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I cant change the direction of the wind, but I can adjust to states, while adding to the diversification of a states
my sails to always reach my destination. Jimmy Dean energy portfolio.
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he nations energy sector is undergoing substan- This SLC Special Series Report, the first in a series exploring
tial changes, as political and economic factors the myriad impacts of wind energy expansion on SLC states,
converge to encourage diversification in gen- examines the benefits of wind energy in the Southern region.
eration. Aided by state and federal tax credits, Forthcoming reports present case studies from three SLC
renewable energy generation technologies are experienc- states, examine SLC states capacity for wind energy genera-
ing unprecedented growth as production costs decline and tion and utilization, analyze state incentives, and explore
implementation increases. the challenges of wind energy generation in the region.
Southern Legislative Conference and SLC are trademarks registered in the U.S. Patent and Trademark Office.
The many benefits of wind energy include long-term
cost competitiveness, economic development, support Glossary
for rural, agrarian communities and reductions in Hub height: Thehub heightis the distance from the turbine
energy-related water use. The growth in the nations platform to the rotor of an installed wind turbine and indicates
wind industry has had ripple effects across the Ameri- how high a turbine stands above the ground.
can economy. The DOE estimates that 101,738 workers
were employed at wind farms in the United States Nacelle: a covering that houses all generating components of
in 2016, representing an employment increase of 32 a wind turbine, including the gearbox, low- and high-speed
percent, up from approximately 77,000 in 2015. Addi- shafts, generator, controller, and brake.
tionally, technological advancement, coupled with the Rotor: a wind turbine component that, with the help of
falling cost of natural gas, have yielded cost-competitive the rotor blades, converts the energy of wind into rotating
deployment in optimal locations, making utility-scale mechanical movement.
wind power a cost-effective source of low-emissions
power generation. Finally, the overwhelming major- Utility-scale: wind energy projects capable of generation
ity of wind farms in the United States operate in rural greater than 1 megawatt.
areas where landowners and local communities reap Wind farm: a group of wind turbines in the same location
financial benefits. used to produce electricity.
Cost Competitiveness
Through the aforementioned innovations in technology increases rapidly in proportion to its height.4 This creates
and historically low natural gas prices, wind power gen- a trade-off between tower cost and the value of added
eration has become an economically compelling means of energy production, further emphasizing the importance
energy production. This shift is evidenced by the grow- of strategic site selection. However, wind turbine prices
ing demand for wind energy from major corporations. have fallen between 20 percent and 40 percent since
In recent years, companies such as Facebook, Amazon 2008, when prices peaked. The 2014 Wind Technologies
Web Services, Procter & Gamble, General Motors and Market Report by DOE found that wind projects built in
Walmart have signed contracts to purchase increasing 2014 had an average installed cost of $1,710/kW, down
amounts of wind energy. This trend suggests that wind almost $600/kW from a peak in 2009 to 2010.5
power no longer is a mere signifier of the private sectors
commitment to sustainability. Rather, these corporations Recent technological improvements have played an
increasingly are investing in wind power because it is important role in the declining cost of wind generation.
fiscally prudent. A 2015 report by the DOE found that through continued
innovation in technology, the deployment of incremental
Due to low natural gas prices, unprecedented fuel switch- wind power in the United States is both feasible and eco-
ing from coal to natural gas has been occurring in the nomically viable.6 Since 1998, hub heights have increased
energy sector. Gas-fired generation is more flexible than by approximately 50 percent, to an average of 82.7 meters
coal-fired generation, facilitating the integration of vari- (271.3 feet) for new turbine installations.7 Over the same
able renewable generation sources, such as wind. This, period of time, rotor diameters have increased more
in turn, drives down the cost of integrating these alter- than 100 percent, with some on newly installed tur-
native energy resources, further encouraging increased bines averaging approximately 99.4 meters (326.1 feet)
implementation. in 2014.8 These advancements increase the amount of
electricity a turbine can generate, allowing a turbine to
Wind is a free but variable resource. The annual energy capture wind at higher speeds. Meanwhile, larger rotors
production of a turbine is highly dependent on wind enable greater energy generation at lower wind speeds.
resource characteristics at a given site and the technical This trend toward heightened efficiency is projected to
specifications of the turbine itself.3 The cost of a turbine continue increasing benefits and lower costs.9
Wind energys hedge value also has made it increas- To meet the growing demand for wind power installa-
ingly cost-competitive. On average, and in real dollar tions, manufacturers have increased production, creating
terms, buyers of wind energy, through power purchase new jobs and strengthening the domestic manufacturing
agreements (PPAs), will pay no more per megawatt hour base. As of 2014, the South was home to approximately
20 or 25 years from now than they do today, whereas 227 companies and 300 facilities involved in the full
it can be difficult to lock in low fossil fuel prices over value chain of the wind energy industry.16 Opportunities
long periods of time.11 for job creation extend beyond manufacturing and can
include operations and logistics, data analysis, commu-
Although fossil fuel prices, particularly natural gas, nications and safety and technical workforce training.
