By Paul Monies | The Oklahoman | September 2, 2016 | newsok.com
A group opposed to wind power incentives said Oklahoma’s budget could be on the hook for as much as $5.2 billion in future claims through 2030 if the state’s zero-emissions tax credit is allowed to continue, an amount the wind industry said is highly inflated.
WindWaste, a group founded by Claremore businessman Frank Robson, said its latest estimates of future wind farm developments in Oklahoma show the state’s annual outlay of rebates from the incentive could balloon to more than $500 million annually as early as 2019.
“We have written industrial wind a blank check payable by the Oklahoma taxpayers,” said WindWaste’s Rick Mosier, who did the analysis.
The group is calling for an early end to the credit by July 1, the start of the 2018 fiscal year. The credit currently has a sunset date of Jan. 1, 2021.
Representatives of the wind industry pushed back against the WindWaste analysis, saying it overestimated future incentive costs by a factor of 20.
“As usual, the numbers from this anti-wind lobby group are dramatically inaccurate,” said Jeff Clark, executive director of The Wind Coalition. “These numbers are designed to shock and strike fear, but they aren’t based in reality and reflect a lack of understanding on how projects are planned for, developed and ultimately constructed.”
The zero-emissions incentive provides a 10-year, 0.5-cent tax credit for each kilowatt hour of electricity generated from wind farms in Oklahoma. If a company doesn’t have an income tax bill, the credit can be redeemed for up to 85 percent of its value in a rebate from the state.
Oklahoma wind capacity has grown in the past several years, with the state now ranking fourth in the nation for wind capacity. About 18 percent of the electricity generated in Oklahoma last year came from wind.
As the industry has grown, so has the zero-emissions tax credit. It was $18.1 million in 2012, $27.2 million in 2013 and $58.7 million in 2014, according to the state Tax Commission. Because of extensions granted, the commission is still processing forms for the 2015 tax year.
It’s hard to get an accurate picture of future wind development because projects aren’t typically announced until they have a signed contract with a utility or other customer. Oklahoma had six wind farms under construction by the end of June, according to the latest market report by the American Wind Energy Association.
The WindWaste estimates assume all wind projects that showed an interest in connecting to the regional grid will get built. It also assumes a larger-than-expected build out of wind farms for the Plains and Eastern Clean Line, a high-voltage, direct-current transmission line that will ship renewable power from the Oklahoma Panhandle to Tennessee.
Mosier conceded his analysis is at the top end of estimates. But he said looking at data from the Southwest Power Pool on future generation connections to the grid is a good start. The pool showed 11,800 megawatts of wind capacity planned for Oklahoma in the queue at the end of August.
“Are those all going to be built?,” he said. “I don’t know. I don’t have any way of telling. However, somebody has gone far enough to request interconnection studies on a project. What we’re saying is they are projects in planning. If they are built, this is what it’s going to be.”
Meanwhile, Mosier said the Plains and Eastern Clean Line will require many more wind farms in order to produce the line’s capacity of 4,000 megawatts. Because of the intermittent nature of wind generation, he said more than 8,800 megawatts of wind capacity would be needed to serve the HVDC line.
“If you built the line for 4,000 megawatts, you’d need to fill it,” Mosier said. “You need to operate it at capacity to the extent that you can. The Clean Line is the most difficult thing to project as to what is ultimately going to be built.”
Clean Line representatives said some extra capacity was expected for projects connected to the Plains and Eastern line, but not as much as WindWaste claims.
“In order to deliver 500 megawatts of power to Arkansas and 3,500 megawatts of power to the Tennessee Valley Authority (TVA), the project anticipates approximately 4,550 MW of new wind farm construction,” said Mario Hurtado, Clean Line’s executive vice president of development. “The amount of new wind generation built will depend on a number of factors, including costs of installation and operation.”
The $2.5 billion, privately funded HVDC transmission project is expected to be in operation by mid-2020.
Representatives of the wind industry said WindWaste’s incentive numbers were inflated. They said the Southwest Power Pool interconnect queue has had a historical build-out rate for generation of almost 15 percent.
For example, the Southwest Power Pool had more than 100,000 megawatts of wind generation in its queue in the past decade, but only 13,000 megawatts got built and connected to the grid. Another 2,000 megawatts are under construction in the region.
Clark said the zero-emissions tax credit will sunset at the end of 2020. The industry also worked with the Oklahoma Legislature to end a five-year property tax exemption for wind projects. Groups like WindWaste focus only on the costs of incentives, he said.
“Their flawed analysis also fails to account for the tremendous benefits that wind power brings to Oklahoma, including cheaper power for every consumer, long-term and reliable property tax revenue for schools, jobs created in rural Oklahoma, and royalty and lease payments to farmers and ranchers,” Clark said.
The zero-emissions tax credit is one of 11 state incentives under review this year by Oklahoma’s Incentive Evaluation Commission. A report on those incentives is scheduled to be finished before the session starts in February.
Clark said the wind industry will continue to work with lawmakers on changes to the incentive structure that will keep Oklahoma competitive with neighboring states like Kansas and Texas.
“The continuing campaign of misinformation and twisted numbers from this anti-wind lobby group detracts from the serious discussion this state needs to have on the future of energy in Oklahoma,” Clark said.
Mosier said WindWaste’s main focus in the 2017 legislative session will be ending the zero-emissions tax credit. The group is less interested in expanding wind turbine setbacks from schools and airports that were put into place in 2015, nor does it expect to advocate for a new tax on wind production.
“In Oklahoma, a tax is a nigh-on impossibility, and we’re not going to lead a state petition to get it,” Mosier said. “I think everybody that is producing wind energy is going to have to look at it someday, but now we’re interested in stopping the bleeding versus worrying about whether or not there is a production tax.”
The Windfall Coalition, formed earlier this year by Continental Resources Inc. founder and CEO Harold Hamm, also plans to continue its work to end all incentives for wind energy.
URL to article: https://www.wind-watch.org/news/2016/09/03/anti-incentive-group-claims-wind-credits-blow-hole-in-oklahoma-budget/