Sunset of Wind Tax Credit Would Kill Jobs in Illinois

As widely reported this week, the much-debated payroll tax bill that Congressional leaders agreed on this week did not include the wind energy production tax credit (PTC), and two articles in Chicago media outline what a loss of the PTC would mean for Illinois. According to the Chicago Tribune:

The wind power industry is predicting massive layoffs and stalled or abandoned projects after a deal to renew a tax credit failed Thursday in Washington. 

The move is expected to have major ramifications in states such as Illinois, where 13,892 megawatts of wind projects -- enough to power 3.3 million homes per year -- wait to be connected to the electric grid. Many of those projects will be abandoned or significantly delayed without federal subsidies. 

The state is home to more than 150 companies that support the wind industry. At least 67 of those companies make turbines or components for wind farms. Chicago is the U.S. headquarters to more than a dozen major wind companies who wanted to take advantage of powerful Midwestern winds.  

Wind proponents tried to tuck the tax credit extension, which provides an income tax credit of 2.2 cents/kilowatt-hour for the production of electricity from wind turbines, in legislation aimed at extending payroll tax cuts. But congressional leaders did not include it in that bill.

There is still a possibility the wind power tax credits could come through as a stand-alone bill or tied to other legislation. But Washington insiders say that is unlikely to happen before the election in November.

By then, the wind industry says it will be too late to avoid massive layoffs and project delays since wind projects slated for 2013 should already be far along. [...]

In order for developers to receive the expiring tax credit, they must have turbines up and running before year's end. As a result, 2012 is shaping up to be a banner year as developers race to complete projects.  

But few such projects are slated for 2013. Developers say they either accelerated projects to be completed this year or pulled back because of uncertainty over the tax credit. [...]

The tax credit, which debuted in 1992, has a history of one- to two-year extensions. A bill tied to the Recovery Act in 2009 extended the program until the end of 2012.

Kevin Borgia, who heads up the Illinois Wind Energy Coalition, said several years of stability for the tax credit helped drive down costs for wind generation. Without the tax credit, he predicts the market for wind power generation will grind to a halt. [...]

Terry Royer, CEO of Winergy in Elgin, which manufactures gearboxes for wind turbines, said the company already plans layoffs, but declined to provide specific numbers of how many employees would lose their jobs. "We solely exist to support the wind industry. Ninety percent of our market is the U.S. market," he said.

Immediately at risk in Illinois are 15 wind projects (3,292 MW) that already have county-level permits. In general since developers don't bother going through the county permitting process unless they are serious about a project, the number of permitted megawatts is usually seen as a good indicator of near-term growth.

Among those projects are a 200 MW wind farm slated for Boone County and a 437 MW project that straddles Lee, Whiteside and Bureau counties. Both were slated for construction in the next 12 to 24 months, said Matt Boss, a project manager with Mainstream Renewable Power, but now would be delayed, Boss said. 

Meanwhile, an article in Crain's Chicago Business took a look at a what the credit's expiration would mean for other Illinois wind projects and manufacturing jobs:

“Unless your project can be built in 2012—and the window is closing on that now—no more projects will go forward until the tax credit is extended,” says Stefan Noe, president of Chicago-based Midwest Energy LLC, which has invested more than $1 billion in eight wind farms generating almost 730 megawatts combined in Illinois, Wisconsin and Nebraska.

 After spending $4 million to win permits for two more developments in Illinois, he's at a standstill because it takes nine to 12 months after ordering turbines to get them up and running. “Nobody is going to place any turbine orders and take the risk that it won't be extended,” Mr. Noe says.

In addition to dozens of component makers and structural steel suppliers in Illinois, the Windy City is the epicenter of white-collar wind power jobs as headquarters to 13 large wind farm developers and turbine manufacturers.

Illinois was second only to California in new wind power installed last year and now ranks fourth in wind-generated electricity and fifth in wind farms under construction this year, according to the Washington-based wind power association.[...]

“Job losses are happening right now,” says John Purcell, vice president of wind energy at Lisle-based Leeco Steel LLC, which makes steel plates for wind turbine towers. By August, layoffs will start in earnest for a third of Leeco's 125 employees engaged in wind projects if the tax credit isn't extended by then. “Ninety percent of our business will go away. Our investment is all at risk because of the uncertainty.”

