienced a 30% increase in business.
  • Movie rentals at the local Movie Gallery increased 20%. (Craig Cox, Colorado Coalition for New Energy Technologies)

Wind Power Brings Relief to Rural Texas
After the Texas legislature passed a Renewable Portfolio Standard (RPS), utilities and wind companies invested $1 billion in 2001 to build 912 MW of new wind power projects. The results? “The completed plants created 2,500 quality jobs with a payroll of $75 million, will deliver $13.3 million in tax revenue for schools and counties and pay landowners $2.5 million in royalty income in 2002 alone. The multiplier effect of this new investment activity will stimulate another 2,900 indirect jobs in Texas. Wind power is bringing relief to rural Texas and creating jobs statewide. (SEED Coalition and Public Citizen’s Texas office)

The People Want Wind Energy
On a summer day in Nebraska in 2003, 109 people participated in an 8-hour special survey that yielded startling results. More than 60% of the survey participants traveled more than 100 miles to voice their opinions on electricity-generating options to the Nebraska Public Power District (NPPD).

The special survey, known as Deliberative Polling, revealed participants’ feelings about continuing, decreasing, or expanding the NPPD’s commitment to renewable resources after reading, discussing, and asking questions of experts. The survey revealed that an overwhelming 96% of the participants thought that the NPPD should move forward with a 200-MW wind project and the costs should be included in the base rate.

Landowner Revenues
Wind energy offers rural landowners anew cash crop. Although leasing arrangements vary widely, royalties are typically around $2,000 per year for a 750-kilowatt wind turbine or 2% to 3% of the project’s gross revenues. Given typical wind turbine spacing requirements, a 250-acre farm could increase annual farm income by $14,000 per year, or more than $55 per acre. In a good year, that same plot of land might yield $90 worth of corn, $40 worth of wheat, and $5 worth of beef.

Wind turbines have a minimal effect on farming and ranching operations. The turbines have a small footprint, so crops can be grown and livestock can be grazed right up to the base of the turbine. As Leroy Ratzlaff, a third-generation landowner and farmer in Hyde County, South Dakota, said, “It’s almost like renting out my farm and still having it. And the cows don’t seem to mind a bit.”

Increased Local Tax Base
Property tax payments from utility-scale wind projects provide much-needed revenue to rural communities for building new schools, roads, bridges, and other community infrastructure. Property tax payments of 1% of the assessed value of a wind project equal approximately $10,000 per megawatt for rural communities each year.

Because wind projects are more capital intensive than conventional power plants, property taxes for wind projects are often two to three times higher per unit of energy than conventional plants. Thanks to wind energy, Pecos County, Texas, added $4.6 million to its property tax revenue in 2002 alone. Here are some more examples of communities reaping the benefits of property tax revenue from wind energy projects:

  • Lincoln County, Minnesota: $471,822 in 2003 (155 MW)
  • Kewaunee County, Wisconsin: $200,000/year in property taxes, or 50% of the county’s budget (20 MW)
  • Carbon County, Wyoming: $480,000/year (85 MW)
  • Iowa: $2.5 million/year (320 MW)
  • Stateline project on the Oregon/Washington border: $1.2 million/year (300 MW)
  • Prowers County, Colorado: $2 million (162 MW)

Minwind I and II: Innovative Farmer-Owned Projects Are the Wave of the Future
In 2000, a group of farmers in Luverne, Minnesota, were looking for an investment that would provide a source of income for farmers and would benefit the local community. The farmers formed two limited liability companies as a vehicle to pursue farmer-owned commercial wind turbines (the farmers chose LLCs because they allowed them to maximize their ability to take advantage of tax credits and other incentives).

Sixty-six investors purchased all available shares in 12 days. The companies had enough working capital to purchase four NEG Micon 950-kilowatt turbines (two at Minwind I and two ant Minwind II). They decided that 85% of the shares must be owned by farmers; the rest are available for local townspeople.

After negotiations, the farmers signed a 15-year contract with Alliant Energy to purchase the electricity. There is so much local interest in the project that more Minwinds are planned. For more information, visit www.windustry.com.

