How Politics & Logistics Could Prevent America’s Biggest Wind Farm from Powering California
For a moment this year, the California legislature was gunning for a bill that would have required all retail electricity in the state to come from “zero-carbon” sources by 2046. California politics often mean little to us Wyomingites, but this bill could have had extensive ramifications for the state’s wind industry.
The bill failed to move forward in the Golden State’s legislature, but the environmentalist groups pushing the agenda behind this bill aren’t going to be deterred anytime soon. Similar proposals are likely to come about in the future, and current California law requires 50 percent of the state’s electricity to come from renewable sources by the end of 2030.
Regardless of attitudes here in Wyoming towards energy policies that minimize fossil fuels, the demand for renewable energy in California is likely going to grow.
“California politics are really driving what will happen with wind in the West,” said Jason Begger, executive director of the Wyoming Infrastructure Authority.
Washington and Oregon are pursuing similar policies.
WYOMING’S WIND TRIANGLES
The Cowboy State is tapping into this growing demand for wind energy, and it may produce a very lucrative industry that could diversify the state’s economy like no other.
“Wyoming represents a tremendous opportunity to meet” the growing wind energy demand, said John Hensley, deputy director of industry data and analysis for the American Wind Energy Association, a wind lobby organization.
According to the National Renewable Energy Lab, parts of Wyoming have some of the highest concentrations of high-class wind energy potential in the country.
But Wyoming also has a number of barriers, and here in the northeast corner, those barriers are even greater. For this reason, Campbell County and surrounding regions have not been the targets of any wind farm projects. At least not yet.
Phil Christopherson, CEO of Energy Capital Economic Development, said he’s not been contacted by any wind farm developers with eyes on the Powder River Basin or surrounding area. Energy Capital ED often facilitates large industrial developments and is the first contact for companies taking an interest in developing in Campbell County.
He said one manufacturer of wind tower components expressed some interest in the area, illustrating that even without wind farms, there’s potential for supporting industries to locate in Wyoming.
The NREL produces maps of annual average wind speeds throughout the United States. Draw a line from Rawlins to Casper and down to Cheyenne, and you find a wind triangle with numerous pockets of the highest levels of average annual wind speeds—those exceeding 10 meters per second. And surrounding that triangle are more areas with winds in the highest ranges.
“Those are the areas of the highest wind potential,” Hensley said.
North of Casper is another area of good wind resources inside a triangle formed by a line from Casper, east to the state border, and then northwest to Gillette.
The lack of interest in wind farm developers in the Gillette corner of Wyoming may change if the demand for wind energy on the West Coast gets high enough that wind farm developers roam outside the state’s prime wind spots in search of new lands to conquer.
In those prime spots, a few companies are making efforts to overcome the barriers that have kept Wyoming as a lower-rate player in the wind energy scene. Their projects, some of the largest in the nation, are grinding through an arduous federal permitting process, and a couple are now primed to begin construction soon.
Crossing the Span
In order to get all this power out to the West Coast, you need power lines. That’s one of the areas where Wyoming loses a competitive advantage. While Wyoming has some transmission capacity to connect it to customers in California and other western states including California, Arizona, and Nevada, most of that is already aging or at maximum capacity.
Jonathan Naughton, professor of mechanical engineering with the University of Wyoming, said the wind resource in the northwest corner of the state is really good. The problem is the transportation capacity we have up here is eaten up by the coal-fired plants. Unless those close, which would certainly be met with a lot of resistance, that capacity is unlikely to open up anytime soon.
And with the public perception that wind represents a threat to the coal industry, a wind farm development in the area may not be greeted with a warm welcome.
“There may be a political component, as we know,” Naughton said.
Transportation capacity is also an issue down in the southern part of the state where large wind farms are being built, but the problem is being addressed there with multi-billion dollar transmission projects developed in parallel with the wind farms.
The Sierra Madre and Chokecherry Projects in Carbon County, being built by Power Company of Wyoming, will contain up to 1,000 turbines with a nameplate capacity of 3,000 megawatts.
Nameplate capacity basically means the amount of power all those turbines would produce under the most ideal conditions. Since wind is unpredictable, the actual amount of power those turbines will produce could be higher or lower depending on how much wind blows through their blades.