The prospects for Congress extending the tax credit, which would cost the federal government upward of $1.4 billion a year, are dicey at best. Late last year, the industry was pushing for a four-year extension. Now it's begging for just 12 more months, and it's unlikely to get that, at least not in time to forestall layoffs.

 U.S. Rep. Robert Dold, R-Kenilworth, organized a letter from the Illinois delegation last week urging congressional leaders to extend the tax credit now. “I want to give them a green light to continue at least another year,” he says. “This will help jobs and the economy.”

Wind Turbines Reduce Property Taxes for Bureau Co Residents

Local governments and the wind industry have long-known that wind development can reduce property taxes for residents near the projects, and an article in the LaSalle News Tribune outlines just how residents of one Bureau County town are going to benefit:

Thanks to the dozens of wind turbines that have gone up around [the Village of] Ohio, the grade school and high school are looking forward to bringing their tax rates down.

Ohio’s tax rates have been high. Last year the combined rate for the grade and high school districts was 7.6806, but in anticipation of receiving more wind farm tax dollars next year, that’s going to change.

“This year the proposed (combined) rate will be approximately 5.9,” said Sharon Sweger, superintendent of both districts

The rate at the grade school will drop from 3.6486 to about 3, while the rate at the high school will fall from 4.032 to about 2.9, Sweger said.

“That will make our rate similar to surrounding districts,” Sweger said.

Big Sky has substantially increased property values around Ohio, Sweger said, almost doubling the districts’ equalized assessed valuation.

The schools have been waiting for this a long time and had long planned to lower their tax rates once those new tax dollars started coming in.

“Both boards were committed,” Sweger said.

As the districts’ local income grows, they will lose some state aid, she said. However, since local dollars have become more dependable in this economy, that’s not necessarily a bad thing.

“We can count on local money coming in. The state hasn’t been as reliable,” Sweger said.

The Ohio districts received a very small payment this year from some of the turbines for one month, but they should see their first big sum of wind farm money this summer, Sweger said.

Both boards held hearings this week before approving their final levy extensions. At the high school, the board approved the levy extension of $1,059,775, up from $619,959 last year. The grade school board approved its levy extension at $1,062,411, up from $542,580 last year.

“Trying to capture that wind turbine money, obviously those numbers went up,” Sweger said.

Invenergy's Grand Ridge Solar Plant Begins Construction

In another example of the state's Renewable Energy Standard creating jobs, Chicago-based Invenergy begun construction on the state's largest solar energy project this week, a 20-megawatt project adjacent to their existing Grand Ridge wind farm in LaSalle County. From an article in the Times of Ottawa:

Construction of the 140-acre solar farm at the southeast corner of East 21st Road and North 15th Road in Otter Creek Township just east of Streator is scheduled to begin Monday.

Joel Schroeder, project director for Invenergy, said union contractor White Construction of Clinton, Ind., is expected to hire more than 100 workers for the job.

The project is one of a handful of new wind and solar projects that are being built in Illinois this year as a result of a competitive bidding process conducted by the Illinois Power Agency last year. Several companies won long-term contracts to supply renewables to the state's utilities in the IPA procurement, including Invenergy's bid for the Grand Ridge solar plant.

We can expect more similar projects, jobs and economic growth in the state if the IPA agrees to hold another competitive, long-term solicitation for renewable energy in the future. From the Times piece:

Streator City Manager Paul Nicholson said a certificate and application as well as fees to utilize the city's enterprise zone have been completed. He expects the first enterprise zone payment of $33,333 to be in the city's possession by Friday or Monday.

The project is expected to bring in an estimated $336,900 in tax revenue per year, with Streator Township High School and Allen-Otter Creek School districts expected to benefit the most.

Streator stands to take in an extra $2.2 million during the next two decades, while Ransom's grade school could see more than $1 million during the 20-year life expectancy of the project.

Schroeder anticipates construction to be finished and the solar farm to be operational by next summer.

He does not expect traffic to be a concern for residents in Otter Creek Township near construction.

"We worked traffic out with the township's road commissioner and construction traffic will be limited to 21st Road coming from the north or the south," Schroeder told The Times.

