Energy Information for the Heartland
Renewal of U.S. tax credit revives some wind-energy projects | Wichita Eagle.
By Dan Voorhis
The Wichita Eagle
Published Wednesday, Jan. 9, 2013, at 10:51 p.m.
Updated Thursday, Jan. 10, 2013, at 9:40 a.m.
Correction: The Flat Ridge 2 wind farm is 470 megawatts. An earlier version of this story had the wrong number
Everywhere around the country, wind energy developers are dusting off plans for wind farms following the one-year renewal of a federal tax credit as part of the “fiscal cliff” bill.
Last year Kansas saw the most wind farm construction of any state in the nation, more than 1,000 megawatts of capacity. But by early fall, the industry, expecting the expiration of the tax credit on Jan. 1, had put the brakes on projects and laid off workers.
With the tax credit now law, industry experts say conditions are ripe for another burst of wind farm construction across central and western Kansas late this year and next.
Although developers face a deadline at the end of 2013, they can be a little more relaxed than in 2012. Last year developers were required to have projects operational by Dec. 31 to get the tax credit so they raced to get projects done. The 470-megawatt Flat Ridge 2 wind farm that sprawls across 66,000-acres 40 miles southwest of Wichita was announced in October 2011 and became operational a few weeks ago.
But the law approved by Congress last week provides that developers only have to start construction during the year.
Those in the industry say they need clarification on exactly what it means to “start” construction. But it almost certainly means the bulk of construction can be done in 2014, say industry experts.
A few wind farms are far advanced. TradeWinds Energy, based in Lenexa, has said it will build Buffalo Dunes, a 200-plus megawatt wind farm to be built southwest of Garden City on 42,000 acres of land area in Finney, Grant and Haskell counties. It has a buyer for the power it produces.
Others are in earlier stages. BP Wind Energy said it is planning an expansion of its Flat Ridge complex, with the 130-megawatt Flat Ridge 3 wind farm. It is also planning the 150-megawatt Ninnescah Wind Farm, about 20 miles northwest of the Flat Ridge complex. It is marketing the projects to power buyers.
And Ford County, home of Dodge City, may see two new wind farms started in 2013, said Mark Shriwise, director of the county’s planning. Developers there are especially interested in tying into the giant electrical substation at Spearville.
One of those Ford County projects, Western Plains wind farm, will come in somewhere between 200 and 400 megawatts, said Matt Riley, CEO of developer Infinity Wind Power of Santa Barbara, Calif.
“The production tax credit played a big part with the move forward of Western Plains,” he said. “Had it not gone through, the future was quite uncertain. It would have delayed construction for at least a year or two, if not indefinitely.”
Riley said that he expected Kansas will see in 2014 the same high levels of construction it did in 2012, driven by the state’s great natural wind, new high capacity power lines – and another looming deadline.
It’s too early to say what this will mean for the state because it isn’t known how many wind farms will be built.
The Hutchinson Siemens plant won’t automatically rehire the 300 staff and contractors it laid off in the fall, Siemens spokeswoman Melanie Forbrick wrote in an e-mail.
The Hutchinson plant benefited when many developers pulled their projects forward into 2012, and there might not be enough new work in the pipeline to require additional workers, she said. That could change as the year progresses, so Siemens will continue to weigh demand for its turbines.
One factor that could slow development is that the big local utilities, Westar Energy and Kansas City Power & Light, both big players in the development of the Kansas wind energy market so far, have essentially met their state-required alternative energy requirements for the time being. Westar has no plans to add any more wind power in 2013 or 2014, said Don Ford, project manager for Westar.
The Kansas Legislature may even remove the requirement, called a Renewable Energy Standard, this session, for state utilities although it may be too late for that to have much effect.
That means any new wind farms will be exporting electricity to utilities around the country, essentially creating an export industry like wheat or airplanes. Buffalo Dunes, for instance, will produce power for the customers of Alabama Power.
The “V-Plan” connecting the substation at Spearville to Wichita as well as Oklahoma is designed to expand the pathway needed to get that power farther east.
Riley said the economic impact includes hundreds of construction jobs, especially in 2014, and a much smaller number of permanent jobs afterward. A wind farm might require 500 workers to build, and 15 to 30 when it is operational.
One of the prime benefits, he said, is the investment. He said a 200 megawatt wind farm represents a roughly $300 million total investment, including large contributions to local governments.
“You could see a $3 billion investment (in 2013-14) because of the one-time nature of it,” he said. “When you have a boom and bust industry, it tends to create years where you see lots of steel go in the ground.”
Longer term the wind energy industry will continue to grow in Kansas, even without a tax credit, said Alan Anderson, an attorney with Polsinelli Shughart in Kansas City, Mo.
