2008 is poised to set another record for annual installations in the US, with over 8GW of wind projects currently under construction scheduled for operation by year's end, according to EER. More than half of US states have enacted Renewable Portfolio Standards (RPS') to date, creating demand for up to 295 terawatt-hours (TWh) of renewable energy supply by 2020. In addition, the US federal Production Tax Credit (PTC) remains crucial to the wind project revenue stream, with looming uncertainty regarding the incentive's current expiration at the end of 2008. Texas continues to serve as the hub of US wind project development activity, with over 45GW of wind projects under development in the state. However, future growth in top US wind regions such as the Southwest, Midwest, West and Pacific Northwest hinges on the completion of numerous proposed transmission projects, according to EER.
T.BOONE PICKENS WIND VISION CAN RAPIDLY BECOME A REALITY: AMERICAN WIND ENERGY ASSOCIATION
Key to generating 20% of U.S. electricity by 2030 is policy support, starting with immediate extension of federal production tax credit
The American Wind Energy Association today welcomed the campaign launched by T. Boone Pickens to strengthen U.S. economic and energy security by boosting wind power production and confirmed that ramping up wind power quickly on a large scale is feasible if the government enacts the correct policies, starting with renewal of the production tax credit.
“Wind power has become a key option for our country,” said AWEA Executive Director Randall Swisher. “Earlier this year, the U.S. Department of Energy, in a major technical report, confirmed that wind can generate 20% of U.S. electricity supply by 2030 while providing benefits that far outweigh the cost. And today, one of the nation’s leading energy businessmen is stating that wind power is not only serious business, but perhaps the single most important strategic investment the nation can make today to strengthen our economy and energy security.
“In order to make this happen, however, the U.S. government will need to play its part and enact short- and long-term policies to transform many of our current practices,” added Swisher. “Of critical, and immediate importance, is an extension of the federal production tax credit, so that the industry can move ahead with planned investments and keep people at work. Of equal importance will be longer-term policies to plan for more transmission to bring large amounts of wind power from windy areas to population centers.”
According to the DOE technical report, achieving a 20% wind contribution to U.S. electricity supply by 2030 would:
- Reduce carbon dioxide emissions from electricity generation by 25% in 2030;
- Reduce natural gas use by 11%, which would in turn lower the pressure on natural gas prices;
- Support roughly 500,000 jobs in the U.S., with an average of more than 150,000 workers directly employed by the wind industry;
- Increase annual revenues to local communities to more than $1.5 billion by 2030; and
- Reduce water consumption associated with electricity generation by 4 trillion gallons by 2030.
Local or State Incentive Programs for Wind Energy Investments
Wind and Photovoltaic Systems Property Tax
Exemption
In 1992, the Minnesota legislature enacted MS2000
272.02(21) and (23)
to exclude the value added by photovoltaic and wind energy systems
rated less than 2 MW from property taxation. Partial exemptions apply
to larger systems. Current rules state that wind systems between 2 and
12 MW of rated capacity are about 90% exempt from property taxes, and
projects over 12 MW are about 75% exempt. In Minnesota, utilities face
higher property tax rates than private companies, so exempting a
portion of a project's value from the property tax creates a
competitive advantage for independent power producers. This statute
applies to the residential, commercial, and utility sectors for the
life of the system, although since the property tax valuation is
determined at the time of initial installation the wind exemptions
apply to a decreasing tax as the property depreciates which important
to consider in calculating life cycle costs.
Wind Energy Generation Grants
Minnesota is unique in offering payments for energy output, placing a
premium on project production rather than providing investment credits
for rated capacity which may or may not be fully utilized once
installed. As enacted in MS2000 216C.41, Minnesota offers a 1.5 cent
per kilowatt hour payment for electricity generated from new wind
energy projects less than 2 MW in capacity. Qualifying projects will
receive payments for ten years, extending beyond the current
eligibility expiration date of January 1, 2005. Projects will be
admitted to the program on a first come, first served basis until new
wind capacity installed under the program statewide totals 100 MW.
