Winds of Change

Sonya Marquis
BUS440-801

Introduction Wind energy is a renewable resource, which means that future supply will not be affected by current use. The rising concerns about global warming, pollution, and depletion of natural resources makes wind a viable and logical source of energy for the near and distant future. There are many advantages to wind energy; it is a sustainable energy source that is non-polluting. With a 30 percent annual increase, wind is the world’s fastest-growing bulk power electricity source. Montana has a bright future in wind energy. The American Wind Energy Association ranked Montana’s wind-energy potential in the top five in the nation. Currently, the state has several utility-scale wind farms in operation.

History of Wind Energy Wind energy has been used by civilizations throughout time. As early as 5000 B.C., wind energy propelled boats up and down rivers. Simple windmills pumped water in China in 200 B.C. Wind energy technology and its applications continued to grow and diversify throughout the ages. By the late 19th century, settlers of the New World were using windmills to pump water, and eventually, to generate electricity. Small windmills were used until the late 1920s to bring electricity to rural Americans. Farm and ranch communities in Montana used wind generators that produced direct current (DC) electricity that was often stored in batteries. However, these systems were short-lived due to the Rural Electrification Act (REA) of 1936. The REA subsidized the construction of rural electric distribution lines, transmission lines, and electrical generation facilities through low interest loans. This government act dramatically increased the number of rural Montana communities that received grid-connected electrical service. The energy crisis of the 1970s led to a resurgence of wind power interest. Electricity produced from wind was more expensive than energy produced from other sources until the prices of coal, petroleum, and natural gas rose significantly during this time.
In 1974, Congress created policies designed to facilitate domestic production of energy and free the United States from its reliance on imported energy sources. The National Energy Act of 1978 and the Public Utility Regulation Act furthered the support of domestic energy sources. A 15 percent federal income tax credit was offered for producers of renewable energy sources, as well as tax incentives on the state level for wind energy development. Montana offered a 10 percent income tax credit to wind energy producers during this time.
This forward progress, however, came to a halt for several reasons. The election of Ronald Reagan led to the U.S. Department of Energy and all state energy offices experiencing budget cuts of 75 percent. R & D became too expensive for privately funded companies to continue, and bringing the new technologies to the market became too risky. There were also very few policy changes that impacted electrical markets and alternate energy sources during this time. This was a major setback for wind energy development, as well as all sustainable energy projects.

Modern Wind Energy Wind-generated electrical capacity has grown since 1980, and saw a significant increase in the late 90s after the Federal Energy Regulatory Commission deregulated the energy market. Deregulation led to higher energy prices thus increasing wind energy projects nationwide. It also opened electric markets to competition. The impact on Montana was very significant. The 100-year old Montana Power Company sold its power generation assets, including its electricity and gas transmission and distribution system, and eventually filed for bankruptcy. Electricity rates went up statewide.
Nationwide wind energy development moved forward. Some areas were more aggressive than others. States in the Midwest and on the West coast have been the most successful in implementing wind energy projects. The five states with the highest installed wind capacity, in order, are Texas, Iowa, California, Oregon, and Washington. The installed capacity of wind power in the United States was just over 35,000 megawatts in 2009, making it the world leader. Texas is a premier state in wind energy production. George W. Bush, as governor of Texas, signed a renewable energy portfolio mandate in 1999 that required power companies to produce 2,000 megawatts of electricity from renewables by 2009. In essence, Bush created a market for wind energy in Texas. It is now the largest producer of wind energy in the United States and home to the largest wind farm in the world. A $4.93 billion expansion of Texas’ electric grid was approved in July 2008 to deliver wind energy to major cities.
The wind power industry has created many opportunities for residents of the state of Texas. Farmers lease their land to wind developers for royalties ranging from $3,000 to $5,000 per turbine per year. During the construction of the various wind farms, local businesses have also seen the benefits of additional revenues through sales of goods and services. Thousands of jobs have been created statewide by the industry.

