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Winds of change: The Great Plains' powerful new economic dynamic

When the wind blows across the prairie, somebody makes money

Allen Best //November 16, 2016//

Winds of change: The Great Plains' powerful new economic dynamic

When the wind blows across the prairie, somebody makes money

Allen Best //November 16, 2016//

You expect scenes of harvest on Colorado’s eastern prairies, such as the blue New Holland tractor disking the brown earth, rows of green corn in the distance, their tassels flipping in the breeze, waiting to be sliced into silage for cattle feed.

But what captures your eyes now as you drive north from Burlington, a town of 4,000 people located along Interstate 70 near the Kansas stateline, are the white wind turbines towering overhead, 86 of them in the Carousel Wind Farm. The $240 million project is the newest among Colorado’s 23 wind farms.

Colorado barely had enough wind generation to count in the year 2000. Last year, though, wind produced 14.11 percent of the state’s electricity, dwarfing hydroelectricity (2.83 percent) and solar (0.55 percent). And more wind is coming.

Utilities used to buy wind power to comply with renewable portfolio mandates. Now, they’re buying wind generation because it’s cheap. Costs dropped 66 percent from 2009 through 2014, according to a recent U.S. Department of Energy study. This cost reduction has been driven by improved siting techniques, but also larger turbines.

Average height of turbines grew 41 percent in the last 15 years. Blades from tip to tip more than doubled. At Rush Creek, Xcel’s planned behemoth project along I-70 east of Limon, the maximum height of turbines will be 135 meters (443 feet). Colorado’s tallest building, the 56-story Republic Plaza in Denver, is 218 meters (714 feet).

The Great Plains have a new and powerful economic dynamic. To be clear, it’s still farm country, with scattered oil and gas production. Now there’s renewable generation, too. Colorado has 1,879 wind turbines, nearly all of them east of I-25. The renewable generation has steadied local economies.

“Because of hail and drought, there’s no guarantee you are going to have a crop every year. But the wind blows every day,” says John Buol, who has seven turbines of the Carousel project on his 3,000 acres of land north of Burlington. He will soon get royalty payments based on electricity generation from the turbines.

In Sterling, about 140 miles north of Burlington, Brad Hofmeister, appraisal analyst for Logan County, reports that 10 percent to 15 percent of the county’s total tax assessment is directly related to the county’s 227 turbines. The local Northeastern Junior College has a program to train wind-turbine service technicians, a job category that the U.S. Bureau of Labor Statistics says will outpace health care and technology in demand growth through 2024. Technicians, according to the college, start at $18 to $22 per hour on average.

Eighty percent of generation occurs in four counties: Logan (Sterling), Lincoln (Hugo and Limon), Weld (Greeley) and El Paso (Colorado Springs). These turbines have maximum generating capacity of 2,965 megawatts, but will likely reach 4,000 megawatts within the next couple of years, says Tom Darin of the American Wind Energy Association. He says that benchmark could double to 8,000 megawatts within a decade. This compares with the 1,636 megawatt capacity at Colorado’s largest coal-fired power plant, the Comanche complex near Pueblo.

Wind, unlike coal and natural gas plants, produces electricity intermittently. Matching supply with demand is more challenging. A program developed by Boulder-based National Center for Atmospheric Research in partnership with Xcel allows the utility to estimate wind generation 36 hours in advance. Projections hit within 10 percent of actual production.

That predictive ability has produced startling figures. Early one morning last November, a time of low demand, 67 percent of Xcel’s Colorado-made electricity came from wind turbines.  More impressive yet, wind provided 54 percent of electricity for two full 24-hour periods last year to Xcel customers.

“It’s absolutely remarkable what we have been able to accomplish in terms of being able to maintain system reliability,” says Frank Prager, Xcel’s vice president for policy and federal affairs. “If you go back 15 years, we wouldn’t have even thought this was remotely possible.”

Xcel had little wind in its Colorado portfolio 15 years ago. Then came the 2004 voter mandate to investor-owned utilities, Xcel and Black Hills Energy, requiring 10 percent renewable power by 2015. After that, legislators twice raised the renewable portfolio standard. Xcel, which supplies electricity to 65 percent of Colorado customers, has reached 25 percent renewables and expects to hit the mandated 30 percent two years in advance of the 2020 deadline.

