Oklahoma wind farm construction continues as state ranks 4th in U.S.
Oklahoma didn’t complete any wind farms in the second quarter, but the state has more than 1,100 megawatts under construction so far this year, a national wind trade group said Tuesday in its latest market report.
The American Wind Energy Association said just 310 megawatts of wind capacity was installed across the country in the second quarter. That came after 520 megawatts were added in the first three months of 2016.
Oklahoma has 5,453 megawatts of wind capacity installed, after adding 270 megawatts in the first quarter. The state continued to rank fourth in the nation for installed wind capacity, following Texas, Iowa and California. Nationally, more than 49,000 turbines are installed, representing 74,821 megawatts of capacity.
The wind association said 12,462 megawatts of wind capacity are under construction across the country, with Texas (5,253 megawatts), Kansas (1,259 megawatts) and Oklahoma (1,130 megawatts) leading the way.
Oklahoma is expected to pull ahead of California for total wind capacity by the end of the year. California, an early leader in wind development, has 5,662 megawatts of installed capacity but just 131 megawatts under construction. Kansas is currently No. 6 in the state rankings, just behind Illinois.
“We’re looking to see Oklahoma and Kansas both make jumps in the rankings in terms of overall installed capacity by the end of this year,” said Hannah Hunt, senior analyst for industry data at the wind association.
Project pipeline
Enel Green Power North America Inc. is among the developers active in both Kansas and Oklahoma. The company has eight wind farms in Oklahoma totaling 958 megawatts, with another 173 megawatts under construction. Enel said its investment in the state exceeds $1.8 billion.
“This growth is made possible, in large part, as a result of a strategic policy framework that has helped position Oklahoma as an attractive place to invest,” said Jack Thirolf, senior director of regulatory affairs at Enel Green
Power North America.
“As a global energy company, our investment decisions are highly competitive and projects are evaluated against opportunities throughout the United States and around the world. When reviewing future growth opportunities in this highly competitive marketplace, EGPNA remains focused on investing in projects that are not only located in regions with great energy resources, but also areas that have a solid and stable regulatory environment.”
Kansas Gov. Sam Brownback, a Republican, has been aggressively targeting wind development. His office worked with Enel on the recent announcement of the 400-megawatt Cimarron Bend wind farm in Kansas. Electricity from the project will go to Google Inc. and the Kansas City Board of Public Utilities.
At 778 megawatts, Kansas led the nation in new wind construction announcements in the second quarter. It was followed by Iowa (551 megawatts) and North Dakota (400 megawatts).
Meanwhile, the wind association said six projects were under construction in Oklahoma in the second quarter: Bluestem in Beaver County; Drift Sand in Grady County; Frontier in Kay County; Grant Plains in Grant County; and Great Western in Woodward and Ellis counties; and Rush Springs Wind Energy Center in Stephens and Grady counties.
Oklahoma incentives
The growth of wind farms in Oklahoma comes as lawmakers and industry representatives continue to debate the value of state incentives for wind development. Legislative efforts to further curtail Oklahoma’s incentives for wind were unsuccessful in this year’s session. But a new state tax on electricity produced from wind is likely to be proposed in 2017.
A wind excise tax was among the recommendations by the Windfall Coalition, a group formed earlier this year by Continental Resources Inc. founder and CEO Harold Hamm to call attention to the growth of wind incentives amid the state’s revenue shortfall.
Complicating the Oklahoma tax policy debate is the construction of the Plains and Eastern Clean Line, a high-voltage, direct-current transmission line that will ship electricity directly from renewable energy projects in the Oklahoma and Texas panhandles to the southeastern United States. The $2.5 billion, privately funded project is expected to be in operation by mid-2020.
The Plains and Eastern Clean Line will take 4,000 megawatts of wind or solar energy to customers in Arkansas and the southeast. If the renewable projects are built in Oklahoma, they will be eligible for the state’s zero-emissions tax credit. The tax credit expires at the end of 2020, but qualifying projects can continue to take the credit for another 10 years.
Because of the growth in wind generation in Oklahoma, the zero-emissions tax credit cost the state more than $101 million from 2012 to 2014, including $56 million in tax year 2014. Corporate tax returns are still being processed for 2015, although estimates put the refundable tax credit at $60 million last year. The credit is one of a dozen picked for further study by Oklahoma’s Incentive Evaluation Commission.
Federal tax credit
Nationally, the wind association said demand remains strong from both corporate purchasers and utilities. Much of the uncertainty over future growth has been taken away by the renewal and phase-down of the federal production tax credit. Its renewal was paired with a lifting of the crude oil export ban in an endof-year deal in Congress.
“There’s never been a better time to buy American wind energy,” Tom Kiernan, the association’s CEO, said in a news release. “Smart utilities and other customers are locking in prices at record lows by starting construction this year to qualify for the full-value PTC. The industry is thriving, and we appreciate support from champions in Congress for a multiyear extension of the PTC.”
The federal production tax credit is 2.3 cents per kilowatt-hour of electricity generated from wind for up to 10 years. Under the phase-down, the credit drops to 80 percent of its value in 2017, 60 percent in 2018 and 40 percent in 2019.
The Congressional Budget Office estimated the renewal and phasedown of the production tax credit would cost $14.5 billion from 2016 to 2025. The office doesn’t do estimates beyond a 10-year window.