Black Hills Power filed Thursday for permission to build a $38 million wind farm 8 miles north of Belle Fourche in Butte County. It would be the first large West River wind development and would help the electric utility meet state goals for renewable power sales, utility officials said.
The “construction-ready” project was developed by Renewable Solutions, a Minnesota company owned by Rapid City native Mark Eilers. The company has conducted exploratory research and obtained easements from landowners on the 4,200-acre site.
If the state Public Utilities Commission rules in August that the project is an appropriate resource addition for Black Hills Power, the utility would buy the project assets including the easements from the developer.
Between seven and 12 turbines, each about 250 feet tall, would join the grassy, rolling landscape by the end of 2012.
The project would initially provide 20 megawatts of electricity, enough to power about 8,500 homes for a year, with the potential to generate up to 50 megawatts.
It wouldn’t be the first wind power flowing into Black Hills area homes. The utility buys 35 megawatts of power from two Cheyenne, Wyo.-area wind farms. But it would be the first wind farm in this area. The project would bring about 40 construction jobs, said Black Hills Power vice president Chuck Loomis, and it could create one or two permanent operations jobs.
“We believe this project offers a cost-effective way to diversify our generation resources by adding renewable wind energy and that it’s good public policy and good for the economic development of the region,” Loomis said.
South Dakota has a goal of 10 percent of power sold in the state coming from renewable, recycled and conserved energy resources by 2015. This project would increase Black Hills Power’s percentage from about 6 percent to about 9 percent, Loomis said.
“We believe we will meet the 10 percent objective by 2015,” he said.
The developer has already tested the wind resource, studied the effect on migratory birds and consulted with the Federal Aviation Administration and Department of Defense, said Aaron Carr, Black Hills Power director of corporate development.
Still needed are final FAA approval for turbine locations, county building permits, county approval to transport the turbines and consultations with the U.S. Fish & Wildlife Service on impacts to native species, Carr said. Carr said the project has been planned to avoid sage grouse breeding areas.
Loomis said the site is ideal not only because of strong winds but because it is just 3 miles from Black Hills Power’s existing transmission lines. As part of the project, the utility would build underground lines on the site itself, then 3 miles of overhead line and a substation to step up the voltage and connect to the transmission system.
It is also good timing, Loomis said. The project aims to take advantage of federal tax credits, recently extended to projects completed by the end of 2012, that provide a 2.5-cent tax break per kilowatt hour for production from wind energy facilities. The credit would last 10 years and save $1.4 million per year, Carr said.
The project would not have an immediate impact on customers’ rates. The company agreed not to attempt to increase rates before April 2013 as part of the settlement in last year’s case spurred by the new WyGen III power plant near Gillette, Wyo.
While Loomis said a wind farm could be an exception to that settlement agreement, he added, “We do not intend to raise rates prior to 2013 for this project.”
The company would fund the project with shareholder investment and would study its finances before determining whether to seek a rate increase in 2013. The effect on a customer’s bill would be about a 1.5 percent increase if the company did eventually raise rates to cover its costs, Loomis said.
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