Wind Power
Development
In South Dakota
Good for Jobs, Good for the Economy and
Good for the Environment
Environmental Law & Policy Center
Protecting the Midwest’s Environment and Natural Heritage
Wind Power Development
Good for Jobs, Good for the Economy and
Good for the Environment
Principal Authors:
Stephanie Chase, Policy Associate
Charles Kubert, Senior Environmental Business Specialist
Contributors:
Howard Learner, Executive Director
Jill Geiger, Director of Communications
Andy Olsen, Senior Policy Adovate
Kelsey Snell, Legal Assistant
Environmental Law & Policy Center
Protecting the Midwest’s Environment and Natural Heritage
www.elpc.org
Introduction
Total Wind Capacity Installed
and in Development (MW), 2008
Source: Black & Veatch Analysis of Global Energy Decisions Energy Velocity Database
W
ind energy is the United States’ fastest growing source of electricity generation.
The country’s installed base of wind energy has grown from 2,000 megawatts (MW) to 16,000 megawatts
over the past 8 years. In 2007 alone, 5,000 MW of wind energy was installed in the United States.
South Dakota is poised over the next few years to become a national leader in wind power generation. The
available wind resources are among the best in the country, and public officials have expressed strong interest in
promoting wind energy as a way to boost the state’s economy, aid landowners and produce clean energy. Yet,
to date, very little of this opportunity has been realized. As of January 2008, there are about 4,000 MW of wind
power under development in South Dakota. However, only 188 MW of wind energy has actually been installed. By
contrast, Minnesota and Iowa each already have more than 1,200 MW of installed wind capacity.
The 4,000 MW of wind power under development in South Dakota potentially represent $8 billion of
investment. Sound and smart public policies can help transform this potential into reality.
This paper showcases the enormous wind power potential for South Dakota to be a renewable energy
powerhouse. It then identifies some important policy drivers that can help South Dakotans fully and effectively
tap this tremendous resource.
1
Wind Power Development: Good Jobs, Good for the Economy and Good for the Environment
South Dakota Wind: A New Energy Harvest
The wind resources in the Northern Great Plains’
states are among the most reliable and productive in
the country. South Dakota ranks 4th in the nation for
its wind energy potential based on the combination of
both high average wind speeds and suitable sites.
Economic Impact of Hypothetical
250 MW Project in South Dakota
During Each Year of Operation
Jobs
While the state has only 188 MW of wind power
installed, wind energy developers have been active in
exploring the state and identifying potential projects.
An additional 250 MW is currently under construction
and about 4,000 MW of projects are at varying stages of
development.
Direct
Total
Source: National Renewable Energy Laboratory JEDI Model,
Note: Assumes No Local Manufacturing Content
Economic Benefits of
Wind Energy Development
This wind power development can bring an enormous
economic boost to South Dakota businesses, landowners
and communities.
Economic Impact of Hypothetical
250 MW Project in South Dakota
During Construction
Jobs
Direct
Total
Earnings Economic Output
($ Millions)
($ Millions)
67
2.6
5.4
122
4.1
10.1
Earnings Economic Output
($ Millions)
($ Millions)
508
18.7
57.1
1004
31.7
97.7
Source: National Renewable Energy Laboratory JEDI Model,
Note: Assumes No Local Manufacturing Content
2
Job Creation
For example, a single 250 MW project in South Dakota
would create about 500 direct construction job-years and
an additional 500 indirect and induced job-years. Indirect
and induced job-years represent those in service and
retail industries supporting the project and construction
workers, everything from coffee shops and motels to
ready-mix companies.
Wind Power Development: Good Jobs, Good for the Economy and Good for the Environment
During its operating years, a 250 MW project will Industrial Development
employ as many as 23 wind technicians maintaining the
As the wind energy industry in the United States
turbines, 44 jobs with suppliers and an additional 55 matures, the domestic manufacturing of turbines, blades
indirect and induced jobs.
and their components is also growing. Wind power
components, such as towers
Landowner Revenues
and turbine blades, are very
Lease
payments
to
large and difficult to transport
landowners are an important
over long distances. That reality
benefit of wind energy
provides a strong incentive to
development.
