Wind Power in Minnesota deed.sate.mn.us

Wind Power in Minnesota
by Stepahine Adams

In an uncertain world economy, the possibility of higher oil prices is a hot topic. Now, more than ever, various states are envisioning a future without undue dependence on foreign oil. Minnesota has been a leader in the development of alternative energy strategies— especially wind energy production. Among the states, Minnesota ranks 9th in wind potential and 2nd in wind capacity.1 Located on farmers' fields, giant wind turbines look nothing like the picturesque windmills first used by the ancient Persians to grind grain. Today's turbines stretch to heights over 213 feet with sleek rotor blades 116 feet long; the larger ones can produce enough energy to fully power about 600 homes. Modern turbines can generate reliable household and utility-scale energy, and wind is increasingly recognized as a valuable resource for clean, cheap energy and economic development.

Wind power capacity in the United States expanded from just 10 megawatts in 1981 to 2,554 megawatts in 2000. This phenomenal growth was driven by national legislation and a federal subsidy, which opened the door to small-scale wind generation by guaranteeing a market for "surplus" energy. The law requires local utilities to buy power generated beyond what is needed by a household or small business that operates a wind turbine. The subsidy program gives corporate entities a 1.5 cent per kilowatt-hour tax credit as an incentive to invest in large-scale renewable energy. Without the subsidy, wind generation costs are between 4.0 and 6.0 cents per kilowatt-hour as compared to natural gas at 3.9 to 4.4 cents, and coal-produced electricity between 4.8 and 5.5 cents.2 From 1998 to 1999, wind capacity in Minnesota increased by 101 percent and contributed 20 percent of the United States' total new wind capacity.3

STATE A HOT SPOT FOR WIND ENERGY PRODUCTION
Like the U.S., Minnesota has its own set of wind energy incentives. In spite of the competitive cost, demand for wind power in Minnesota is largely driven by a 1994 legislative mandate. That year, the legislature required Northern States Power (NSP, now Xcel Energy) to produce or contract for 425 megawatts of wind energy by 2002. Projects less than two megawatts in size and owned by a small business, a nonprofit organization, or a tribal council are offered subsidies of 1.5 cents per kilowatt hour for power sold to utilities. These small projects are also exempt from property taxes. Minnesota, like many other states, now permits "net metering," which allows the utility to provide the customer with back-up power when the wind does no

As with the U.S., there are signs that wind power in the state may see more market-driven demand in the near future. There is good reason to believe that utility companies may choose wind power without its being mandated. For one thing, wind turbines are easier to locate and build than coal and nuclear plants. Also, there is some evidence that banks are becoming more receptive to financing wind power.

The global momentum to decrease greenhouse gases is providing Minnesota wind developers with another reason for optimism. Emissions trading, a market-based approach to decreasing greenhouse gases, allows regions or countries to save, trade, or sell emission "credits" that accrue when the production of clean, renewable energy- such as wind energy- lowers emissions.

The Buffalo Ridge 4 in Southwest Minnesota is the best location for wind development in the state and is, at present, home to the largest wind farm in the world. Unhindered by forests or cities, winds blow on the ridge at an annual average speed of 17 miles per hour. Currently, there are 450 turbines on the Buffalo Ridge that produce 300 megawatts of wind energy to supply approximately 110,000 homes with power.5 At the end of 2001, Xcel Energy was attempting to obtain regulatory approval to upgrade its transmission lines in the area to provide 825 megawatts of power.

Outside the Buffalo Ridge area, Elk River (in Sherburne County) is the site of two wind turbines. One is a small test project; the other is a new, 660-kilowatt wind turbine dedicated in 2000. Elk River, with 21 renewable and efficient energy projects, calls itself "Energy City." Moorhead brags about having the first utility to offer wind power as an option. Other locations with prime wind resources include Clay, Becker, and Otter Tail counties in the West Central area and, to a lesser extent, Lake and Cook counties in Northeast Minnesota.

As the wind energy industry grows, its economic development prospects look bright— turbines are usually located in rural areas and are expected to create much-needed job opportunities as well as tax revenues. There is hope that wind power will help small farms by providing another source of income for cash-strapped farmers.

INCOME FOR FARMERS
It's no secret that agriculture has come under increased stress in recent decades. The number of farm operators in Minnesota whose principal occupation is farming decreased by 26 percent from 1987 to 1997.6 Both small-scale and large-scale wind developments offer opportunities for farmers or landowners to supplement their incomes. Local wind developers think that the small-scale, distributed generation model of wind development could help farmers develop a long-term income stream that is not affected by fluctuating commodity prices.

Large-scale wind farms lease wind rights from landowners. Contracts between farmers and wind developers vary by type of project, company, and individual situation. For example, NSP paid $450 per acre for the wind rights, $1,200 per acre for rights to build roads and areas for the towers, and $5,000 per tower for one typical large project 7. This contract arrangement gave the landowner the option of a one-time payment or a 10-year payout period with 8.0 percent interest. Other projects have paid landowners a yearly fee based on turbine production capacity. Depending on size of turbine and amount of energy produced, contracts can pay from $2,000 to $5,500 per turbine each year. Because each wind farm utilizes only a small portion of the land for maintenance access roads, towers, and transformers, farming can continue virtually unhindered.

