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High hopes for offshore power

  • Oct 25, 2021
Herald News

This story is part of a series about the burgeoning offshore wind industry and the economic potential it offers to Southeastern Massachusetts and the Cape and Islands. It is powered by the Solutions Journalism Network and is dedicated to delivering solution-oriented stories about how the region can overcome problems and obstacles to fully embrace the opportunity this new industry offers.

Before he worked for American Clean Power, Jeff Danielson was an Iowa state senator for 15 years, representing Black Hawk County, the state's fourth most populous region, and a Democratic stronghold. But most of Iowa is rural and Republican. In 2020 residents voted wholesale for former President Donald Trump, an outspoken opponent of clean energy.

So it was a surprise, Danielson said, that in a 2017 vote on a redesign of the state license plate, the public chose to include an increasingly familiar feature on Iowa's rural landscape.

"The license plate that won was a landscaped picture with silos, smokestacks — traditional manufacturing strength and farming — right alongside a wind turbine," Danielson said. "If you drive around Iowa today, that is the license plate you see."

What was once controversial has now become an accepted feature in the heartland. In 2019, wind energy generated more electricity than coal-fired plants for the first time in Iowa state history and now accounts for 57% of the state's electric power generation, according to the U.S. Energy Information Administration (EIA).

It is the highest percentage of electrical production by wind power of any state and it happened fast. Five years ago coal-fired plants generated 53% of the state's electricity, according to EIA, but as of 2020 only accounted for 24%.

It's a matter of economics, wind power advocates say, not politics.

The U.S. is second only to China in terms of installed wind power. China has 288 gigawatts compared to the U.S., which has 122. But China is way ahead of the U.S. when it comes to offshore wind installations. This year, China displaced the U.K. as the top offshore wind country with 11.1 gigawatts of power installed. The U.S. has only one, a 55-megawatt, five-turbine offshore wind installation off Block Island, Rhode Island.

Last year, the Biden administration set a goal of generating 30 gigawatts of offshore power along the East Coast by 2030 as part of its strategy to dramatically reduce greenhouse gas emissions in the energy sector. Massachusetts' recent update of its climate change plan set a goal of 5.6 gigawatts of offshore wind as an integral part of its plan to achieve a 50% emissions reduction target by 2030, and net-zero emissions from the energy sector by 2050.

Wind energy industry brings jobs and billions of dollars to a community

An important milestone on the road to achieving these goals was final approval by the U.S. Bureau of Ocean Energy Management last spring of Vineyard Wind 1, an 800-megawatt wind farm that will become the nation's first utility-scale wind farm. Located just 12 miles south of Martha's Vineyard, the farm is in the heart of what is considered prime wind country for its wind speeds and duration and relatively easy accessibility.

When completed, Vineyard Wind 1 will provide electricity to about 400,000 homes and businesses, according to the company.

Massachusetts has six wind lease areas and three it shares with Rhode Island. Wind farm construction and operations can generate thousands of jobs and billions in economic investment.

The American Wind Energy Association's (now part of American Clean Power) 2020 economic assessment of offshore wind on the East Coast projected that $28 to $57 billion in investments will flow into the U.S. economy between now and 2030, depending on how much power is installed and on supply chain growth in the U.S. The report estimated that offshore wind construction and operations would produce between 19,000 and 45,000 jobs by 2025 and 45,000 to 83,000 jobs by 2030.

State and municipal leaders hope communities on the Cape and Islands and Southeastern Massachusetts communities will gain significantly in job creation and economic investments as this new industry evolves. Although offshore wind has no track record in the U.S. to back up projections and estimates, a mature onshore wind industry, particularly in the Midwest and Southwestern U.S., demonstrates that success is possible and that communities benefited overall.

Unlike coal and gas-fired plants, which must buy fuel to produce electricity, wind companies make lease payments to secure land to build and operate their turbines. That money goes to landowners, and it has helped even out the variability in weather and pricing endemic to farming.

But there are community-wide economic benefits as well. Wind companies pay for labor and materials for construction and hire locally for long-term operations and maintenance jobs. Property taxes, payments negotiated through economic development agreements, and money for road use are also major revenue sources for municipalities, counties and their residents that helped this new industry gain acceptance in America's heartland.

"That money (lease payments) along with the tax money and the salaries and benefits really buoys the local economy in ways that not even a manufacturing plant can do on a single site," Danielson said. "People recognize that."

Wind energy reduced reliance on fossil fuels in Midwest

These economic benefits helped other Midwestern and western states that once were heavily dependent on fossil fuels to generate electricity, adjust their energy portfolio to include wind power. According to the EIA, Texas is the nation's number one producer of crude oil and natural gas. But it is also ranked first in wind, producing 28% of the wind-generated electricity in the U.S.

