Harnessing the power of wind – Idaho lagging behind in resource development

Bob Lewandowski figures with the power he sells back to Idaho Power, he will pay for his wind turbines in six or seven years.
Missing tax credit

Ken Dey
The Idaho Statesman

http://www.idahostatesman.com/story.asp?ID=64674

Bob Lewandowski is all smiles now when he talks about the wind that blows across his land between Boise and Mountain Home.

But he wasn´t smiling over the four decades that his family tried to scrape out a living farming the wind-swept land.

“I used to curse the wind,” he says. “Every time we put seed in the ground the wind would come up and blow it away.”

But that´s all history.

Lewandowski gave up farming and decided to use his former nemesis to generate electricity.

Today a pair of hand-me-down wind turbines salvaged from a California wind farm tower 150 feet above his farm, converting wind into electricity that is sold to Idaho Power Co.

“Now I pray for wind,” he says.

Lewandowski´s small wind farm is the only operating farm in Idaho producing commercial power, despite the state´s ranking as the 13th best state in the nation for wind power.

Idaho´s wind power advocates hope that changes, but how quickly could depend on the willingness of state leaders to make Idaho attractive for wind developers.

And so far that hasn´t happened.

Several large wind power projects are already on the drawing board, and over the last several years about a dozen wind power companies have been collecting wind-speed data at sites across the state.

But nothing has been built and developers say Idaho lags behind other states in its efforts to attract wind power projects.

“Idaho is surrounded by states that are working with the renewable energy industry to support development,” Rich Rayhill, vice president of Ridgeline Energy. “It would be great if Idaho would join with the other states and create a similar supportive environment at home.”

Rayhill, whose company has received permits to build a 100- to 200-megawatt project straddling Bingham and Bonneville counties in eastern Idaho, said neighboring states of Montana, Wyoming, Oregon, Washington and Nevada don´t impose sales tax or property taxes. And Utah this year passed legislation exempting renewable energy developers from a sales tax.

Although Idaho has no incentives, it wasn´t from lack of trying.

Wind developers and others were initially enthused with a trio of bills introduced in the Idaho Legislature this year that offered incentives including a sales tax exemption on equipment.

The bill to exempt the sales tax failed to pass. Two other pieces that allowed a half-cent per kilowatt production tax credit and a 3 percent investment tax credit on equipment made it through the session, but were stopped at Gov. Dirk Kempthorne´s desk on Friday when he vetoed both bills, saying the state´s budget was too tight to offer additional incentives.

“The governor said that anything like that has to show some kind of return on investment and that doesn´t show it right now,” Mike Journee, Kempthorne´s press secretary, said Friday.

Journee said when the budget situation improves, the governor would look more favorably on incentives to encourage alternative energy.

Just last month spokesman Dick Larsen and others at the Idaho Department of Water Resources Energy Division were crediting the Legislature for its willingness to offer incentives.

“We´re absolutely delighted with the pieces of legislation that did go through,” Larsen said at the time.

For the last three years, the state agency has been one of the most vocal advocates of expanding wind energy in Idaho. They´ve hosted numerous public meetings and are monitoring wind speeds on state lands to see if any of those lands have potential for development.

On Friday Larsen said the department didn´t have a comment on the governor´s veto.

Although the veto eliminated some incentives, Rayhill and others said the biggest setback came when the Legislature failed to pass the sales tax exemption.

Rayhill said not being able to exempt the sales tax put Idaho´s wind developers at a disadvantage when bidding for power contracts.

Because there are only a limited number of manufacturers of equipment such as turbines and generators, Rayhill said there´s little difference in the prices companies pay for equipment.

“When we have to add 6 percent (Idaho sales tax) on top of that, we´re out of the ball park,” Rayhill said.

Mike Heckler, a spokesman for Boise-based Windland Inc., which is planning to build a 200-megawatt wind power project in the Cotterel Mountains south of Burley, said they hope the Legislature passes a sales tax exemption in the next session.

Finding a buyer

Incentives make it easier for developers to be more competitive when bidding against each other to supply power to an utility.

And it´s that power contract that can make or break a project.

“If you don´t have a power contract, you´re not going to get financing (for a project),” Rayhill said.