The solar farm will replace 160 acres of farmland producing corn and soybeans, amounting to .025 percent of the 643,291 acres of total tillable cropland in La Salle County, according to a 2007 census conducted by the National Agricultural Statistical Services.

The project is part of a 20-year power purchase agreement with ComEd.

ComEd will utilize the solar energy-renewable certificates to meet a state policy requiring 0.5 percent of its renewable portfolio be provided by solar energy. State law requires 7 percent of all electricity sold by an electric utility come from renewable resources.

The solar farm is expected to produce 200 megawatt hours per acre, estimated to power about 2,900 average homes annually. In comparison, wind turbines produce 13,500 megawatt hours per acre.

La Salle County, Otter Creek Township, Otter Creek Township Roads and Illinois Valley Community College will benefit as well from tax revenue.

Wind Farm Will Reduce Property Taxes for One Illinois Town

Citizens of one Bureau County town will soon see their property taxes decrease thanks to the massive infusion of new tax revenue from a wind farm that was built in the area last year.

These millions in new revenue are being generated by Edison Mission Group's Big Sky Wind Farm which was built near Ohio Illinois last year, and comes at a time of decreasing tax revenues for towns across the state. Under state law, around 70% of this new money goes directly to local schools. This means that means this wind farm is helping to fund education in one corner of rural Illinois, and comes at a time when the state is late in making its payments to schools. In this troubling environment, any source of new local revenue is a blessing.

A letter written from the town's school districts was printed in the Walnut Leader, and explains the benefit the project has brought to local education:

The turbines are running, which means the Ohio community will benefit from the tax revenue generated. This coming summer, when you receive your next tax bill you will see a much lower tax rate from both Ohio High School and Ohio Grade School.
 
It is the intent of both boards to capture the increased revenue from the turbines while lowering the school tax rate for the community as promised. The levy being proposed by both districts will be based on an increased Equalized Assessed Valuation (EAV) which includes the turbines. A larger EAV means we can lower the rate each household will pay.
 
At this time the EAV is an estimated amount given to us by Bureau County and Lee County Assessors. Since this is only an estimate we cannot propose an exact rate but the boards believe the combined rate will be in the neighborhood of around 5.9% putting our rate within the range of the other schools in our area.
 
In comparison, last year's combined rate was 7.6806%. In capturing the money from the turbines we will be exceeding last year's extension, which will require a board tax levy hearing. The purpose of the hearing is to explain why we are requesting the additional income and receive comments from the community. This meeting must take place to capture the turbine money.
 
Both boards are proposing a decreased tax rate however; the announcement that must be printed in the paper is titled "Notice of Proposed Tax Increase for Ohio Community Grade School". The same type of notice will be printed for the high school. This does not mean your taxes will increase. It is our intent to lower the tax rate.
 
We are not proposing an increase in the tax rate, just an increase in the extension we collect from the turbines. Ohio schools appreciate the support of the community and through this levy cycle will be able to lower taxes in a time when the economy is bad an our community can use the money.

E.ON Touts Economic Benefits of Pioneer Trail Project

With E.ON's Pioneer Trail project now partially commissioned, the company is touting the economic benefits the project is bringing to the area. From an article in the Paxton Record:

Whenever E.On builds a wind farm, Trenholm said, “we really try to provide an economic shot in the arm to the local community as the project lives throughout its life.”

In addition to creating 200-plus temporary construction jobs, the wind farm is expected to create 10-12 permanent positions once built. Jobs will be created by E.On and GE to maintain the turbines for their 25-year life spans, Trenholm said.

Also, over the next 25 years, Trenholm said, the wind farm will generate $29 million in property tax revenue for local taxing bodies, including $1.2 million annually to the PBL school district; and distribute more than $50 million in lease and royalty payments to landowners.

Once construction is complete, E.On will have also improved more than 31 miles of public roads.

State Sen. Shane Cultra, R-Onarga, said the wind farm is “good for the taxpayers; it’s good for the schools; it’s good for the landowners; and it’s good for the country, because it’s renewable energy.”

Paxton Mayor Bill Ingold Ingold said that when any business plans to locate to the City of Paxton, he uses the “mental yardstick” of “is this mutually beneficial?”  to both the city and the applicant before he decides whether he is in favor of a project.

