In the wind? Nebraska work could stall without tax credit

Source: By ALGIS J. LAUKAITIS / Lincoln Journal Star • Posted: Monday, October 22, 2012

Dave Vavra has been waiting five years to get those big trucks — hauling giant blades and long tubes for a wind farm — to roll into Saline County.

Vavra is president of the Saline County Wind Association, a grass-roots group made up of 260 members representing 60,000 acres that may be suitable for wind energy development. The group has tried to attract a developer without success. A company that showed interest has since left the wind industry, and discussions with several others have gone nowhere.

“We’re in a holding pattern right now,” said Vavra, who lives in Doniphan but owns land in Saline County.

Vavra and his group may have a longer wait if Congress does not extend the Production Tax Credit. Created under the Energy Policy Act of 1992, the credit provides wind developers and others who generate electricity from renewable resources with an income tax credit. Set to expire in December, some doubt it will be extended.


“The biggest single driver is the federal Production Tax Credit. When it’s in place, we move forward. When it’s not there, we lag,” said John Hansen, president of the Nebraska Farmers Union, one of the state’s strongest supporters of wind energy development.

Without an extension, up to 37,000 wind industry jobs nationwide will be lost next year, and wind installations will plummet, the American Wind Energy Association said recently.

The tax credit issue already is having repercussions in Nebraska. Katana Summit announced in September that it will close its wind tower manufacturing plant in Columbus and another one in Ephrata, Wash., because of the uncertainty in the wind industry. The Columbus plant has 214 employees; the Washington plant, 79.

“The wind industry is taking it on the chin,” Vavra said.

The tax credit will be one of the key topics at the fifth annual Nebraska Wind Conference on Monday and Tuesday at the Cornhusker Hotel. This year’s theme is “United and Strategic in Advancing the Wind Industry of Nebraska.”

Vavra participated in the first wind conference in 2007 and spoke at the last two. He will be speaking again this year and will be among a handful of speakers talking about landowner associations.

Nearly 300 people have signed up and paid $100 to hear national, state and local experts speak, but Vavra doesn’t think there will be many landowners like him, who are interested in wind energy development, in the crowd.

“They’ve been hearing the same stuff over the last four years, and there’s been no development during that time except for what is happening at Broken Bow and Petersburg,” Vavra said.

Gov. Dave Heineman and utility officials dedicated the Broken Bow wind farm, a 50-wind turbine project in Custer County, on Tuesday. The $145 million project was built by Edison Mission Energy, which is selling all of the electricity to the Nebraska Public Power District.

The Petersburg wind farm in northeast Nebraska, which has 27 turbines, began commercial operation about a year ago. The Omaha Public Power District is buying all of the electricity, about 40 megawatts.

Crofton Bluffs, a 14-turbine wind farm in northeast Nebraska, is scheduled to go online later this month.

Contracts have been signed by OPPD and NPPD to buy power generated at Broken Bow II, a proposed 75-megawatt addition to the existing facility. However, Dave Rich, renewable energy development manager for NPPD, said the project is contingent on renewing the tax credit.

NPPD is not planning to build any more wind farms until at least 2017 because it is ahead of schedule in meeting a goal of having 10 percent of its power portfolio come from renewable resources by 2020, Rich said. But a large industrial customer, which he declined to name, has expressed interest in getting electricity from wind and that could result in another wind farm.

Nevertheless, Rich anticipates a slowdown without the federal tax credit and some help from the Legislature to put Nebraska on the “same plane” as its neighboring states. Rich pointed out that some of those states have sales tax incentives that make their wind energy power less expensive, especially when exported to other regions.

“No developers (in Nebraska) have contracts to sell power out of state,” Rich said.

Only one application has been submitted to the Nebraska Power Review Board to export electricity from a wind project under LB1048, said Tim Texel, the board’s executive director. The law is designed to encourage the export of wind energy.

Transmission — getting electricity to other parts of the nation — is a major hurdle. Nebraska has sufficient power lines to move small amounts of electricity from wind farms, but needs more infrastructure to move power around the state and out-of-state.

“For Nebraska to develop all of its wind potential, there would have to be a huge amount of transmission,” Rich said.

The Nebraska Transmission Advocacy Group is a step in that direction, Hansen said. The group is working with the Southwest Power Pool, a regional transmission organization, to build additional power lines in Nebraska that lead to other states.

“The whole issue is: we can generate the power (wind energy), but we can’t get it out of the state. We don’t have a strong market for it here in the state,” Vavra said.

Nebraska ranks fourth in the nation in wind energy potential but 25th in installed capacity with 337 megawatts, according to a new report released by the Sierra Club. Nebraska lags all of its neighboring states, the report said, and needs to do more to create jobs, lower utility bills and reduce health costs caused by harmful emissions from coal plants.

The report released last week by the Sierra Club and supported by the Nebraska Farmers Union, Nebraska Wildlife Federation and two state senators said investing in wind energy between now and 2030 could save Nebraskans as much as $225 million annually and lead to nearly 14,000 new jobs.

Currently, 67 percent of the electricity generated in Nebraska comes from coal.

Hansen believes that wind energy development moves forward when federal and state governments work together to offer incentives. The uncertainty of the tax credit has created problems, he said, but so has a depressed economy.

“When the economy is booming, more electrical generation is needed. … When the economy is flat, electrical generation is flat,” Hansen said.

In Nebraska, public utilities are the drivers in wind energy development, but under federal law they cannot receive production tax credits. So, they have to work with private companies and sign long-term agreements to purchase power before wind farms are built.

Hansen said the economy has slowed wind power development by NPPD and OPPD, the state’s two major players. But, he said, the state is adding 122 megawatts of wind energy with the Broken Bow and Crofton Bluffs wind farms this year.

Lincoln Electric System has purchased power from wind farms and will do so when the opportunities arise for projects that make economic sense, said administrator and CEO Kevin Wailes. But he said the extension of the tax credit will be a factor. LES has 27 megawatts of wind power.

“Some of the public power utilities may think we are going too fast. Some think we are going too slow. But we want to continue to grow at a sustainable rate that continues to grow,” Hansen said. “Nebraska is not catching up at the rate we are going.”