Indiana is still a coal state — it was third in the country in terms of coal consumption for industry and electrical generation in 2020, and coal-fired plants accounted for 53% of its electrical generation — but wind is starting to make inroads, accounting for 7% of utility-scale power generation in 2020, according to the EIA.

Benton County is the heart of Indiana's wind country with 653 turbines and a capacity of nearly 1,200 megawatts of power already installed. Just 30 miles down the interstate is White County, which now has 702 megawatts of installed wind power, and another 302 megawatts under construction.

The two counties are in the state's wind belt where the wind industry determined that the wind resource at 262 feet — the height of turbines at the time of the first round of wind farm construction, was strong and steady. As technology progressed and turbine heights grew to 330 feet — more areas of the state could tap into the wind and wind farms began cropping up in other counties. In just a decade, the industry grew to the point where Indiana is now ranked 12th in the nation in wind power, according to EIA data.

It's made a difference in Benton and White counties, which are rural and over 90% agricultural, with little manufacturing. Most people find work in relatively low-paying jobs in farming or retail. According to 2020 U.S. Census data, the per capita income in Benton is a little over $25,000. It's $27,000 in White County. A little under 9% of residents live below the poverty line.

With no industrial base to tax, the burden for municipal and county services falls largely on those who pay property tax. Blessed with plentiful land and wind, the counties saw opportunities for additional revenues in a new industry.

"Benton and White counties both had a purposeful intent on attracting the wind farms," said Danielson, who is now American Clean Power Association's central region director for state affairs.

Wind companies paid millions in property taxes to Benton, White counties

Although the areas' wind resource was the big draw for wind companies, the two counties also provided incentives. A Purdue University study, released in September of 2020, profiling the wind industry in Indiana, estimated the cost-per-turbine at $2 to $4 million dollars installed. Wind farms are worth hundreds of millions of dollars and that could mean high property taxes. Part of the incentive package to bring wind companies to Benton and White counties were abatements on property taxes that allowed them to take advantage of depreciation by paying reduced taxes over the first 10 years.

Even with those reduced taxes, the counties collected significant revenues. The Purdue study found that Benton County collected over $20 million in property taxes from wind farms since 2008. White County received over $9.5 million since its first wind farm was built in 2011.

Those taxes grew over time from $136,000 in 2008 in Benton County to $4.3 million in 2018. White County collected nearly $2.3 million in 2018. In Benton County, that translated to nearly $500 per person in 2018 from wind farm property tax payments, the Purdue study estimated.

Both counties used the payments to reduce property taxes, and in Benton county that meant a drop from $2.49 per thousand valuation in 2006 before the wind farms were built, to $1.66 in 2019, the Purdue University study found.

A similar scenario is shaping up in Massachusetts. A 2017 UMass Policy Center report estimated that the first 800-megawatt phase of Vineyard Wind would result in $14.7 to $17 million in state and local taxes and fees in its first year of operation.

Indiana counties and their towns also received millions in payments negotiated under economic development agreements. These allow government entities to capture more revenues beyond taxes and other preexisting regulatory sources.

They can be based on the anticipated burden placed on municipal or county infrastructure, such as roads damaged by the transport of heavy turbine parts. The Purdue study found that a road use agreement by the Fowler Ridge wind farm allowed Benton County to spend $35 million on county road repairs over 10 years.

Job creation spreads the monetary benefits of wind farms

Job creation, compared to lease agreements, is better at distributing wealth. Construction represents the bulk of the jobs in the wind industry. But they come and go, and while there are far fewer operation and maintenance jobs, they pay well, hire locally, and are long-term.

The Purdue study found that Benton County wind farms employed 95 people full-time in operations and maintenance for the nearly 1,000 megawatts of power installed at the time of the study. The U.S. Bureau of Labor Statistics estimated that the median annual wage for wind turbine technicians nationally was $56,230, plus overtime. Ten percent of those surveyed made over $90,000 a year. The Purdue study found similar numbers for Indiana wind technician jobs.

"These were very good-paying jobs for the area," said Russell Hillberry, an associate professor of agricultural economics at Purdue and a co-author of the study. Jobs in farming and retail, the two major employers in the county, tend to pay less and the wind farm jobs come with benefits such as health insurance and retirement plans.

"Maintenance and operations jobs are pretty good jobs, really good for rural Indiana," Hillberry said. "The locals will tell you, you can have a one-income family. It's good enough for that."

