south dakota wind experience - santel communicationssdtown/doc/presentation_to_sd_town_and... ·...

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

mailto:[email protected]

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


•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


•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

[email protected]

On Facebook

605 295 1221

mailto:[email protected]

south dakota wind experience - santel communicationssdtown/doc/presentation_to_sd_town_and... ·...

Documents