Modern Wind Energy in Montana Montana has finally gained a foothold in the wind energy market with the successful launch of the Judith Gap wind farm in 2006. It is located on Highway 191 in central Montana between Harlowton and Judith Gap on private and state school trust land. The wind farm, owned by Invenergy, consists of 90, 1.5 megawatt wind turbines manufactured by GE. They are strategically placed across 14,000 acres of land. Each turbine has 126-foot long blades that are mounted on towers that are 260 feet tall. The footprint of each base is 48-feet in diameter.
Of the 90 turbines, 13 sit on state land. The revenues generated will include a one-time installation fee to the school trust of nearly $20,000 and $50,000 to $60,000 annually in the future. Despite these hefty payments for the use of state lands, Invenergy has reported that the Judith Gap project is profitable. It is also a low risk project because of warranties provided by GE on the turbines themselves and insurance for lost revenues due to equipment problems or failures. The wind farm generates about 150 megawatts of power, which is sold to NorthWestern Energy for $31.75 per megawatt hour. This is sufficient enough energy to provide 7 percent of the electricity needs of NorthWestern’s 300,000 customers in Montana.

The Judith Gap wind farm is currently the largest wind farm in the state of Montana. It has recently proposed expanding the number of wind turbines to 125. This would add another 52.5 megawatts to the wind farm’s power-production capacity.
There are several other wind farms statewide in different phases of development and operation. Montana has made great strides in the past few years to develop sustainable, renewable wind generated power.
The Coyote Wind Farm was granted approval in December of 2009 to install wind turbines on private and state-owned school Trust land. The Coyote Wind Project is tentatively planning on 44 total wind turbines, 8 of which will be on state-owned land and 36 on private. It will be located northeast of Springdale, Montana and initial construction was planned for this year.
The Martinsdale Wind Farm, LLC is developing a wind energy facility in central Montana 20 miles west of Harlowton, Montana. The site will boast 36 wind turbines, an underground and overhead electrical collection system, a project step-up and interconnect substation, a SCADA communication system, hub height freestanding meteorological towers, transmission lines, and access roads. This is a multi phase project, and the site could be expanded to 100 wind turbines. The first phase of construction was completed last year.
The Diamond Willow wind farm, owned by Montana Dakota Utility, is located near Baker, Montana. It was completed in 2008 and includes 13 turbines with a total capacity of 19.5 megawatts. The wind farm produces enough energy to power 7,000 residences.
Another notable wind farm in the state is the Two Dot Wind Company. They purchase used turbines, which are refurbished and installed in smaller scale wind farms. All of the refurbishing is done in Montana, creating jobs and income for the state. They are the only local market for wind energy labor and equipment. The Two Dot wind farm has 12 refurbished wind turbines on-site. The energy produced at this wind farm is sold wholesale to NorthWestern Energy.

The Future of Wind Energy
The time is now to invest in wind energy development. The state of Montana has many tax incentives for renewable energy generating facilities. Property tax exemptions, tax credits against corporate income tax for businesses engaged in the production of renewable energy, investment tax credits for alternative energy, and exemption from wholesale energy transaction tax for wind generated electricity are just a few of the many incentives available to develop and use wind generated energy. There are also grant and loan programs available to fund research and development for renewable energy sources. “Special revenue bonds” can be obtained by renewable electric energy generation facilities that are exempt from state taxes, a feature that allows funds to be borrowed at a significantly lower rate then taxable bonds. There are also several other loan programs with various benefits to facilitate the growth of wind generated energy projects. The support from the state and federal government along with private groups will keep wind energy development moving forward in the state of Montana.
The economic benefits of wind energy to the state of Montana are substantial. Farmers and ranchers can lease their land to wind farm developers for no up-front investment or cost. The royalty payments are, in most cases, more profitable uses of their land.
The revenues generated from wind farms on state lands benefit school districts and can help lower the tax burden on residents of the state of Montana. Jobs are created by the wind industry, local businesses benefit from the construction of the wind farms, and new business opportunities are created by the industry. These benefits have been seen in the successful development of wind energy in Texas.
However, the most important factors in the development and growth of wind energy in Montana and nationwide are not just economic. Wind energy is sustainable, renewable, and pollution free. The nation’s dependence on fossil fuels and imported energy sources is a monumental concern facing future generations. Wind energy can be part of the solution.

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