And Ingold said he “can’t think of anything more mutually beneficial” to both his city and E.On Climate & Renewables than the Pioneer Trail Wind Farm.

“I will admit the money is very important to Paxton, to PBL schools, to the landowners, to the farmers, to the townships,” Ingold said. “It’s also very, very satisfying to know that we are now part of a solution — a solution that proves we are not relying on fossil fuels to heat our houses in the winter and to cool them in the summer, but that we are supplying a source of sustainable and renewable energy that will keep rates affordable while at the same time diversifying the power supply.”

Power agreement
The energy produced from the wind farm will benefit rural electric cooperative members statewide, according to John Freitag, vice president of operations for the Association of Illinois Electric Cooperatives.

E.On this summer agreed to sell some of the renewable energy produced by the wind farm to a consortium of 21 electric-distribution cooperatives in Illinois. Paxton-based Eastern Illini Electric Cooperative’s power supplier — Prairie Power Inc. — teamed up with the Southern Illinois Power Cooperative and the Wabash Valley Power Association in agreeing to buy up to 40 megawatts of energy per year over the next 18 years.

The co-ops and their 540,000 members in Illinois should start receiving renewable energy by the end of 2012.

“This is literally a statewide project for us, from the co-op perspective,” Freitag said. “Energy from this wind farm will serve members from in the north up in Henry County, up by the Quad Cities, all the way down to Metropolis in Southern Illinois, so this is a big deal for us.”

E.On makes donations
E.On also made two community donations during Thursday’s event.

The first was a check for $10,000 to the PBL school district.

The second was a $5,000 check to the Save Our Pool Committee, a group of citizens trying to raise funds for the repair of Paxton’s swimming pool. SOP members Kitty Anderson, Gary Popel and Nancy Taylor accepted the check.

Anderson thanked E.On for its “generous contribution” and lead developer Brad King, specifically, for coming “to my rescue when I needed them.”

Anderson also thanked the landowners involved in the project and the Paxton community itself “for being so willing to give their funds during a time when it’s not easy to give.”

The company is also touting the speed with which they completed the project's construction:

In some countries, putting a wind farm into operation — even partially — can take twice as long as it took E.On Climate & Renewables to start generating electricity at the Pioneer Trail Wind Farm near Paxton.

A mere four months from the time construction began this summer is all it took to turn on the first of the wind farm’s 94 turbines.

“I can say for E.On that this is a record,” Mike Winkel, chief executive officer for Germany-based E.On Climate & Renewables, told a crowd of about 100 people at a ceremony Thursday marking the energization of the first turbines.

“I’m afraid we may have set a standard that we can’t live up to in the future,” joked Steve Trenholm, CEO of the company’s North America division, based in Chicago. “But we’re certainly going to try.”
Trenholm said the wind farm’s construction is seven months ahead of schedule.

E.On broke ground on June 21, when its construction contractor — Indiana-based White Construction — began building access roads and foundations for the 400-foot-tall towers. Turbine components arrived in mid-August.

As of Monday, 75 of the wind farm’s 94 turbines had already been built, including 11 that began generating power to conclude Thursday’s event and nine more that were put online Friday.

“To have the first turbines going into service this fast is just amazing,” Trenholm said. “We have never done a project this fast. I’m almost at a loss of words.”

The 150-megawatt wind farm, the first in Ford County, is expected to be fully placed into service by mid-2012, providing enough electricity to power about 45,000 homes, according to E.On officials.

Wind Farm a Tourist Attraction for Streator and LaSalle County

From an article in the Times of Ottawa:

A busload of mechanical engineering students looked toward the sky in amazement.

For many on the tour from Purdue University Calumet of Hammond, Ind., this was the first time they had seen a wind turbine, much less stood directly underneath one.

The students comprised just one of the many groups that utilize the private business tours conducted at Invenergy's Grand Ridge Wind Farm. The tours are geared toward students and public officials.

Streator City Council members and Tourism Director Ed Brozak, at past public meetings, said the wind farm is becoming not only a source of energy but also one of the leading suppliers of tourists to the area.

Streator Tourism promotes the wind tours on its website and in printed promotional material.

