Federal Stimulus Cash Grant Gives Boost to Locally Owned Wind Power

Date: 3 Aug 2010 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Community-owned wind only represents 2 percent of U.S. wind power, but it’s been enjoying a growth spurt from the economic stimulus.  Normally, locally owned projects are stymied by the need to find a tax equity investor that can absorb hundreds of thousands of dollars in tax credits from the 2.1 cent per kilowatt-hour Production Tax Credit.  The federal stimulus bill changed everything, allowing project developers to claim an upfront cash grant in lieu of the production-based credit.  And it’s making community wind simpler than before.

Kent Madison, a third-generation farmer in eastern Oregon, used to cuss when the wind blew hard and kicked up dust and kept him from spraying his crops. But now, with 18 windmills on his farm, he sees dollars, not dust, every time the wind blows. Those windmills are each bringing in $6,000 to $8,000 in rent yearly. In a dozen years or so, Madison, who farms wheat, alfalfa and vegetables on 17,000 acres, will own three windmills virtually outright, plus the revenues from the electricity they produce, plus he’ll still be getting rent for the other 15.

The cash grant program has paid out cash grants to 80 wind projects as of June 30, and 17 (21 percent!) are community wind projects.  But the success may be short-lived, as the cash grant option is only available for projects that begin construction by the end of 2010.  After that, the cash grant (and benefits of community wind) will fade.  This is a particularly hard pill to swallow given the state of the economy and the relative economic advantage of community wind.

A 2009 study by the National Renewable Energy Lab, a division of the U.S. Department of Energy in Golden, Colo., shows that community wind projects support more local jobs than commercial projects — three times as many during construction and nearly twice as many long term. Also, the research shows, they funnel more money into local communities and create public goodwill toward wind power.

Community wind offers another benefit: acceptance.

“In local communities, there’s been little to no opposition to wind projects,” said Eric Lantz, a wind policy analyst at the Renewable Energy Laboratory and a co-author of the study. “There’s more pride taken when you’re able to participate with an ownership stake.”

The help to community wind projects doesn’t need to end with the stimulus package.  An amendment to the Production Tax Credit, for example, could convert it to a cash payment and remove the most significant ongoing barrier to community wind, as ILSR discussed in a 2008 paper – Broadening Wind Energy Ownership by Changing Federal Incentives.



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John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.