Legislators recognized that the state mandate for Xcel Energy (formerly NSP) to build or purchase 400 MW of wind power by 2004 and an additional 400 MW by 2013 would stimulate large, cost-competitive wind projects, and wanted to launch a program that would stimulate dispersed, locally-owned projects as well. This grant program was initiated with the goal of establishing infrastructure to support small-scale wind development. The first projects admitted into the program were owned by Moorhead Public Utility and Great River Energy.
Minnesota's production credit roughly mirrors the federal renewable energy production incentive (REPI) that provides payment of 1.5 cents per kilowatt hour (adjusted for inflation) for electricity produced from wind and closed loop biomass. Minnesota's grant program is available for commercial, industrial, residential, nonprofit, utility, and tribal council sectors. The incentive payment is a direct, quarterly payment sent by the state, regardless of tax liability.
Wind Energy Equipment Sales Tax Exemption
Under MS2000 297A.25-68&72, wind energy equipment as well as all
materials used to manufacture, install, construct, repair, or replace
the systems are exempt from Minnesota state sales tax if they are used
as an electric power source.
For more information on state wind incentives, contact:
Minnesota Department of Commerce Energy Division
85 7th Place E., Suite 500
St. Paul, MN 55101-2198
Phone (651) 297-1178 Fax (651) 297-7891 Toll Free (800) 657-3710 (MN only)
Lise Trudeau: Engineer, Renewable Energy and Advanced Technologies
Email Energy.Info@state.mn.us
Web: http://www.state.mn.us/portal/mn/jsp/content.do?subchannel=-536881511&id=-536881350&agency=Commerce
Value-Added Stock Loan Participation Program
This low interest loan program, which is administered by the Department
of Agriculture through the Rural Finance Authority, was created in 1994
as MS2000 41B.046 to assist farmers wishing to buy into wind generation
cooperatives. Under current rules, the maximum project size is 1 MW,
and the RFA provides up to $24,000 and 45% of the loan principal over 8
years. As a "participation loan," individual financial institutions
issue loans with the RFA subsidizing the interest rate, with resulting
rates averaging 4%. The program is funded through a revolving account
and is available for residential and commercial sectors.
Agricultural Improvement Loan Program for Wind
Energy
The Minnesota Department of Agriculture administers a low-interest loan
program through the state's Rural Finance Authority (RFA) to provide
loans to farmers to improvements to or additions to permanent
facilities, up to 45% and up to $100,000 of the loan principal with
payment terms up to 10 years. Wind energy conversion equipment was
added to the legislative definition of agricultural improvements
(MS2000 41B.043) in 1995. Like Minnesota's Stock Loan Program, this is
a "participation loan," whereby the loans are made by individual
financial institutions working with the RFA. The Rural Finance
Authority has a Master Participation Agreement with 365 financial
institutions throughout the state, which governs the responsibilities
of the various parties in such participation loans.
For more information on state loan programs, contact:
Minnesota Department of Agriculture Rural Finance Authority
90 West Plato Boulevard
St. Paul, MN 55107-2094
Phone (612) 297-3557
Fax (612) 296-9388
Wayne W. Marzolf
Email Wayne.Marzolf@state.mn.us
Web www.mda.state.mn.us/AgFinance/stockloan.html
and www.mda.state.mn.us/AgFinance/improvement.html
Green Pricing
Requirement
Minnesota's 2001 Omnibus Energy Bill (SF
722),
requires electric utilities in the state to offer customers the option
to purchase power generated from renewable sources or "high-efficiency,
low-emission distributed generation, such as fuel cells or
microturbines fueled by a renewable fuel." The legislation sets a
non-binding goal for utilities to obtain at least 10% of the energy
supplied to retail customers from renewable sources by 2015. Rates
charged for the offerings must be based on the difference between the
cost of the renewable energy and the same amount of nonrenewable
energy. Utilities may generate the renewable energy or purchase credits
from a renewable energy provider certified by the Public Utilities
Commission.
For more information contact:
Minnesota Public Utilities Commission
121 E. 7th Place, 3rd Floor
St. Paul, MN 55101
Phone (612) 296-7124
Fax (612) 297-7073
Susan Mackenzie
Email: Susan.Mackenzie@state.mn.us
Additional information can be found at AWEA's inventory of state incentives for wind.
