South Dakota Wind Experience
Steven Wegman
South Dakota Renewable Energy Association
Post Office Box 491
Pierre, SD 57501
email [email protected]
Phone 605 295 1221
Facebook South Dakota Renewable Energy Association
The Comments and Views
Are those of Steve Wegman
And not those of the South Dakota Renewable Energy Association
Wind Potential
Pop Quiz
• 1 When do you need a State Permit to build a wind farm?
A. When your neighbor see it.
B. When the county say so.
C. When the wind farm is over 100 megawatt in sizes.
D. None of above.
Installed Wind as of 9-1-2018
•Wind Power Additions Continued at a Rapid Pace in 2017, with•7,017 MW of New Capacity, Bringing the Total to 88,973 MW
$11 billion invested in wind power project additions in 2017
Over 80% of new 2017 capacity located in the Interior region
Partial repowering trend: 2,131 MW of existing plants retrofitted w/ longer blades
U.S. DEPARTMENT OF ENERGY OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY 6
•14
•13
•12
•11
•10
•4
•0
•9
•8
•7
•6
•5
•3
•2
•1
•Southeast (annual, left scale)
•Northeast (annual, left scale)
•Great Lakes (annual, left scale)
•West (annual, left scale)
•Interior (annual, left scale)
•Total US (cumulative, right scale)
•49
•42
•98
•91
•84
•0
•77
•70
•63
•56
•35
•28
•21
•7
•14
•OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY 42•U.S. DEPARTMENT OF ENERGY •OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY 42•U.S. DEPARTMENT OF ENERGY
•Change in Performance as Projects Age Also Impacts Overall
•Trends; Performance Degradation Shown After Year Nine
Sample includes projects with COD from 1998 to 2016
Median (with 10th/90th percentile error bars) Capacity-Weighted Average
1
70.8
2
70.8
3
62.6
4
57.8
5
56.6
6
42.9
7
37.3
8
32.3
9
22.4
10
14.7
11
9.4
12
6.7
13
4.6
14
4.2
15
2.7
16
2.3
17
0.6
18
0.6
•120%
•110%
•100%
•90%
•80%
•70%
•60%
•50%
• Years post-COD:
Sample GW:
•OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY 43•U.S. DEPARTMENT OF ENERGY •OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY 43•U.S. DEPARTMENT OF ENERGY
•Regional Variations in Capacity Factors Reflect the Strength of•the Wind Resource and Adoption of New Turbine Technology
•Sample includes projects built in 2015 or 2016
•Weighted Average (by region)
Weighted Average (total U.S.)
Individual Project (by region)
•55%
•50%
•45%
•40%
•35%
•30%
•25%
•20%
•15%
•10%
•5%
•0%
•Great Lakes709 MW
•Interior14,412 MW
•Northeast4.5 GW
•Great Lakes8.6 GW
•Interior50.2 GW
•West12.6 GW
•Northeast629 MW
•West
308 MW
•Southeast133 MW
•Note: Limited sample size in some regions•45%
•40%
•35%
•30%
•25%
•20%
•15%
•10%
•5%
•0%
•Specific Power ≥ 400 (3.0 GW)Specific Power ≥ 400 (3.0 GW)•Specific Power range of 350–400 (6.9 GW)Specific Power range of 300–350 (35.1 GW)Specific Power range of 250–300 (17.8 GW)Specific Power < 250 (14.1 GW)
•Regional averages
•Region
•Wind Turbine Prices Remained Well Below the Levels Seen a
•Decade Ago
•• Recent turbine orders in the range of $750-950/kW
U.S. DEPARTMENT OF ENERGY OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY 45
•2,600
•2,400
•2,200
•2,000
•1,800
•1,600
•1,400
•1,200
•1,000
•800
•600
•U.S. Orders <5 MW
•U.S. Orders 5 - 100 MW
•U.S. Orders >100 MW
•Vestas Global Average
•SGRE Global Average
•BNEF Global Index
•MAKE U.S. Index
•400
•200
•Announcement Date
•0
•Lower Turbine Prices Have Driven Reductions in Reported•Installed Project Costs
2017 projects had an average cost of $1,610/kW, down $795/kW since 2009-2010
Limited sample of under-construction projects suggest somewhat lower costs in 2018
U.S. DEPARTMENT OF ENERGY OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY 46
•4,000
•6,000
•5,000
•3,000
•2,000
•1,000
•0
•Interior (49.7 GW)
•West (12.4 GW)
•Great Lakes (8.3 GW)
•Northeast (4.5 GW)
•Southeast (1.1 GW)
•Capacity-Weighted Average
•Commercial Operation Date
•
•OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY 67•U.S. DEPARTMENT OF ENERGY
•Future Outlook, Beyond Current PTC Cycle, is Uncertain
•Current Low Prices for Wind, Future Technological
•Advancement, and Direct Retail Sales May Support
•Higher Growth in Future, but Headwinds Include:
Phase-out of federal tax incentives
Continued low natural gas and wholesale electricity prices
Potential decline in market value as wind penetration increases
Modest electricity demand growth
Limited near-term demand from state RPS policies
Limited transmission infrastructure in some areas
Growing competition from solar in some regions
•
•OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY 68•U.S. DEPARTMENT OF ENERGY •OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY 68•U.S. DEPARTMENT OF ENERGY •OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY 68•U.S. DEPARTMENT OF ENERGY
•Conclusions
Wind capacity additions continued at a rapid pace in 2017, with significant
•additional new builds anticipated over next three years in part due to PTC
Wind has been a significant source of new electric generation capacity
•additions in the U.S. in recent years
Supply chain is diverse and multifaceted, with strong domestic content for
•nacelle assembly, towers, and blades
Turbine scaling is significantly boosting wind project performance, while
•the installed cost of wind projects has declined
Wind power sales prices are at all-time lows, enabling economic
•competitiveness (with the PTC) despite low natural gas prices
Growth beyond current PTC cycle remains uncertain: could be blunted by
•declining federal tax support, expectations for low natural gas prices and
•solar costs, and modest electricity demand growth
Development
In South Dakota
•South Dakota Wind Energy Development•by Capacity and Status
•This map may not represent every proposed wind farm in S.D. It represents projects that developers have communicated to the PUC. Location of the wind farms are approximate.
•Nameplate Capacity (MW)
•Existing
•UnderConstruction
•Pending
Proposed
•125 -200
•50 -125
•Less than 1
•200 +
•1 -10
•10 -50
•North Belle Fourche
•Wind Quary
•Current Nameplate Capacity: 974 MW Currently Under Construction: 0 MW
•Darren Kearney, Staff Analyst•South Dakota Public Utilities Commission [email protected]
•Corson County
•Tate Topa
•Rosebud Sioux Tribe
•Campbell County
•Prairie Winds SD-1 (Crow Lake)
•Highmore Wind Farm
•SD Wind Partners (Crow Lake)
•Tatanka Wind Power
•Infinity Wind
•Prairie Winds
•Tradewind Energy
•Brule County Aurora County
•Titan 1
•Crocker Wind Farm
•Highmore Wind 2
•Sweetland
•Tatanka Wind Power 2
•Wessington Springs
•Davison County
•Oak Tree Energy
•Day County
•City of Howard
•Day County 2
•Dakota Range 1 and 2
•Updated December 2017
•Prevailing Winds
•Canova Wind Farm
•Beethoven Wind
•Buffalo Ridge 4
•Tatanka Ridge
•Minn-Dakota WindBuffalo Ridge 1
•Summit Wind
•Dakota Power Community Wind
•Cattle Ridge
•Strandburg
•Crowned Ridge I and II
•Deuel Harvest
•Bitter Root
•EMS
•Walleye Wind
•Coyote Ridge
•Buffalo Ridge 2
South Dakota Wind Projects
South Dakota Wind Energy CenterMinnDakota Wind FarmTatanka Wind FarmWessington Springs Wind ProjectBuffalo Ridge I Wind FarmTitan Wind Project just install 25 MW batteryDay County Wind FarmBuffalo Ridge II Wind FarmPrairieWinds SD1 Wind Project
South Dakota Wind Projects
South Dakota Wind Partners Wind Project
Oak Tree Wind Farm
Beethoven Wind Farm
Campbell County Wind Farm
Kimball Wind Project
White Lake Wind Project
Crocker Wind (under construction)
RETIREMENTS BY LOCATION, AGE & POLICY
21
Landowner Issue with Easements
• Easements Granted
• (wind, access, transmission, shadow, flicker, noise…)
• Crop Damage / Other damage
• Indemnification
• Liability Cap for Landowners
• Insurance
• Development Milestone
• Decommissioning Bond
• Most Favored Nations Clause
• Confidentiality Provisions
• Development Covenant
• Allocation of Payments
• Definition of Gross Revenues
• Termination
• Provisions that survive termination
• Non-Interference Provision
• Subsurface Pore Space Ownership
• CRP Land
• Taxes
• Audit Rights (in the case of a royalty)
Dakota Range Wind Project Site Plan
23
PSYCHOLOGY of LEASING
Key Participants in Leasing:
• Landowner = negotiator = price maker not taker
• Land man = paid by and loyalty to
company, experienced
Company deadlines come and go – no hurry
Psychology of Leasing (cont.)
