THOUGH MINNESOTA IS challenging its dominance, Iowa is currently the Midwest region's wind champion. Iowa hosts 471 gigawatts (GW) of wind-power-generating capacity, the third largest amount of installed capacity in the U.S. after California and Texas.
State legislators have grand plans for wind power and other renewable energy resources such as biomass and ethanol. Says Senator Tom Harkin, “Wind power is a new ‘cash crop’ for farmers and rural communities, and we know it holds great potential for Iowa.”
First in the state
Farming the wind is nothing new to George Braaksma Jr. of Sibley, IA. More than a decade ago, his was the first Iowa farm to hook commercial wind power up to a utility company's electrical grid. Braaksma liked the idea of making some extra income with clean energy. But he found it wasn't as easy as just putting up some wind turbines and collecting a check.
“Not long after we put up our turbines, a government program was started to make new wind developments tax exempt for a trial period,” Braaksma says. “That was good news for wind power, but our turbines didn't qualify because they'd been built prior to the program. My associates and I spent a lot of money and several trips to Des Moines to try and get our turbines grandfathered in, but we weren't successful. The tax assessor claimed we owed $1,700 a year for each of the five turbines. Meanwhile, wind turbine technology was improving rapidly, and we realized it would be more practical to tear down the old turbines and build new, more efficient ones that did qualify for tax relief.”
In addition to government tax relief, farmers are increasingly seeking innovative business arrangements to limit tax exposure on wind farms. Braaksma, for example, sold 330 acres of farmland to Northern Alternative Energy Company of Wayzata, MN. He doesn't own the land or the turbines except as a shareholder of the company. He receives payments based on energy sold to Alliant Energy Company and continues to farm the land around the turbines on a prearranged cash rent basis. “It's just another way to organize the business,” Braaksma says. “Wind farming is a business like anything else.”
Two 600-kilowatt (kW) Micron turbines were built on the site in 1997. Then in the fall of 2003, two new super-size Gamesa G80 wind turbines were added. The largest wind turbine in North America, each G80 produces 1.8 megawatts (MW) of electricity, which is enough power to supply the electricity needs of about 1,450 average-sized Iowa homes.
John Jaunich, president and CEO of Northern Alternative, says going to bigger turbines is key to profitability. “Larger turbines produce more production with less land and maintenance,” he explains. “It's an economy of scale. One turbine takes the place of three.” The company has similar commercial wind farms in Wyoming and Iowa and, through a sister company called Navitas, recently built the first commercial wind farm in Illinois. More than 60 wind turbines are now visible from I-30, near Compton, IL.
Business of wind
“Wind is good for the pocketbook and the environment,” says Chuck Goodman, a retired farmer from Alta, IA. Goodman has three General Electric turbines on his land that produce power for MidAmerican Energy. These turbines take up about 1.3 acres of land, including an access road. Goodman receives $750/year for each turbine, plus 2% of the revenue, for a total income of about $6,000/year.
Because every location has different generation potential and electricity demands, wind development companies don't like to make general statements about how much money a farmer can earn from a wind farm. However, farmers using wind turbines as an income source report a wide range of money-making scenarios. Wind developers may offer landowners an annual lease, a royalty on power produced, a single up-front payment, or a share of revenues from a wind project.
Royalties appear to be in the range of $2,000/year for each turbine. A typical income from leasing one utility-scale turbine is said to average $1,500/year. This translates into about $40/acre or $10,000/year on a 250-acre farm. In an area that size, about 10 acres may be lost from crop production as a result of access roads and the towers. At a wind farm near Lake Benton, MN, some landowners report annual payments of up to $5,000 per turbine, supplementing their annual farm income by $70/acre.
Wind energy has gone from a quirky alternative to big business. Multinational giant General Electric is one of the companies hoping to cash in. With competitive economics, high reliability and environmental benefits, wind power is becoming increasingly popular and more widely recognized as a viable energy solution throughout the energy industry.