While the
manufacture and assemble wind
terms of these payments are
power equipment components
confidential, landowners can
near the sites where they will be
expect at least $4,000 per
installed. In short, states acting
installed megawatt per year
early with policies supporting
for granting permission to
wind power, and where
place turbines on their land.
development is occuring, have
Some developers may even
a leg up in attracting related
share in the revenues from the
manufacturing
jobs.
For
project. Landowners can earn
example, several major wind
these lease payments without
component
manufacturers
significantly impacting their
have opened plants in Iowa
existing farming and ranching
(Siemens, Clipper, Acciona),
operations. In effect, wind
Minnesota (Suzlon) and North
energy becomes a new and
Dakota (LM Glasfiber).
highly predictable “cash crop”
In South Dakota, Molded
for farmers and ranchers.
Fiber Glass, a major wind
turbine blade manufacturer, is
Tax Revenues
building a 300,000 square foot
For many rural counties
facility in Aberdeen that will
and communities, wind farms
employ up to 750 people when
can be the single largest capital
it opens later in 2008.
investment
and
property
taxpayer. South Dakota recently enacted HB1320,
Other South Dakota wind energy business
which creates a uniform taxing system for utility-scale success stories include:
wind projects. HB1320 assesses a $3,000 per MW fixed
rate plus 2% of gross revenue tax on wind generation t Energy Maintenance Systems which employs 180
equipment. For each 100 MW of wind power, this wind technicians who refurbish and maintain wind
would represent an annual tax payment of $300,000 + turbines both in the field and at its base in Howard.
an estimated $300,000 tax on power sales revenue for
a total of $600,000 per year. All of the fixed capacity tKnight & Carver which also has a growing plant in
tax and 20% of the variable production tax would go Howard that manufactures wind turbine blades.
to the county in which the project is located with the
remainder going to the state. Multiply that by dozens Benefits to Tribes
of similar projects across the state, and wind energy
The Rosebud Sioux have a small existing wind farm
development can easily become a key source of support and are pursuing a larger development. Other tribes are
for rural schools, other community services, and also exploring the benefits that wind could bring to their
property tax relief.
lands and communities. Currently, the Western Area Power
Administration is studying the feasibility of integrating
tribal wind and hydropower along the Missouri River.
3
Wind Power Development: Good Jobs, Good for the Economy and Good for the Environment
Environmental Benefits of Wind Energy
Public Policy Options to Spur Wind Power
Development in South Dakota
t No global warming and other harmful pollution.
There are no emissions of carbon dioxide or mercury,
Strong wind speeds are fundamental to wind energy
sulfur dioxide, nitrogen oxides or radioactive wastes.
development. But, equally important are forwardlooking public policies that encourage both large projects
t No water use. Unlike coal plants, wind energy and more smaller, locally-owned wind projects.
requires no water for steam generation or cooling. This
is important in water-scarce South Dakota.
1. Renewable Energy Standard. Twenty-five states
have now adopted state Renewable Energy Standards
(RES), which require utilities to obtain a growing
portion of their electricity supply from renewable energy
sources. Illinos and Minnesota have the strongest in the
country, requiring 25% of the electricity supplied by
utilites to come from renewable energy by 2025.
An RES is a key driver for wind development
because it creates a predictable demand and a timeline
for developers to follow.
2. Transmission. Because the available wind energy in
South Dakota is far greater than the state’s own electricity
needs, the ability to move this power out of the state is
essential. There is limited available capacity, however,
on interstate transmission lines. The South Dakota
Energy Infrastructure Authority is a public-private
partnership to help develop energy projects, provide
financing for new and expanding facilities, and assist
in the development of new transmission lines across
the state. Moving forward, it should develop a more
focused mission statement and work with other states
to develop new approaches for more transmission.
The recently-passed HB1320 also addresses
transmission issues by providing partial rebates of
wind generation property taxes to cover the cost of new
transmission lines and substations in conjunction with
a wind farm. Up to 90% of the tax can be rebated for the
first five years provided that the rebate does not exceed
50% of the cost of constructing this development.
t Minimal wildlife impacts. With careful siting,
modern wind turbines have minimal impacts on birds
and other wildlife populations.