"People are coming from all over to see them," Brozak said. "It's becoming a popular attraction. We field calls every week asking about them."

With that, Brozak anticipates the city's restaurants, convenience stores, gas stations or hotels could benefit.

"Anytime we can bring people from out of town here, it's a positive for Streator," Brozak said. "They help our local businesses and contribute sales tax revenue."

Neighboring communities also could see a benefit from tourists. The Marseilles Chamber of Commerce said it has not received any reports from businesses benefiting from the tours.

Representatives from Invenergy said the wind turbines are of interest to an array of people, but most of them more casual, checking out the turbines themselves or stopping in to ask questions.

Organized tours are only available by appointment and not available to the general public, since the sites are working power plants.

"Some people stop by spur of the moment after noticing the turbines while driving on Interstate 80, with others making appointments for organized tours to see firsthand how we harvest clean energy," said Alissa Krinsky, spokeswoman for Invenergy.

The group from Purdue visited the wind farm as part of a lesson plan.

Chenn Zhou, mechanical engineering instructor, said her class has worked on turbine simulators and will build a model turbine.

"We came to Illinois to see the real thing," Zhou said.

Her class learned each turbine could be monitored or shut off from any one of the turbines.

Brozak is hoping to work with the wind companies in the future to continue these tours.

"We will help facilitate them any way we can," Brozak said. "It's a draw to the area."

Wind Energy Will Bring $4.1 Billion to Illinois' Economy, Says ISU Study

Illinois will see more than $4.1 billion in economic activity over the coming decades thanks to the 2400 megawatts of wind generation currently operating in Illinois, says a recent study from the Center for Renewable Energy at Illinois State University (PDF).

Released at the recent "Advancing Wind Power in Illinois" Conference in Chicago, the new analysis is the third version of a similar study that has been updated twice since 2009 as wind development has exploded in Illinois.

According to the study, Illinois' existing 2,422 megawatts of wind generation:

• Created approximately 13,323 full-time equivalent jobs during construction periods with a total payroll of over $762 million
• Supports approximately 598 permanent jobs in rural Illinois areas with a total annual payroll of over $35 million
• Supports local economies by generating $22 million in annual property taxes
• Generates $10 million annually in extra income for Illinois landowners who lease their land to the wind farm developer
• Will generate a total economic benefit of $4.1 billion over the life of the projects

The study uses the Department of Energy's Jobs and Economic Development Impact (JEDI) model to estimate the economic activity, direct and indirect, that comes when wind farms are built in Illinois. Direct impacts include temporary construction and transportation jobs to erect the turbines, permanent jobs to operate the projects; indirect jobs include manufacturing to build the turbines; and induced impacts occur when workers spend money in communities where projects are built. The study also examines the new property taxes local governments receive from wind development and the lease payments farmers receive from project operators.

The study is an important resource for the wind industry and policymakers in Illinois, as it highlights a bright spot in the state's otherwise dismal economy. From the study:

It is very important that stakeholders and decision makers are educated about the economic development impact wind energy has brought to the state and local communities so that informed decisions regarding future adoption of wind energy projects can be made. By analyzing the impacts of Illinois’ 17 largest wind farms, this report supplies interested parties with information concerning the economic development benefits of wind energy. It can also be used as a resource by communities to identify the economic development opportunities a wind project may create.

A look at how the numbers break down between direct, indirect and induced impacts:

The study also gives a solid overview of the types of local jobs that are created by wind development. Because developers also often rely on local sources for concrete, sand, rebar, aggregate and other construction supplies, these professions include many industries hurt by the state's current economic downturn, such as:

• Construction Laborers
• General, Road, Concrete and Construction Contractors
• Electricians and Power Engineers
• Structural and Civil Engineers
• Excavators and Earthmovers
• Truck Drivers
• Operations & Maintenance Staff
• Administrative Staff

In addition to the info on economic development, the study also provides a wealth of general information about wind power in Illinois. As such, it's highly-recommended for anyone looking to understand why this state has seen such growth in recent years, and why policymakers need to ensure electric market structures are conducive to an expansion of wind energy sources in this state.

Kudos to Dr. David Loomis, Janet Niezgoda and the entire team at the Center for Renewable Energy on another great update to this important study.