Another project north of Medicine Bow, being built by Viridis Eolia, is planned to have over 700 turbines, with a completion date of about 2020. Rocky Mountain Power, a subsidiary of PacifiCorp, is proposing to spend billions on new wind farms, as well.
“Moving those electrons over that span is difficult,” said Hensley with the AWEA.
However, utility companies are in the process of rectifying that problem, at least for the wind industry in southern Wyoming.
Among those projects is Gateway West, proposed by Rocky Mountain Power and Idaho Power. When complete, it will create 1,000 miles of high voltage power lines to transport power across southern Idaho and Oregon. It’s estimated to be complete sometime between 2020 and 2024.
TransWest Express, which is owned by an affiliate of The Anschutz Corporation, is being built specifically to supply renewable energy needs. Anschutz is also the same umbrella company building the Sierra Madre and Chokecherry projects in Carbon County. Once complete, the transmission lines will transport energy from Wyoming to the substations near Hoover Dam in Nevada, and then on to markets in California.
Currently, the estimated time for completion of these projects is 2020.
Should new wind farms spring up here in Campbell County, new transmission will probably have to be built along with them, increasing the costs of the development.
Part of the push for new wind projects in Wyoming is also the race to take advantage of the Production Tax Credit.
The Renewable Electricity Production Tax Credit was passed in 1992 and granted renewable energy producers a 1.5-percent per-kilowatt tax credit for a decade after the facility went online. The credit was indexed to inflation, and by 2016, it had grown to 2.3 cents per kilowatt.
This amounts to $3.4 billion per year renewable energy companies get to pocket, rather than sending on to the federal treasury. Wind producers account for 80 percent of that $3.4 billion per year and have availed themselves of $12.8 billion in these credits since 2008.
The program was supposed to expire in 1999, intending only to jumpstart new wind farms. Since its passage, it has expired five times, and each time, wind lobbyists, insisting their industry can’t survive without it, have been able to get it reinstated. Five other times the deadline was extended before it expired.
The tax bill in the U.S. House rolled the credit back to 1.5 cents, and the Senate version left it untouched. According to the AWEA, the rollback, if it would have passed, would have destroyed the wind industry.
“The House tax bill, far from being pro-business, would kill over half of new wind farms planned in the U.S. and undermine one of the country’s fastest-growing jobs,” said Tom Kiernan, CEO of the AWEA.
The Senate version won out, and it appears likely the PTC will last at least until the end of 2019. If past experience is any indicator, the credit will once again be extended before it expires in two years.
Not willing to bank on the possibility it will expire, wind farm developers are feeling an extra push to get their projects off the ground in time to take advantage of it. In Wyoming especially, that is a very short timeline due to the large portion of land in Wyoming that is administered by the BLM.
Kara Choquette, director of communications for Power Company of Wyoming, said the company began permitting the Chokecherry and Sierra Madre projects in 2006 with applications for rights-of-way applications through BLM land.
By August 2008, they were completing the public scoping requirements. In summer of 2012, they completed their final environmental impact statement. Further environmental requirements, called the environmental assessments, were completed in 2013.
Installed wind capacity: 1,489 MW
State rank for installed wind capacity: 15th
Number of wind turbines: 1,005
State rank for number of wind turbines: 14th
Wind projects online: 22 (Projects above 10 MW: 18)
Wind capacity under construction: 3,000 MW
Current Wind Generation:
During 2016, wind energy provided 9.42% of all in-state electricity production.
(Source: American Wind Energy Association)
Wind Generation Potential:
Land-based technical wind potential at 80 m hub height: 422,713 MW
Land-based technical wind potential at 110 m hub height: 352,535 MW
In January 2017, the BLM completed its site-specific environmental analysis of Phase I, but the site-specific review for Phase II elements is still ongoing. Though they have no control over the BLM process, Power Company of Wyoming expects this review to be complete by 2019.
The permitting and development costs alone for the wind farm projects and the TransWest project amount to over $100 million.
Most wind projects start with a power purchase agreement, which is a commercial contract with a utility to purchase the power the wind farm produces.
These agreements go a long way toward facilitating the financing of the wind farm development. Then the state and local permitting process begins. When you have to deal with federal permits, the process is much longer and more expensive.
Power Company of Wyoming proceeded with the permits without any commercial agreements in place. They’re building the project at their own risk.