It won’t stop there. “We’re going to be adding more and more (wind energy), because the price is good,” Prager says. It costs money to build turbines, he adds, but unlike coal and gas, the wind is free. And it’s carbon free. At least for planning purposes, Xcel assumes a future tax on carbon emissions anywhere between $0 and $40 a ton.

 War on rural Colorado?

Electricity from the Carousel farm is being sold to Westminster-based Tri-State Generation and Transmission, which delivers power to 18 of the 22 electrical co-operatives in Colorado, or about 20 percent of Coloradans. Tri-State and its members this year expect to get 25 percent of all their electricity from renewables, especially hydroelectricity. Three more renewable projects are expected to come on line before the end of 2017.

“We will continue to look at opportunities to further expand our portfolio,” Tri-State spokesman Lee Boughey says.

In December, Congress extended the federal production tax credit of 2.3 cents per kilowatt hour to 2020. With that security, Xcel will also be pushing hard for more wind in the next four years. “That’s one reason we are pushing to get Rush Creek,” Prager says. “We want to take advantage of that while we can.”

The Independence Institute, in a June report by Michael Fumento, was skeptical of Xcel’s motives. Rush Creek “appears to have only one real purpose: to enrich Xcel’s coffers with the Production Tax Credit,” says the study. The Independence Institute argues for natural gas, not wind.

Still, Xcel’s $1 billion, 600-megawatt Rush Creek will expand Colorado’s wind generation by 20 percent when it begins production in late 2018. It is to be owned entirely by Xcel Energy using turbines constructed at Vestas factories in Windsor, Brighton and Pueblo. And, of course, the wind driving the 300 turbines will be Colorado wind.

Planning began in 2008. The land in the two project areas, 90,000 acres altogether roughly from Deer Trail to beyond Hugo, is sparsely populated, about two-thirds used for grazing. In Lincoln County, one of five counties slated for Rush Creek turbines, oil-and-gas drilling has skidded from 132 permits for drilling in 2014 to just six this year, as of September. Some of this gap will be filled by the 350 construction jobs for the wind farm. Afterward, “tens of jobs” will be needed for maintenance and operations, says Krista Jo Mann of Invenergy, the developer of the wind farm.

Property taxes will boost revenues at the courthouse in Hugo. Last year, Lincoln County got $1.7 million in property taxes from four existing wind farms. Rush Creek’s increased valuation will fatten revenues substantially more, lowering levies on farms and ranches.

“It does benefit everybody in the sense that it can make their tax bill a little less,” says John DeWitt, county land use administrator.

Still, local reactions have been mixed. Some objected to noise, although county testers found only 45 decibels.

“Some people love them, and some people hate them. There’s really no middle ground,” DeWitt says. He suspects those who dislike the turbines most often are those who don’t see lease payments.

The American Wind Energy Association estimates that wind project owners pay Colorado landowners a combined $5 million to $10 million annually in lease payments. Most of the money in wind farms is at the factories.

“Where they are manufactured is a really big deal in terms of where the economic benefits flow,” says Eric Lantz, a wind expert at the National Renewable Energy Laboratory in Golden. But even a few wind turbines in a low-population county can have large impacts, he says.

 Hollowing out rural America

Can this new wealth reverse the peeling paint of the Great Plains? Even in courthouse towns like Burlington, life seems to be two steps forward, then two — and sometimes more — steps back. A prison there closed in July, shedding 142 jobs. The town still has plenty of jobs, says Rol Hudler, the city’s economic development director, but they pay $20,000 to $25,000 a year.  This year, the agriculture economy has taken a dive, too. Rain is not the problem. Instead, the strong U.S. dollar has crimped exports. There’s pain on Main Street in Burlington. “Absolutely,” says Hudler.

“No matter what we do, and no matter how much oil and gas and how much wind we have, the main streets keep shrinking,” says Lisa Nolder, who runs the Bent County Development Foundation. in Springfield. “It’s part of the hollowing out of rural America.”

Still, Nolder sees more renewable energy benefitting rural Colorado. Almost certainly, there will be more. Experts polled by researchers from NREL and other institutions for a recent study reported that wind energy costs would drop another 35 to 41 percent by mid-century. An improved transmission system among Western states could overcome the residual limitations of intermittent wind and solar, allowing even higher volumes of renewables.

No, the wind doesn’t always blow on the Great Plains. But now, when it does, somebody’s making money.