The turbines being installed by GE are among the most widely used models on the market. More than 2,000 GE 1.5-MW turbines are already deployed at sites across North America, Asia and Europe. Their towers stand more than 200 ft. tall, and each of the three spinning blades is 112 ft. in length. They are mounted on 207-ft. towers.
Out of all the states in the North Central Region, Minnesota is the most ambitious when in comes to renewable energy. Although an impressive 360 MW of power have already been installed, the state has another 2,065 MW planned over the next few years.
Minnesota established its first serious wind project 10 years ago in a farming region known as Buffalo Ridge. This strip of high ground near Pipestone, MN, is used primarily to grow corn and soybeans. The 73 Kenetech KVS-33 turbines that comprise the 25-MW Buffalo Ridge Wind Power Facility were soon joined by the 107.25-MW Lake Benton I project. Owned by FPL Energy, it uses 143 GE 750-kW turbines and provides 327,000 MW/year to Xcel Energy.
Roger Kas of Woodstock, MN, farms beans, corn and hay and raises more than 200 head of cattle on his Buffalo Ridge farm. Kas says he has doubled his income via a land-lease agreement with a developer for 17 wind turbines on his land.
“It only takes about seven or eight acres out of the land. I can farm all the rest of it and I get my percentage out of the production,” Kas says. “You are not going to get rich off of it, but with a little wind energy income and a little farm income, a guy can make a living.”
Due to the strong winds in the area, developers keep adding more turbines. The 104-MW Lake Benton II Wind Power Facility, for instance, was built using GE 750-kW machines. Local farmers are positive about the advantages of wind.
“As a farmer with tillable land, you wonder if you will be able to farm close to the towers,” says Henning Hansen, who owns land used by the Lake Benton II wind farm. “The land around the towers that is not farmed is actually a very small amount.”
Hansen was paid $450/acre for wind rights, and received $1,200/acre for the easement on land needed for roads and towers. The wind developer also paid him $5,000 for each tower that it constructed on his farm.
Improved efficiency on hold
In 1979, wind cost about $0.40/kW. According to Xcel Energy, the current cost for wind energy from its GE wind turbines at Lake Benton, MN, is $0.04/kW. That's good enough to be considered competitive with more traditional generators such as natural gas turbines.
The giant Gamesa turbines that tower over Braaksma's cornfield in Iowa promise even greater efficiency. However, the main driver of wind projects at present is funding from government programs. The Department of Energy's Wind Powering of America Initiative is part of the energy bill that is currently bogged down in Congress. That has put a temporary hold on some projects, including the funding needed to build substations that will hook the new generators on Braaksma's farm up to the electrical grid. Until the politics get resolved, the largest wind turbines in America are likely to stand ready, but unproductive.
Though Iowa and Minnesota have taken the lead in Corn Belt wind generation, other Midwest states possess colossal untapped potential. North Dakota, South Dakota, Nebraska and Kansas are some of the windiest areas of the nation. Yet these states currently host just a fraction of the nation's commercial wind farms. Wind energy proponents point out that, if properly developed, North Dakota's wind power alone would be sufficient to produce 138,400 gigawatts of electricity, almost enough to supply the entire United States.
What exactly is a megawatt of wind-generated energy? For conventional generators, such as a coal-fired plant, a megawatt of capacity will produce the same amount of electricity consumed by 400 to 900 homes in a year. For renewable energy, such as wind or solar energy, the equivalent is less. Renewable sources typically produce less energy than conventional generators because their “fuel source” (wind or sun) is intermittent.
For example, a 100-MW wind farm might be capable of producing 100 MW during peak winds, but will produce much less than its rated amount when winds are light. As a result of varying wind speeds, over the course of a year a wind farm may only average 30 MW of power production. Similarly, a 1,000-MW coal plant may average 750 MW of production over the course of a year because the plant will shut down for maintenance from time to time and the plant operates at less than its rated capability when other power plants can produce power less expensively.
A low-cost coal plant typically operates at capacity factors of 60% or higher. High-quality wind sites will generate at about 30 to 40% of their rated capability on average because of wind speed variations.