Note: The article below was first published in Democratic Energy in October 2002.
As part of the 2002 Omnibus Tax Bill, the Minnesota legislature established a new tax system for wind energy equipment. The production-based fee varies by the size of the projects. A large-scale wind energy conversion system (capacity of more than 12 megawatts) would pay 0.12 cents per kilowatt-hour. A medium-scale wind system (capacity between two and 12 megawatts) would pay 0.036 cents per kilowatt-hour. A small-scale wind system (capacity of two megawatts or less) would pay 0.012 cents per kilowatt-hour. Wind energy systems with a capacity of 250 kilowatts or less and small-scale systems owned by a political subdivision would be exempt from the production tax.
This new production-based tax structure for wind energy in Minnesota replaces previous laws that subjected wind energy equipment to a complicated method of valuation and property taxation. The new tax scheme should be better for both wind energy developers and the local tax districts in the path of wind power development (counties, cities, and school districts). The new system is more transparent and will allow tax districts and wind developers to better predict what the revenue stream from the wind projects will be.
Minnesota is home to over 400 MW of wind energy development. A typical 1 MW wind energy turbine will pay about $3,100 in production fees each year.