The construction phase was brief, nine months to a year, and employed a lot more people than the operations and maintenance phase, he said. Since these were high-skill positions, these workers tended to come from outside the county.

Still, other aspects of the regional economy benefited from construction including worker housing, restaurants and road work. That led locals to call the construction phase a bonanza, Hillberry said.

When construction jobs went away, the long-term jobs in operations and maintenance typically went to locals, he said.

"They need a local labor force. You have to maintain these for 30 years and you have to find someone who wants to live in rural Indiana," Hillberry said.

Developing a U.S. supply chain for offshore wind industry

Onshore wind has had decades to build up its supply chain and the U.S. Dept. of Energy says that most wind energy components are made in America, with 500 companies spread across 43 states. That's not been the same story for offshore wind.

Brendan Casey, research and analytics manager for American Clean Power, said the cost and logistics of transporting the large components such as towers, blades and the turbine over roadways made local manufacturing more attractive.

In Newton, Iowa, a Rhode Island-based company saw an opportunity after a Maytag plant shut down in 2007, leaving 1,800 workers without jobs. In 2008, TPI Composites reopened the plant to make wind turbine blades with 550 employees. A second company opened up a plant nearby to make the towers.

"This industry (clean energy) has repurposed (buildings) and found a way to bring some of those communities back," Danielson said, adding the supply side will grow over time.

Offshore wind is not universally welcome on Cape Cod - or the Midwest

But, as Massachusetts and Cape Cod residents know well from the failed Cape Wind project and from the long permitting process that Vineyard Wind experienced, the massive wind turbines and towers used to generate electricity are not universally welcomed. Despite advocacy by politicians, environmentalists, energy experts, the industry remains on shaky ground, including in places such as Indiana where it has become an established presence with known benefits.

Issues of noise, shadow flicker from turning blades, habitat and wildlife impacts, and inequities in who actually benefits from lease payments, along with some anti-climate change politicking, now threaten the explosive growth initially experienced by the wind industry in Indiana.

Thirty-four of 92 Indiana counties have passed regulations that are either outright prohibitions on wind and solar farms or are so restrictive that they act as prohibitions. In some cases, these county actions occurred at the last minute after renewable energy developers had already spent millions on site studies, work, and permitting. That led to uncertainty in the wind farm industry and has stifled growth both in wind farms and potentially solar farms.

A bill that some Indiana state legislators and wind power proponents hoped would stabilize the siting process by overriding county control with state standards, failed to pass in the Indiana Legislature last spring. The battle ostensibly centered on concerns that the bill violated Indiana's cherished tradition of local control. Ironically, that same legislature passed a bill recently that took away county control by prohibiting bans on natural gas in new construction.

"An enormous amount of anti-solar, anti-wind, NIMBY crowds have popped up over the last few years and reached critical mass," said Kerwin Olson, executive director for the Citizens Action Coalition, a nonprofit organized around ratepayer protection during the energy crisis in 1974. The coalitions advocates for affordable health care and a clean environment at the state and community levels.

"I think the wind industry is looking for a level of certainty and they had companies invest and then walk away because of local opposition," Olson said. "They are hesitant to invest because they lack that certainty."

Advanced Energy Economy, a national association of businesses advocating for clean energy and electrification of transportation, estimates that clean energy, storage, and efficiency grew by an annual average of 2% in Indiana between 2017 and 2019 and employs over 83,000 people, four times as many as auto manufacturing. The group projected a 6% growth in wind jobs in 2020 and 6% growth in advanced energy jobs in 2021.

Power from retired coal-fired plants replaced by natural gas, wind

Putting aside the obvious drive to reduce emissions, legislators and utility companies in Indiana have started to realize that there is a need to replace coal-fired plants that are being retired as cheaper sources of power such as natural gas and renewables come online. This year the Northern Indiana Public Service Company (NIPSCO), which is the largest natural gas distribution company, and the second-largest electric distribution company in the state with nearly 470,000 electric customers, brought two wind farms in Benton and White counties online.

NIPSCO's analysis found that moving to renewables would save customers $4 billion over 30 years. Three years ago, the company committed to retire all its coal-fired electrical generation plants by 2028 and replace them with wind, solar, natural gas and hydroelectric power.

Even with that economic reality, the future is suddenly not as bright as it once was for wind power mainly due to the lack of stability in getting site permits for facilities, which is causing wind companies to look elsewhere.

"All signs are pointing to the wind industry not looking to Indiana anymore," Olson said.

"The real challenge for communities is that every piece of red tape you put in front of these projects means the costs go higher and could eventually lead to decisions to go elsewhere," Danielson said.

Contact Doug Fraser at Follow him on Twitter: @dougfrasercct.

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