Wind forecast: Outlook hesitantly optimistic

Regional developments suggest tempered growth in wind energy industry

BY KRIS BEVILL

Congress’ approval of a one-year extension to the 2.2 cent per kilowatt hour wind energy production tax credit (PTC) earlier this year provided some relief to the industry and has spurred renewed interest in manufacturing and production projects, but the long-term fate of the industry remains unclear.

In late May, Quebec-based Marmen Inc. celebrated the opening of its first U.S. plant, a wind tower fabrication plant in Brandon, S.D.

The facility was originally built in 2010 by another company which planned to manufacture wind towers, but the project stalled when the company, Tower Tech Systems, failed to secure enough contracts for towers, says Nick Fosheim, executive director of the Lincoln & Minnehaha County Economic Development Associations. Construction of the building had been completed and some equipment was installed, but the company never hired any of the proposed 150 employees. Marmen plans to add 50,000 square feet to the 150,000-squarefoot space and has already begun recruiting employees, according to the company. It expects to begin operating at the end of this year and will employ up to 250 people when the facility is fully operational next year.

Fosheim says Marmen’s plant opening will have a significant economic impact on Brandon and the surrounding area. “Certainly, we’ll see an increase in the local employment opportunities, but we’ll also see increased residential growth and increases in sales tax revenue,” he says. “It will challenge us to grow our training programs to meet the continued demand by local employers. All of this will impact the entire region, not just Brandon. When you consider Marmen’s international reputation, this really puts us on the map in terms of recruiting new business to the area.”

Brandon, located just a few miles east of Sioux Falls, S.D., has a population of about 9,000. At 250 employees, Marmen would be Brandon’s largest employer, according to Fosheim. Marmen has launched a vast recruitment campaign to locate staff and Fosheim says local and state agencies will assist. “It’s our job in economic development to connect businesses with the right partners so they can be successful here,” he says. “We have an opportunity to prove that even though unemployment is low, opportunity is high and our region is growing. Marmen has said it is hiring primarily character, not skills, because they are willing to train. That approach may prove beneficial as they ramp up to full production.”

Ron Rebenitsch, executive director of the South Dakota Wind Energy Association, says Marmen’s expansion to South Dakota demonstrates positive movement in the industry, but the ongoing national recovery from the recession and low natural gas prices continue to impact the industry’s overall growth. “On the positive side, projects that have been on hold are coming back, not so much in the Dakotas but in other parts of the country,” he says, adding that locating production facilities in the northern Plains, like Marmen has done, makes strategic sense. “It’s a solid business decision to place a factory in the middle of the industry,” he says. “By building towers in this region, you can elim- inate some of the cost of transport.”

Fargo-based Wanzek Construction, a MasTec company, has installed more than 5,000 megawatts of wind generation capacity across the U.S. and is currently actively working on the preliminary stages of a number of projects, but it’s too early to say whether those projects will come to fruition, says Rob Lee, director of operations for Wanzek’s wind energy group. “It seems as though the appetite from utilities is not where it needs to be to build a bunch of projects at the moment,” he says. “The PTC has helped the renewable industry considerably but a one-year extension is tough because it creates a roller coaster of projects, where every other year we are busy.”

Wanzek constructed wind projects in several states and in Puerto Rico last year, but none in the Dakotas or Minnesota. So far this year, the company is bidding on projects throughout the U.S., with a concentration in Iowa, North Dakota, Oklahoma and Texas, according to Lee.

Minnesota Power, a division of ALLETE, recently celebrated the completion of the final phase of it its $500 million, 101-tower Bison Wind Energy Center near New Salem, N.D., and could announce more wind energy investments in North Dakota this year, pending permitting approvals and other considerations. Todd Simmons, Minnesota Power’s general manager of wind operations, says he believes there is room for wind energy to grow in North Dakota, particularly for companies like Minnesota Power, which must comply with Minnesota’s requirement that utilities obtain 25 percent of their power from renewable sources by 2025. Renewables currently account for between 15 and 18 percent of Minnesota Power's supply, but its long-term goal is to generate power from an equal mix of renewable, natural gas and coalbased sources.

Minnesota Power holds wind options on approximately 120,000 acres of land adjacent to the Bison Wind Energy Center, which will remain in place for nearly 50 years. The utility currently provides service to about 143,000 customers across 26,000 square miles in northeastern Minnesota. PB

Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com