January, 2003
When South Dakota's legislators blow into Pierre for the 78th Legislative Session, the state's electric cooperatives plan to build a blizzard of support for a plan that would bring a $40 million wind farm to the hills near Highmore, S.D.
The state's cooperatives announced in September a plan that would partner their power supplier, Basin Electric Power Cooperative of Bismarck, N.D., with Florida-based FPL Energy to develop 80 megawatts of wind generation in the Dakotas.
Under the plan, FPL Energy will build 80 megawatts of wind energy - a 40MW wind farm in each of the Dakotas - and Basin Electric would purchase the output of the projects. The electricity would then be used by members of Basin Electric cooper-atives - including those in South Dakota and western Minnesota. FPL Energy would construct, own and operate the projects, which are scheduled to be operational by the end of 2003.
But, for that to happen, a legislative hurdle must be cleared in South Dakota.
For the turbines to be built and the jobs to be created, South Dakota's cooper-atives, FPL Energy and other project supporters will be asking the legislature to make adjustments to the way that wind turbines would be assessed for property taxes.
The request would call for wind turbines with a generation capacity of 100KW or more that are completed after June 1, 2003, to be assessed at 30 percent of the assessed value. This would reflect the fact that wind turbines produce power only about 30 percent of the time, due to the intermittent nature of wind. Typically, wind turbines only produce electricity when wind speeds are between 9 and 56 miles per hour and are only at partial production until the wind speed exceeds 33 miles per hour. Conventional fossil-fuel generation plants are taxed at 100 percent of assessed value, but also produce electricity more than 90 percent of the time.
"We are excited to be able to go to the legislators with an actual project. To bring a project of this magnitude to South Dakota, with all the associated economic benefits, would be a keystone event in the future of wind development in our state," said Ed Anderson, director of government and member relations for the South Dakota Rural Electric Association, Pierre, S.D., which represents the state's cooperatives in legis-lative matters. "It signals a commitment the legislators have been asking for and an opportunity we cannot afford to miss."
The North Dakota project is planned near Edgeley, N.D. which is about 65 miles north of Aberdeen, S.D. The portion near Edgeley has the green-light for construction to begin, due in part to tax legislation that has been enacted there.
"Those state tax credits and benefits, working with the federal production tax credits make North Dakota a very good environment for the development of wind energy - that combined with our outstanding potential as far as being the Saudi Arabia of wind," said North Dakota Gov. John Hoeven, at the time the project was announced.
Original discussions between Basin and FPL would have placed the entire 80MW wind farm in North Dakota where newly enacted state tax provisions are favorable to the project.
However, Basin and its member systems wanted to spread the project between the Dakotas to take advantage of transmission availability and bring a $40 million invest-ment in wind energy to South Dakota.
The South Dakota portion of the wind farm would be located in Hyde County in east central South Dakota and would consist of 27 1.5MW turbines. Transmission lines from the site to the regional grid would be provided by East River Electric Power Cooperative in Madison, S.D.
"East River working with us on the transmission grid interconnection made this possible," said Ron Rebenitsch, manager of member marketing at Basin Electric.
Rebenitsch said that limited transmission in North Dakota and the availability of East River's transmission line in the Highmore area made divvying up the project attractive.
FPL Energy has identified South Dakota as a place to develop wind for a variety of factors. The state's ranking as fourth-windiest in the nation and the appropriate topography are considerations as are the availability of transmission, having landowners favorable to the project and local support of the project.
Having a local market for the wind energy doesn't avoid transmission congestion issues, but helps by providing options for power suppliers to deliver electricity to consumers.
FPL Energy also notes that an additional benefit to partnering with the cooperatives in the area is that local people would be benefiting from the electricity generated in their community.
FPL Energy is the nation's leader in wind energy. It has more than 1,500 megawatts of wind generation and owns the world's two largest wind farms. They have 33 projects in 13 states in operation, under construction or in development.
The Highmore project would create 150 construction jobs which would rely on local companies for manpower and equipment as much as possible. Three to four permanent jobs would be created in the area. Landowners would receive annual payments for having turbines located on their property and some tourism opportunities would also be created.
South Dakota's electric cooperatives have already proven themselves as leaders in commercial-scale wind energy production in the state. In November 2001, the state's electric cooperatives broke ground on a 2.6MW wind project near Chamberlain. The two turbines, part of the PrairieWinds program, began producing electricity in January and provide enough energy to power about 600 homes.
The electricity produced from these two 40MW wind farms planned in North Dakota and South Dakota will produce enough electricity to serve about 25,000 typical North and South Dakota homes.
The clock is ticking on the project. If the state is unable to bring its tax structure more in line with neighboring states, the possibility of the Highmore wind farm going forward is remote. The project would be located outside of South Dakota.
But with the support that the wind project has by local community leaders in the Highmore area, the state's cooperatives and FPL Energy are hopeful the project will be built.
This article appeared in the January 2003 edition of Dakota Energy Cooperative Connections Magazine, Vol. 3, Number 9, Pages 8 and 9