Both Rayhill´s and Windland´s projects still don´t have confirmed buyers for the wind power they hope to generate, but it´s not just because Idaho doesn´t have the right incentives.

Wind power developers say there hasn´t been a great rush from utilities to buy renewable energy.

Dave Luck, head of business development at EnXco, a Danish-based company that was the first company to announce in 2001 that it was looking at Idaho for a commercial wind farm, says how quickly wind power develops will depend on the willingness of utilities to add wind as a power source.

In Idaho, only one major utility, PacificCorp, has announced an aggressive expansion of wind power.

PacificCorp garnered national attention earlier this year for putting out a bid for contracts from renewable energy companies to provide 1,100 megawatts of renewable energy over the next seven years.

“This is a major corner turned,” Luck says of the PacificCorp decision. “It demonstrates that there is a legitimate demand for wind.”

Idaho Power Co., buys power from Lewandowski´s projects and a limited amount of wind power from the State Line wind project in Oregon and Washington to support its green power program.

In early March, Idaho Power also filed a request with the Idaho Public Utilities Commission to approve a 20-year contract to buy power from a 9-megawatt wind farm near Great Falls, Mont.

But Idaho Power has yet to commit like PacificCorp to such a large increase in renewable energy.

Idaho Power spokesman Dennis Lopez said the company fully expects that wind power will eventually play a bigger role in the company´s future power sources.

Lopez said the company is in the process of completing its 2004 Integrated Resource Plan that looks ahead 10 years to determine how much power the company will need and where it will come from. A draft of that plan should be out next month.

Nationwide, wind provides about 1 percent of the nation´s power, but it´s growing.

In 1981, there were 10 megawatts of wind power generated, today there are 6,374 megawatts, according to the American Wind Energy Association.

The association has set a goal of increasing the amount of wind generation to 6 percent of the nation´s power supply by the year 2020.

PacificCorp spokesman Deston Nokes said it made good business sense to buy more wind power.

“The more types of power you have in your pool, the better off you are,” Nokes said. “It allows less reliance on fossil fuels.”

The cost to build wind projects is more expensive than other power plants. A wind farm costs about $1 million a megawatt to build, which is two-thirds more expensive than a plant powered by natural gas.

But Rayhill said wind costs less in the long-term.

“Natural gas is a diminished resource and gas prices will increase significantly,” Rayhill said. “But wind is free, and when the projects´ up-front costs are paid, it continues to produce electricity with no fuel charge.”

An economic boost

A new economic impact study now being prepared by the University of Idaho finds that every dollar wind farms earn from the sale of electricity would bring $1.60 back to the neighboring community from increased spending and tax revenue.

That´s a good return, but not as good as other industries, according to Garth Taylor, a University of Idaho economist. Farming, for example, has a bigger impact. Every dollar earned in farming brings about $2 to a community.

Taylor said the biggest economic boost to communities from wind power would come during the initial construction phase, when construction workers would be spending their paychecks in the community. Once the wind towers are up, they require only a handful of employees to maintain them, Taylor said.

Although the impact is smaller, where it takes place is also a factor.

“Most wind sites are in the rural areas,” said Robert Hoppie, the administrator of the Idaho Department of Water Resources Energy Division. “This is a way of getting an economic impact into those areas and away from the Treasure Valley.”

The future of Idaho’s wind

Back at his wind farm, Lewandowski knows first-hand that it´s easy to be upbeat about wind power, but that enthusiasm doesn´t mean much until some significant investments are made in the state.

“There was lots of enthusiasm and lots of support, but no investors,” Lewandowski says of his experience starting his own wind farm.

He had no formal training, but he started researching and visiting California wind farms to ask questions. He left California with four used turbines to start his project.

It took him four years and 19 permits before his first wind turbine started turning.

He now has a second turbine in the air, but it´s not generating electricity yet because he hasn´t been able to finalize a contract to sell the power.

Between the tumbleweeds and idle farm equipment littering his land, Lewandowski is already assembling a third turbine that he hopes will also start generating electricity.

Lewandowski said he´s hopeful that the industry can take off and diversify Idaho´s sources of power.

“I´m eager to see it happen. I´m tired of being the pioneer.”

To offer story ideas or comments, contact Ken Dey
[email protected] or 377-6428