Negotiating Points:
• Everything is negotiable
* Use Dogged Determination
• Know what you want, be firm
• May not arrive on an agreement – OK
• Good leases take time and last a long time
• Let the games begin! – Use a scapegoat
• Seek attorneys advice
Production Credit Tax Value for a 100MW with a Capacity Factor of 43.1
MWhs/year
n $23/MWh x 377,556 MWhs/year
= $8,683,788/year
n 10 Years x $8,683,788 =
$86,837,880
n Calculated for project that receives
full PTC in 201 6
100 MWs x 8,760 hrs/year x 43.1 % CF = 377,556 MWhs/year
$23/MWh x 377,556 MWhs/year = $8,683,788/year
10 Years x $8,683,788 = $86,837,880
Calculated for project that receives full PTC in 2016
$0.023/kWh in 2016Based on $0.01 5/kWh (1993 dollars) multiplied IRS inflation
adjustment factoro Being Phased out, developers will receive:2016: 100%2017: 80%2018: 60% 2019: 40%2020:No PTC available (unless extended...)
Projects qualify once they “commence construction”Physical work test: must complete work of a “significant nature”Financial Safe Harbor: 5% or more of the total cost of the
facility was paid or incurredProjects must be placed in service within 4 years of
construction
Production Tax Credit
98MW, AdjustedSummary Results
98 MW project, Adjusted Assumptions
Jobs Earnings Output ValueAdded
Sales Taxes
Other Taxes
LandLease Pymts
During Construction
366 $17,900,000 $47,800,000 $24,200,000 $6,922,000
Yearly During Operating Years
6 $1,000,000 $3,100,000 $2,200,000 $129,200 $487,000 $392,000
Total over 20 Operating Years
766 Job-years
$37,900,000 $109,800,000 $68,200,000 $9,506,000 $9,743,000 $7,840,000
29
South Dakota Taxes
• Nameplate $3 per Kw
• 100 percent local
– 50% to Schools
– 35 % to Counties
– 15 % to Township
• Production Tax
• $0.0045 per Kwh
• 80% to State
• 15% local Community
• Same allocation as nameplate
Years 1 -5: 100% of tax revenue outside state-aid formula and not counted as local effort
Year 6: 80% outside formula and not counted Year 7: 60% outside formula and not counted Year 8: 40% outside formula and not counted Year 9: 20% outside formula and not countedYears 10 and beyond: all tax revenue inside formula and counted as local effort
School District Tax Revenue on Wind Energy
Economic Benefits (Continued)
32
25-Year Projected Tax Revenue for the Dakota Range Wind Project
RecipientAnnual Tax Revenue
(Approximate)
Total Tax Revenue
(Approximate)
Codington County $80,000 $2,000,000
Leola Township $6,000 $150,000
Germantown Township $30,000 $700,000
Grant County $280,000 $6,900,000
Lura Township $25,000 $600,000
Mazeppa Township $90,000 $2,300,000
Waverly School District $225,000 $5,600,000
Summit School District $280,000 $7,000,000
South Dakota $420,000 $10,600,000
Wind for Schools in SD
• Started in 2008
• 10 schools districts• Elkton• Miller• Sioux Falls• Wessington Springs• Yankton• Dakota Valley• Box Elder• Mitchell• Selby• Sanborn Central
Wind for Schools SD
• Teach the Educators
• Mitchell, Miller, Box Elder, Watertown
• Over 160 educators
• Hands on training, with in classroom demo units
Wind for Schools SD
Thank you
Steve Wegman
South Dakota Renewable Energy Association
Post Office Box 491
Pierre, SD 57501
On Facebook
605 295 1221