“We are unusual in that regard,” Choquette said. And that also speaks to the confidence investors have the projects will find the demand they need to be profitable.
Factored into that is the state tax. Wyoming is one of two states with a tax on wind power, with Minnesota being the other. Here in Wyoming, the state currently charges $1 per megawatt hour.
Hensley, with the AEWA, said this tax mitigates the attractiveness of the state to wind developers.
“The state is not economically competitive when you factor in that tax,” Hensley said.
TEN THOUSAND ACRES
While the wind resource is attracting wind farm developers, the political winds here in Wyoming and elsewhere create a lot of uncertainty.
Last January and again this year, Wyoming lawmakers voted against a bill that would have raised that state tax to $5 per megawatt hour.
Rep. Mike Madden (R-Buffalo), House Chair of the Revenue Committee that considered the bill, was one of its sponsors. Madden said the bill may come up for reconsideration in the 2018 session as a private bill.
Madden said the tax needs to be raised in order to bring the wind energy in line with the revenue sources that come from the oil, gas, and coal industries.
“Even though wind is renewable, something is lost when 10 thousand acres is turned into wind farms,” Madden said.
Sen. Cale Case (R-Lander), who is on the Senate Revenue Committee, agrees.
“It’s going to have an enormous impact on the landscape of Wyoming. It will change it forever,” Case said.
Sen. Larry Hicks (R-Baggs) proposed a bill in the last session to increase the wind tax to $10 per megawatt hour. He told the Casper Star-Tribune that he wanted to compensate the state for losses in revenue as demand for coal switches to wind.
It’s unlikely wind is having much of an impact on the coal industry. A Department of Energy study released last August found that increasing natural gas-generated power was the primary cause of the decrease in demand for coal.
The relatively new process of hydraulic fracturing has created a huge supply of natural gas and driven down gas prices, making it much harder for coal to compete.
The wind lobby also doesn’t see its product as a direct competitor with coal.
“We’re not suggesting wind is going to take away the coal industry,” said Evan Vaughan, spokesperson with the EWEA.
The politics of California are creating even more uncertainty. While they create the demand for wind energy, they may also determine from where the supply must come. California’s unions played a significant role in defeating the bill that would have set the 100-percent target, over concerns the bill wasn’t doing enough to preserve jobs in the state.
“That’s completely understandable,” Choquette with the Power Company of Wyoming said of the union’s concerns.
She said Power Company of Wyoming sees its wind farm projects as a way California won’t have all its eggs in one basket. Wyoming can diversify California’s renewable energy sources.
When you’re dealing with intermittent sources that can suddenly turn off at random times throughout the day, having multiple sources to draw upon can prevent a host of problems, including blackouts.
Right now, the main method of dealing with the intermittency problem of wind and solar energy is to draw upon baseload sources, such as coal and natural gas, which are available regardless of the weather.
IDEALS VERSUS REALITY
Currently, wind and solar comprise less than 2 percent of the global energy supply, which is not limited to electrical generation, according to the Energy Information Administration. By 2040, the EIA estimates that amount will grow to 6 percent, far less than the rosy 100-percent predictions of California.
What happens if 100 percent renewable energy simply isn’t possible?
Much of the 100-percent policy push was supported by research from Mark Jacobson, Stanford University professor. In 2016, Jacobson and other researchers published a study showing a combination of wind, solar, tidal, hydroelectric, and geothermal energy could supply all the U.S. energy needs without oil, gas, coal, or nuclear energy.
Researchers began posing legitimate questions about Jacobson’s research this year, only to be met with dismissive and flippant responses from Jacobson. Then this past summer, 21 prominent researchers published a peer-reviewed, scathing analysis of Jacobson’s research, showing it contained mountains of errors and invalid modeling tools.
Jacobson is now suing the lead author of the study and the flagship journal that published it, claiming the analysis was intended to damage his reputation with knowingly false statements. Many researchers are quite surprised that Jacobson is using civil suits, rather than the scientific research process, to respond to his critics.
Jacobson’s behavior may demonstrate the 100-percent push is a pipe dream produced by ideologues whose ideals aren’t considering practical technological barriers. And should reality trump politics, an entire house of cards could come crashing down.
At that point, wind farms will become scrap metal monuments to bad policies scattered all across the altered Wyoming landscape.