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Renewal of U.S. tax credit revives some wind-energy projects Renewal of U.S. tax credit revives some projects

  • 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.

Uncertain impacts

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.

Reach Dan Voorhis at 316-268-6577 or dvoorhis@wichitaeagle.com

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