An industry movement to “repower” wind farms to capture tax credits is bringing back a previously dormant cargo source to the Port of Longview. However, the flurry of activity may blow out with the end of one tax incentive in 2020.
The port first started handling wind cargo, which includes turbine blades and engine parts, around 2006 amidst the “original wind energy surge,” port officials said in a news release.
According to the port’s wind tonnage record, an average of 86,640 metric tons of wind cargo came through the port each year between 2007 and 2009.
Most wind farms can operate with their original equipment for 25 to 30 years, so wind cargo tonnage at the port died off just a few years later when the new wind farms powered on.
From 2010 and 2012, the port handled an approximate total of 62,830 tons of wind cargo – about 75% of the tonnage it had handled in a single year at the height of the wind energy surge. The port did not handle any wind cargo from 2013 to 2015.
(Tonnage likely would have dropped off completely after 2010, but a 2012 spike in wind projects – primarily due to developers rushing to schedule them before the expected end of a tax credit program, which was later extended – is reflected in the port’s tonnage data.)
But in 2016, just halfway into the lifespan the original wind farms, a steady uptick in wind cargo began flowing into the port.
“(General Electric) hadn’t been using the Port of Longview for quite some years … so it was nice to see GE return,” said Laurie Nelson-Cooley, manager of business development. The port also works with Vestas, another company that makes and ships wind turbine parts.
The port has consistently handled wind cargo since 2016, working with almost 18,730 tons of cargo in the last three years – with some parts headed to the same farms the port handled equipment for just a decade before.
“In 2006, the port handled cargo for Oregon’s Leaning Juniper wind farm and just last month, the port handled upgraded blades for the same project,” port officials said in a news release this spring.
Wind farms like Leaning Juniper decided to repower, or replace old turbine parts with modern, more technologically advanced parts that can increase the capacity and efficiency of the farm. For example, the repowered blades at Leaning Juniper are longer and lighter than the old blades, allowing the turbines to process low velocity winds.
“By replacing existing equipment – even equipment from just 10 years ago – an owner can extract more power from within the same footprint, produce more energy on an annual basis, lower the operating expenses and extend wind resource’s useful life,” said Gillian Charles, an energy policy analyst with the Northwest Power and Conservation Council.
In addition to improving the energy outputs at their plants, companies also may choose to repower to take advantage of tax incentives.
Wind farms that replace a significant portion of turbine parts – at least 80% of the fair market value of the original facility – requalify for the U.S. production tax credit.
That tax credit, commonly referred to as the PTC, provides a per-kilowatt-hour tax incentive for companies that generate electricity using certain renewable resources such as wind. But that tax credit ends after 10 years of operations – unless the wind farm chooses to repower.
The anticipated end of the PTC was likely behind the 2012 spike in wind cargo; however, Congress later renewed the program.
The 2016 surge in repowering projects – which heralded the return of wind cargo to the port – came as a result of Congress yet again deciding to discontinue the PTC. Legislators scheduled a slow phase out of the program over which the tax benefit would drop by 20% each year until the end of 2019, when the PTC was ended altogether.
“The end of 2016 was the last chance to guarantee 100% of the production tax credit,” said Michael O’Brien, regulatory director for Renewable Northwest, a regional nonprofit that advocates for new clean, sustainable and renewable resources.
The rise of repowering was “a confluence of technology and the tax credits. And the tax part is important because the IRS provided guidance in 2016 that you can safe harbor equipment, which means if you purchase some of the new rotors and nacelles, you then have four years from when you purchase them … to get it online” and still receive the PTC, O’Brien said.
PacificCorp, one company in this region with active repowering projects, will update all 13 of its current wind farms before the end of 2020.
“We are really excited about this project. … With advancements in technology, we can use the exact same footbring of those facilities to produce, on average, 25% more clean energy for our customers,” said Tim Hemstreet, managing director of renewable energy development at PacifiCorp. Hemstreet added that the Portland-headquartered company services rural clients.
“We are really excited in a project like this that can result in jobs at the Port of Longview or in rural Washington place where these projects are located,” Hemstreet said.
Though recent wind tonnage doesn’t rival the heights reached during the earlier wind energy surge, it still is a “large job creator … and revenue stream” at the port, Nelson-Cooley said.
“Moving this big equipment requires a lot of men,” she said, adding that the larger the cargo, the more “complexity of moving it. And there’s requirements for zero damage … so (clients) are willing to pay a little bit more money to have a more safe, risk-free environment.”
With the end of the PTC on the horizon, and the completion of repowering projects started in 2016, the port could soon enter another quiet period for wind cargo.
“We do expect the wind tonnage to continue in an upward trend at least through 2021,” she said. “Then we will probably see a downtick. … but you see that with any (overdimensional) project cargo.”
At that point, wind cargo may be replaced by other types of “project” cargo, which the port can handle with the same equipment it uses for wind.
“Everyday we are looking for other projects, whether it’s transformers or power facilities being built in Canada,” Nelson-Cooley said. “It’s great when it comes, but with project cargo, you can’t rely on it 100%.”