Wind farm prices keep coming down and natural gas prices are almost certain to rise in the next year or two, making wind more competitive as an energy source.
Many utilities view having wind energy as a hedging strategy because the wind price is fixed by contract for 10 or 20 years, while gas and coal prices fluctuate, he said.
Flat Ridge 2, the largest wind farm in Kansas, is about to come online just before a key wind-energy tax incentive ends.
The $800 million, 419-megawatt wind farm — which is owned by BP Wind Energy and Sempra U.S. Gas & Power — is scheduled to be fully operational by the end of the year. It spans 66,000 acres across Sumner, Kingman, Harper and Barber counties in south-central Kansas.
According to this report from The Kansas City Star, the wind farm’s construction has been part of the boost the state’s economy has received from the wind energy industry.
A study conducted by the Kansas City law firm of Polsinelli Shughart found that the industry has created 3,484 construction jobs, 262 maintenance and operations jobs, and 8,569 indirect jobs in Kansas.
Land leases for wind farms in Kansas have resulted in $273 million in income for landowners and $208 million in revenue for local governments.
With plenty of wind to go around in Kansas, one might expect this industry to continue growing. But that’s no safe bet.
With the possible end of energy production tax credits — which expire at the end of the year unless Congress and the president act to renew the program — companies like BP are reticent to move forward with other wind farm plans in Kansas and elsewhere.
Under the program, commonly referred to as PTC, wind farms get a 2.2-cent-per-kilowatt-hour tax credit for their first 10 years of operation.
That makes it no coincidence that Flat Ridge 2 is coming online before the program ends.
The project, which was announced in October 2011, took just over a year to complete.
Daniel McCoy covers aviation, manufacturing, energy and automotive.
Kansas’ largest wind farm set to begin operation – KansasCity.com.
BY STEVE EVERLY
The Kansas City Star
The largest wind farm to be built in Kansas is set to begin operation by the end of the year.
Flat Ridge 2, jointly owned by BP Wind Energy and Sempra U.S. Gas & Power, is on a 66,000-acre site covering parts of Harper, Barber, Kingman and Sumner counties in southern Kansas.
The project has 274 wind turbines, each with capacity to generate 1.6 megawatts of electricity or a total of 438 megawatts. That’s enough to supply electricity to 160,000 homes.
Besides being the largest wind farm in Kansas, the $800 million project is the largest ever to be built all at once, instead of in phases.
The owners said the giant wind farm was built in Kansas in part because of its business environment but largely because of its wind resources, which have been ranked the second best in the United States.
“Kansas is blessed by very strong winds,” said John Graham, the CEO of BP Wind Energy, which is a unit of the BP oil and natural-gas conglomerate.
The opening of the wind farm will be a boost to Kansas, which has been relatively slow to take advantage of its wind. It is ranked ninth in the amount of wind-energy installations.
The Kansas Energy Information Network says the state has 2,192 megawatts of wind energy capacity not counting Flat Ridge 2. Iowa, by comparison, has 4,536 megawatts of installed capacity, making it the third highest in the U.S.
Nevertheless, Kansas still has felt some economic benefit from its wind energy. The Kansas City law firm of Polsinelli Shughart, in a study financed by groups or companies connected to the wind industry, found that wind energy had created 3,484 construction jobs, 262 operation and maintenance jobs, and 8,569 indirect and induced jobs in Kansas as the investment rippled through the state’s economy.
The leasing of land for the wind turbines has meant $273 million in additional income for landowners and $208 million in revenue for community organizations and local and county government, the study concluded.
Those numbers would grow further as more wind farms are built.
But wind energy’s future is unclear, in part because of the low price of natural gas, which has made it an economical option to generate electricity.
Wind energy has been bolstered by requirements in many states, including Kansas and Missouri, that electric utilities use renewable energy to meet part of electricity demand. Wind energy has also been boosted by the Production Tax Credit, which is used to reduce the price of electricity produced to help make it more competitive.
Both aids have been attacked by opponents of renewable energy, and the tax credit, set to disappear at the end of the month, has been under the most immediate threat.
In contrast to the wind-farm opening, some manufacturers have pulled back, in part because of uncertainty about the tax credit. One big manufacturer, Siemens Energy, in September cut 900 jobs in the U.S., including 256 at its factory in Hutchinson, Kan.
BP Wind Energy, which previously built a smaller 100-megawatt wind farm in Kansas, says it has more land in the state for additional wind turbines, but those plans are on hold until the future of the incentive is resolved.
Graham of BP Wind Energy said an additional six years probably was needed until the cost of wind turbines declined enough, along with some increases in efficiency, to allow wind energy to be competitive without the Production Tax Credit.