LINCOLN – A new wind energy tax incentive signed into law last week was touted as a way to lure a wind farm worth hundreds of millions of dollars to Nebraska, but that’s no sure thing.
The sponsors of the wind bill say the incentive has already drawn the interest of wind energy development companies, but there is no guarantee that the $300 million to $400 million wind farm will come here.
“I think we’ll see the development we expect,” said State Sen. Steve Lathrop of Omaha. “The opportunity for large export projects is huge, and we’re now in a position to compete for them.”
Sen. Galen Hadley of Kearney agreed. “Without this bill, we would not have been in the game,” he said.
Legislative Bill 104 was one of the few business incentive bills passed this year by the Legislature. It was designed to boost the state’s lackluster development of its wind resources. It was also hoped that it would land the Rattlesnake Creek wind project.
But the developer of the hoped-for wind farm says it will be four to eight weeks before it is known whether the company can move forward.
“We still have more water to flow under the bridge,” said Frank Costanza of Kansas-based TradeWind Energy, which would build the Rattlesnake Creek wind farm. “When we get all the pieces together, we’ll announce it. I remain very confident we’ll get all of these pieces together.”
The state’s wind resources rank No. 3 in the country, but its development of wind energy is just No. 23, according to the American Wind Energy Association. By comparison, Iowa can generate 10 times more power from wind, and Kansas can generate about six times more.
Wind energy produced in Nebraska has been too expensive to be competitive because wind farms here have had to pay sales tax on millions of dollars’ worth of equipment – turbines, towers and blades – needed to produce power.
The new tax incentive would cut $15 million off the cost of building the Rattlesnake Creek wind farm in northeast Nebraska, making it possible to sell power at a lower cost.
“You don’t get business unless you’re the lowest cost provider, so that $15 million makes a huge difference,” said Costanza. “If we didn’t get (the tax break), we would have probably relocated the project.”
Rattlesnake Creek would be the first Nebraska wind project to export power to other states. All other wind farms in the state produce electricity only for Nebraska customers.
Costanza said his company is now in a race against time to contract with electric utilities outside the state.
Such contracts, called “power purchase agreements,” are required before Nebraska will approve a wind farm that plans to export power to another state.
The TradeWind project also must apply with the state for the tax credits, which is an added step that other states don’t have.
The application process is through the Nebraska Advantage Act, the state’s major business development law. LB 104 folded renewable energy development into the act, which has helped lure and expand major manufacturers, businesses and computer data centers.
The Rattlesnake Creek project also has a Jan. 1 deadline to have some construction underway to qualify for a major federal tax break for wind farms. That tax credit is scheduled to expire at the end of this year.
Despite the wind bill, Nebraska still lacks a couple of tax incentives offered by other states.
Oklahoma, for instance, offers tax credits for each megawatt of wind energy generated, and Kansas provides breaks on property tax.
David Levy, a lobbyist for a trio of wind developers, said that means Nebraska may have to revisit its wind incentive package in the future.
But Rich Lombardi, who lobbies for the Wind Coalition, an organization of wind developers across the Great Plains, called the new tax incentive “a big deal.”
“This is regarded by the wind industry as a significant milestone for Nebraska,” he said. “Now, we have the premier economic development tool in the state (the Advantage Act) recognizing renewable energy. It’s going to expedite development.”
Lombardi said that he has already heard from other companies interested in Nebraska and that the tax incentive will also promote expansion of existing wind farms.
Even before the bill’s passage, Nebraska was poised to nearly double its wind energy capacity when two 75 megawatt wind farms are completed at Broken Bow and Steele City and a 200 megawatt project is finished in Antelope County.
Those projects, along with the proposed Rattlesnake Creek project near Allen, Neb., would push Nebraska just past the 1,000 megawatt mark for wind energy production capacity. That, Lombardi said, is an important benchmark in attracting more companies that build wind farm components.
Dave Rich, the sustainable energy manager for the Nebraska Public Power District, said LB 104 tax credits could benefit the wind farm at Steele City, which in turn would provide a slight rate break for NPPD customers.
A spokeswoman for the Omaha Public Power District, Paula Lukowski, said the law will help its customers as well, by reducing the future cost of wind energy.