WINDY JOBS
Can wind power aid economic development efforts in the state? A recent study by the Renewable Energy Policy Project counted the average number of jobs created for various types of renewable energy projects. The study estimated that 3.7 jobs are created per megawatt of wind power in the United States.8 These positions can include operation and maintenance, administration, sales, and construction jobs. According to Jim Nichols, Site Supervisor in Tyler, Minnesota, for Vestas Wind Systems, a Danish wind turbine manufacturer, the jobs that have been created from the Buffalo Ridge projects are "good, head-of-household type jobs." Critics argue that operation and maintenance jobs are often filled by non-locals, and construction jobs are only temporary. Nichols counters that local firms do not complain about one-shot, but significant ($1,000,000 per megawatt) investments in their community. Furthermore, Nichols contends that additional rural jobs are created when turbine operators locate in the region to provide maintenance service for their contracts— as did Vestas Wind Systems

BENEFITS TO LOCAL GOVERNMENT
When the Minnesota Legislature mandated that NSP purchase 425 megawatts of wind power, they also created economic opportunity for counties where the projects were located. Lincoln and Pipestone counties have generated substantial tax revenues from the Lake Benton I and Lake Benton II wind power projects on the Buffalo Ridge. Together, the two counties in 2000 received approximately $1,254,020 in tax revenue from the wind projects. This was almost 20 percent of the counties' combined total yearly revenue.9 Lake Benton, the home of over 200 turbines, calls itself the "Windpower Capital of the America Midwest" for good reason! It's clear that large-scale projects can contribute substantially to county coffers even as small-scale wind farms remain exempt from local property taxes.

SPIN-OFF EFFECTS: PROS AND CONS
Supporters maintain that wind power encourages community stability because wind-related businesses and energy dollars are retained locally. Critics argue that wind turbine manufacturers and owners tend to be non-local, and they send profits out of state. Two Minnesota wind turbine owner/developers, Navitas and Great River Energy, have made a point of keeping wind dollars local.

Turbines can also bring tourists. Navitas will soon open a Midwest Center for Wind Energy near Hendricks in Lincoln County. Their regional offices and maintenance facility will house a public hall, interpretive center, and bed and breakfast-style lodging in the heart of a wind farm. Navitas is talking with county government about scenic bike tours of the wind farms.

Wind power's critics argue that poorly planned wind farm projects may cause hazards to birds, create unpleasant aesthetic effects, generate noise, and interfere with radio and television signals. Residents in two Kewaunee County (Wisconsin) towns have had a rocky ride with wind power. Their problems have included poor television reception and allegedly decreased property values. They warn that large-scale wind farms are not yet problem-free, and great care should be taken in their placement and maintenance. In response, the National Wind Coordinating Committee, a multi-sector collaboration of utilities, state and federal government agencies, environmental groups, and consumer advocates, recommends that states, counties, and local decision makers set regulations to ensure that wind turbines are appropriate and suited to the communities in which they are located. The State of Minnesota, through its Environmental Quality Board, currently regulates all wind projects greater than five megawatts. Site permits address turbine spacing, safety, construction, maintenance, environmental and agricultural impact, and responsibility to the landowner— among others issues. So far, this planning has resulted in good experiences for Minnesota's wind industry promoters and consumers.

WHAT IS THE FUTURE OF WIND POWER?
Due to better technology and uncertain petroleum prices, wind power's relative price can be competitive with natural gas and coal. Development of Minnesota's wind resources lowers the state's dependence on foreign oil markets and keeps the dollars generated from energy production circulating among farmers, cooperatives, counties, and businesses within the region. Higher-cost renewables, such as solar power and biomass, may not do as well when up against conventional energy sources.

Wind power's long-term development will depend on public interest. Rural residents stand to benefit the most from economic development but also stand to lose the most from siting problems. Wind power is an environmentally-sensitive energy source, but turbines may not be bird-friendly, quiet, and aesthetically pleasing to some. Like nuclear facilities, coal plants, and natural gas, wind power promoters will have to go through the process of gaining public support for their facilities.

For now, Minnesotans seem proud of their giant turbines and progressive environmental policies. Some states are known for their cheese, some for their corn. If this state's wind power industry keeps developing at its current rate, Minnesota could be known as…the Turbine State?



--------------------------------------------------------------------------------

RELIABILITY OF WIND POWER
Experts say that wind power has the overall potential to supply about 10 percent of U.S. electricity needs, with a few caveats for reliability. What are these caveats?

The wind must continue to blow at documented average speeds. Wind speed is a function of the sun, the Coriolis force, land patterns, and the air's density— none of which are likely to change drastically. However, wind does blow intermittently and inconsistently from day to day. Hence, wind energy can augment but not replace large-scale sources of energy.


Wind turbines connected to the grid are typically backed up with coal, and the wind fluctuations are not noticeable.


Wind turbines that are not connected to the grid and only power a home or farm must be backed up with a battery which stores the excess wind power for later use.


All power plants need to be shut down and serviced periodically. Wind power's potential depends on its lower need for maintenance and repairs compared to many other forms of power. Modern wind farms are available 98 percent of the time. Maintenance costs for wind energy systems are less than 1.0 cent per kilowatt-hour.


--------------------------------------------------------------------------------

FOR MORE INFORMATION:
Minnesota Department of Commerce
www.commerce.state.mn.us

Minnesotans for an Energy Efficient Economy
www.me3.org

Windustry
www.windustry.org

American Wind Energy Association
www.awea.org