remain low, by adding wind power to existing port-
folios, buyers can effectively minimize the long-term The deployment of wind power also can stimulate
risk of increasing fossil fuel prices. Though currently indirect job creation and economic development. As an
low, natural gas prices are historically volatile. For this example, the town of Pryor, Oklahoma, has experienced
reason, the resource rarely is sold on a long-term, fixed- these benefits first-hand. In 2012, Google announced a
price basis. Instead, it frequently is sold with variable second data center at Pryors MidAmerica Industrial
pricing, and utilities must hedge fuel prices in order to Park.17 Mr. Andrew Silvestri, head of public policy and
Source: U.S. Wind Industry 2016 Annual Market Update, American Wind Energy Association.
external affairs for Google in Oklahoma, said the com- the turbine on the landowners property. Farmers and
pany built its Pryor data center in part because of the ranchers can tap into this market by leasing land to wind
availability of wind energy.18 This data center represents developers. Large wind turbines typically use between
a $2 billion investment in the community, including half an acre and two acres of land, including access roads,
more than $1.5 million in science and technology grants; allowing farmers to continue planting crops and graze
free public Wi-Fi; workforce development grants; and livestock up to the base of the turbines.20 Payments for
technology resources for nonprofits. Google employs land leases typically range from $2,000 to $5,000 per
approximately 400 people at this facility, 70 percent of turbine, per year. For some, this can mean the difference
whom are hired from the local area.19 This strategic deci- between keeping or losing the family farm.
sion, fueled in part by access to affordable wind energy,
has been a tremendous boon to the local economy. The American Wind Energy Association estimates that,
in 2016, domestic wind farm companies paid approxi-
Support for Rural Communities mately $245 million to farming families and other
For rural communities with strong and consistent wind rural landowners.21 In 2015, more than $156 million
resources, wind power can provide a vital economic was paid to landowners in counties with below aver-
boost. This is particularly true for rural, agricultural age incomes.22 Collectively, landowners in seven states,
communities. Though wind developers own the turbine including the SLC member states Texas and Oklahoma,
itself, they rarely own the land on which it is located. currently receive an excess of $10 million in annual
Instead, they often enter into long-term leases to site lease payments.23
Source: U.S. Wind Industry 2016 Annual Market Update, American Wind Energy Association.
The structure of land-lease agreements can take several by comparing their experiences to landowners in
forms, including a fixed annual payment; one-time, up- non-wind farm communities. While this survey was
front payment; revenue sharing; or some combination conducted outside the Southern region, the results
of the three. Revenue sharing can offer the highest rate nevertheless provide relevant insight. When com-
of compensation, but also the highest risk, particularly pared to neighbors who did not host wind farms or
if a project is unsuccessful. Fixed annual payments often turbines, the survey found that those community
are lower than revenue sharing agreements, offer less members with turbines on their property invested
risk to landowners and a more predictable source of twice as much capital in their farms; purchased more
income. A one-time, up-front payment also may be farmland over a five-year period; were more likely
attractive, but this option can complicate the terms to believe their land would be farmed in the future;
of sale if the property is sold during an active lease and reported it was neither easier nor more difficult
agreement. When considering a land-lease agreement, to farm around turbines.24
property owners may choose to consult with legal
counsel. Further, farmers and ranchers should consider Beyond the benefits to landowners, wind farms also
the terms of the lease in relation to the potential impact contribute to rural communities through tax revenues.
on farm operations. In most states, taxes assessed on energy production
equipment are collected by local, rather than state,
In 2014, a University of Michigan survey of farmers governments. These funds may then be utilized to
in the state sought to understand the impact of wind improve public services or to reduce the local property
turbines on landowners in wind farm communities tax burden on all landowners. In a recent study, the
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his report was prepared by Anne Roberts Brody, support state policymakers and legislative staff in their
policy analyst and committee liaison of the work to build a stronger region.
Energy & Environment Committee of the
Southern Legislative Conference (SLC), chaired Established in 1947, the SLC is a member-driven organization
by Representative Lynn Smith of Georgia. This report and the largest of four regional conferences of CSG,
reflects the body of policy research made available to comprising the states of Alabama, Arkansas, Florida,
appointed and elected officials by the Southern Office of Georgia, Kentucky, Louisiana, Mississippi, Missouri,
The Council of State Governments (CSG). North Carolina, Oklahoma, South Carolina, Tennessee,
Texas, Virginia and West Virginia. The Annual Meet-
Opened in 1959, the Southern Office of CSG fosters inter- ing of the Southern Legislative Conference, convened as
governmental cooperation among its 15 member states, the focal point and apex of its activities, is the premier
predominantly through the programs and services provided public policy forum for Southern state legislators and
by its Southern Legislative Conference. Legislative leader- the largest regional gathering of legislative members and
ship, members and staff utilize the SLC to identify and staff. The Annual Meeting and a broad array of similarly
analyze government policy solutions for the most prevalent well-established and successful SLC programsfocusing
and unique issues facing Southern states. Meanwhile, SLC on both existing and emerging state government chal-
member outreach in state capitols and coordination of lengesprovide policymakers diverse opportunities to
domestic and international delegations, leadership develop- ask questions of policy experts and share their knowledge
ment and staff exchange programs, meetings, and fly-ins with colleagues.