Wind Energy vs. Conventional Energy
Wind energy is “homegrown” energy that produces no air or water emissions. It also makes the homeland more secure by reducing our dependence on foreign energy sources. Local wind energy can also ensure that dollars earmarked for conventional energy remain in the community. In 2001, a study conducted by the Nebraska Wind Energy Task Force found that while Nebraska spent $113 million on imported coal in 1998, the state’s ten windiest counties experienced a median income 21% lower and a poverty rate 4% higher than the state average (based on 1995 data). The task force concluded that a commitment to developing wind power in Nebraska could help counteract these trends in rural areas. By contributing to utility-grade power generation, wind power can extend non-renewable energy sources, helping to secure our energy future, stabilize energy costs, and reduce our dependence on foreign energy. For these reasons, rural utilities are looking for ways to diversify their energy portfolios and partner in utility-grade wind power generation (See “The People Want Wind Energy”).

Diversifying energy portfolios with wind energy also makes good economic sense. In 1979, wind energy cost 40 cents per kilowatt-hour. In 2004, the cost per kilowatt-hour dropped to between 3 and 4.5 cents per kilowatt-hour, making wind energy a competitive contender for electricity generation. In fact, when the Colorado Public Service Commission issued a ruling in 2001 on the 162-MW wind project in Lamar, Colorado, the commission determined that wind energy provided the lowest cost of any generation resource submitted to a solicitation bid by Xcel Energy. The commission also determined that unlike the other generation resources considered, the Lamar project avoided a future risk of increased fuel prices.

Wind energy provides yet another advantage over conventional fuels: conservation of our precious water resources. Conventional power plants use large amounts of water to generate power from fossil fuels; wind turbines do not. That makes wind energy a good choice for drought-stricken communities in rural America.

Corn Growers Support Wind Energy
In April of 2003, the American Corn Growers Foundation commissioned a nationwide, random, and scientific survey of 500+ corn farmers in the 14 states representing nearly 90% of the nation’s corn production. The poll found that 93.3% of the nation’s corn producers support wind energy; 88.8% want farmers, industry, and public institutions to promote wind power as an alternative energy source; and 87.5% want utility companies to accept electricity from wind turbines in their power mix.

Wind Energy Helps Mitigate Natural Gas Prices
Natural gas accounts for 80% to 90% of the cost of producing anhydrous ammonia for nitrogen fertilizers. When natural gas prices increase, farmers and ranchers are forced to pay higher utility bills and higher production costs.

According to the U.S. Energy Information Administration, natural gas prices today are in the range of $5 to $6 per MMBtu. According to Ed DeMeo, president of Renewable Energy Consulting Services, gas industry analysts expect prices to be high for a number of years because the demand for gas continues to rise and new production is not keeping pace. At these prices, the fuel-cost component alone for a kilowatt-hour generated in most gas plants exceeds the total cost of a kilowatt-hour generated by a modern wind plant.

“A utility with both gas and wind plants can use wind energy when it’s available, back off on the gas plant during those periods, and then ramp up the gas plant to maintain total system output when the wind dies down,” DeMeo said. “The savings in gas resulting from the wind plant operation can more than cover the total wind plant costs, and the gas plant can maintain system reliability when the wind is fluctuating or not blowing. Total-system operating costs are reduced, total-system environmental emissions are reduced, and system reliability is maintained.”

Wind power has the potential to displace substantial amounts of natural gas consumption, thus reducing upward pressure on natural gas demand and prices.

Minnesotans Export Crop of the Future to Cities
“There’s no question in our minds that we need to move toward renewable energy, and wind energy development is significant for any community. This is one of the few bright spots in a rural landscape,” said Dave Benson, farmer and county commissioner of Nobles County, Minnesota.

Wind energy generated in rural areas can be connected to the regional utility grid system and transmitted to other areas. Rural leaders in Benson’s region are planning a new transmission line along I-90 that will bring wind energy to the Twin Cities. The region currently generates about 360 MW, but the rural communities can only use 50-60 MW.

“We need a line to export this new crop,” Benson said. “And we’re educating the community to be partners in owning the means of production. Our hope is that the local communities benefit.”

How Can I Bring Wind Energy to My Community?

Although integrating wind energy into the energy portfolio mix may sound like a futuristic concept, harnessing the power of the wind is hardly a new idea. Small turbines on individual farms and ranches were commonplace before the advent of rural electrification. Wind projects in rural America may be a return to the past that could help preserve rural communities and the family farm. Making a living on the family farm has never been easy, but harnessing wind energy as the cash crop of the future is a viable way to ease the financial burdens of farmers, ranchers, and rural communities and preserve the rural way of life.


* Produced for the U.S. Department of Energy by the National Renewable Energy Laboratory, a DOE national laboratory.

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