Consumer Benefits of Wind Energy
The cost of wind power has declined dramatically
over the past twenty years. At the same time, the cost
of building new coal plants has continued to rise.
Moreover, wind power has no fuel costs, and provides
a long-term fixed-cost source of power. In addition,
wind power is not subject to the uncertainty of future
carbon taxes, which thereby makes it even more costcompetitive.
3. Community Wind Development.
Most of
the focus on wind energy is on large wind farms,
involving hundreds of millions of dollars in capital
investment, but there are also good opportunities
for smaller scale projects, which create local wealth
and more easily integrate with distribution lines. For
example, land owners and small rural cooperatives
have invested in small projects. School districts
across South Dakota are expressing interest in soSource: Lawrence Berkeley Laboratories
4
Wind Power Development: Good Jobs, Good for the Economy and Good for the Environment
called “behind the meter” projects and need more
The South Dakota Public Utilities Commission
support. The Bank of North Dakota can support is developing a set of standards for small generators
loans to schools and landowners for these projects. of power. This is a key policy issue, and should be
monitored by public officials interested in creating a
In southwestern Minnesota, more than 500 friendly environment for wind energy development.
megawatts of wind power is locally-owned. Policies such
as Minnesota’s Community Based Energy Development 5. Technical Training. There are new “green job”
(CBED) Program have been important in stimulating opportunities to expand and establish new training
these projects.
programs for wind technicians at community colleges
and vocational-technical institutes. Lake Area Technical
4. Interconnection Standards. Every state must Institute in Watertown and Mitchell Technical Institute
determine how independent electricity generators currently offer energy-related programs. As the wind
can connect to electric distribution lines. Establishing industry expands, it will create more demand for
statewide
interconnection
standards
ensures educated, skilled workers. With good technical training,
consistency, predicatablity and that all parties know the South Dakotans can earn a good wage and work in
interconnection “rules of the road.” This better enables communities across the state.
renewable energy generators to have a fair chance to
bring their power to market.
Existing and Proposed Wind Projects in South Dakota
Map Key
Green = Existing Projects
Yellow = Projects Under Construction
Red = Proposed Projects
June 2008 Data
O
ver the coming decades, wind energy will become an increasingly important source of
clean, renewable electricity generation that will have an enormous impact on rural economies, jobs and the
environment throughout the Great Plains and Midwest. South Dakota is well-positioned for a rural economic
renaissance through wind energy development, but must put in place the right policies to achieve these benefits.
5
Environmental Law & Policy Center
The Environmental Law & Policy Center is the Midwest’s leading public interest environmental legal
advocacy and eco-business innovation organization. We develop and lead successful strategic advocacy
campaigns to protect our natural resources and improve environmental quality. We are public interest
environmental entrepreneurs who engage in creative business dealmaking with diverse interests to
put into practice our belief that environmental progress and economic development can be achieved
together. ELPC’s multidisciplinary staff of talented and experienced public interest attorneys,
environmental business specialists, public policy advocates, and communications specialists brings a
strong and effective combination of skills to solve environmental problems.
ELPC’s vision embraces both smart, persuasive advocacy and sustainable development principles to
win the most important environmental cases and create positive solutions to protect the environment.
ELPC’s teamwork approach uses legal, economic and public policy analysis, and communications
advocacy tools to produce successes. ELPC’s strategic advocacy and business dealmaking involves
proposing solutions when we oppose threats to the Midwest environment. We say “yes” to better
solutions; we don’t just say “no.”
ELPC was founded in 1993 after a year-long strategic planning process sponsored by seven major
foundations. We have achieved a strong track record of successes on national and regional clean energy
development and pollution reduction, transportation and land use reform, and natural resources
protection issues. ELPC’s creative public advocacy effectively links environmental progress and
economic development and improves the quality of life in our Midwestern communities.
Environmental Law & Policy Center
35 East Wacker Drive, Suite 1300
Chicago, IL 60601
Tel: 312-673-6500 Fax: 312-795-3730
Web: www.elpc.org Email: elpc@elpc.org