October 17, 2011

How blue state policy is greening up red states too

Increasingly, red states are also benefitting from the development of local renewable energy to meet renewable energy standards (RES) in blue states.

A legislative task force in very red state South Dakota recently proposed changes favoring wind farm construction (tip from regular reader Bob Wallace). Coal rich and empty, South Dakota has no RES requiring renewable energy, and little local demand for new energy, but the task force was concerned that much lower taxes on wind farms to encourage renewable energy development in neighboring windy states led to South Dakota being out-competed for wind farm development.

Minnesota has a 25 percent by 2025 RES, and Iowa now gets 20 percent of its electricity from wind, due to an early and ambitious RES when they had Democratic legislatures. Both are now fast growing wind powers. South Dakota recently added a merely "aspirational" goal of 15 percent renewable.

"South Dakota's construction taxes are substantially higher than those charged by neighboring states...Construction taxes play an important role in determining the cost of a wind project, and South Dakota's contractor's excise tax puts it at a disadvantage to other states that do not have the tax," the task force worried.

The difference is considerable. South Dakota tax on a $360 million, 200 MW wind project would be $12.9 million - but only $2.8 million in Minnesota or $3.4 million in Iowa.

Last year red state Idaho helped California meet its 2010 mandate, with hastily added wind power right before the deadline. Idaho has no RES of its own, but it has the potential for big sales, with some of the best wind resources in the nation.

Now it is red-state Wyoming with its abundant wind resources that is marketing itself as the blue state's bff.

"Wyoming has an excellent opportunity to provide low-cost renewable energy to help it hit that 33-percent RPS," Loyd Drain, executive director of Wyoming Infrastructure Authority told Energy Prospects West.

WIA is a bit late. As we've covered at Clean Technica, California's renewable energy standards have long since generated enough offers to supply 100 percent of its electricity from renewables by 2020, far more than the 33 percent renewable energy it mandates.

But (assuming the California legislature retains its Democratic majority) there will no doubt also be a higher RES by 2025, so we'll need more clean power even after 2020.

And what Wyoming offers is a match made in heaven. California's own supply of solar projects, and its wind farms, both peak in summer. Wyoming wind farms, with average capacity factors in the mid-40s, are the perfect foil, as they are winter-peaking resources, according to Drain.

The Western Electricity Coordinating Council's 10-year Regional Transmission Plan for the Western Interconnection is banking on the marriage. The Governor's Office made a public pitch this month stressing the cost-effectiveness of their wind power.

"WECC's analysis indicates that if California met just 20 percent of its demand with deliveries of high-capacity wind energy from Wyoming instead, California ratepayers could save on the order of $600 million every year, translating to billions of dollars in savings for those customers over time," said a press release issued by the WIA and the Governor's Office. 


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