Nebraska wind power needs a push

December 27, 2012 by  
Filed under Green Energy News

TradeWind Energy LLC has most of the agreements it needs to move forward with a 200-megawatt wind farm in northeast Nebraska.

The proposed Rattlesnake Creek Wind Project would sit on more than 20,000 acres in Dixon County and generate enough electricity to power approximately 60,000 homes.

There’s just one thing the Lenexa, Kan.,-based wind developer is missing — a buyer.

Rattlesnake Creek is a prime example of wind projects that have been stalled or moved out of state as developers look for better incentives to reduce the cost of the power they’re producing.

The quandary was presented at this year’s Nebraska Wind Conference and used to update Nebraska Public Power District’s Board of Directors on wind-generation restrictions earlier this month.

Power from TradeWind Energy’s Nebraska project would be sold to both in- and out-of-state utilities, such as those located in the wind-deficient Southeast. The developer already has similar export projects in Kansas and Oklahoma that supply electricity to Alabama and Tennessee.

David Rich, sustainable energy manager at NPPD, said Nebraska has failed to attract export projects because lower development costs make the end product cheaper in other Midwest states.

“Nebraska projects are getting beat out because those states have put incentives for wind for export where as Nebraska hasn’t,” Rich said.

The Nebraska Legislature passed a bill in 2010 that allows private investment in wind projects for export, but nothing has moved forward in the state over the past two years.

And it’s not because of a lack of available resources.

Nebraska ranks fourth in the country with more than 900,000 megawatts of wind energy potential, according to the American Wind Energy Association. That’s enough power to meet the state’s current electricity needs 120 times over.

According to the Nebraska Energy Office, the state currently has 11 operational wind farm sites consisting of 260 turbines capable of producing 459 megawatts of electricity, or enough to power 165,880 homes. In 2011, just 2.9 percent of the state’s power was provided by wind.

By comparison, Iowa wind farms have a current total capacity of more than 4,500 megawatts, according to the American Wind Energy Association, which is enough to power 1.1 million homes and meet nearly 19 percent of the state’s total electricity demands for 2011.

While several more wind projects for in-state use are planned in Nebraska and both NPPD and Omaha Public Power District are expected to meet renewable energy goals, Rich believes it may take action by the state Legislature to spur any development for export.

Rich said Nebraska’s role in ethanol production shows that incentives work. However, there is very little available to wind developers, who pay the state’s 5.5 percent sales and use tax, local property taxes and an annual capacity tax of $3,518 per megawatt that goes to counties and school districts.

TradeWind Energy estimates the sales and use tax increases development costs in Nebraska at least 5 percent, which drives up the price of electricity produced here by more than $3 per megawatt-hour.

States such as Kansas, Oklahoma and South Dakota avoid this price escalation by eliminating the sales and use tax for wind projects or providing property tax exemptions and production tax credits.

The problem in Nebraska, Rich said, is the state can’t afford to lose this revenue without replacing it with another source.

A possible solution, he said, is to reduce the sales and use tax assessed to wind projects, which will hopefully increase the number of developments that create jobs and boost local property taxes.

“You miss out on some one-time sales tax, but there is a tremendous benefit to the counties,” Rich said.

Nebraska’s current wind projects generate more than $1.3 million in annual property taxes and $1 million in lease payments to landowners, according to the American Wind Energy Association.

State law also requires developers to offer at least 10 percent of the electricity produced at wind farms to Nebraska utilities before export contracts can be considered.

Rich said NPPD won’t lobby for a specific bill regarding wind incentives during the upcoming legislative session.

“We are waiting to see what legislation is introduced,” he said.

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