Realizing Potential

Major projec ts point toward growth in Dakotas’ wind power

BY KRIS BEVILL

Wind is a constant presence for those living on the northern Plains, yet the number of wind farms built to capture that ever-present piece of the Plains environment is only a fraction of what could be, according to the American Wind Energy Association South Dakota, which generated 26 percent of its electricity from wind in 2013, has 783 megawatts (MW) of installed wind capacity generated by 474 turbines, according to the group. It ranks only 19th among states for total megawatts of wind capacity installed Only 15 percent of North Dakota’s power was produced from wind in 2013, but the state outranks its southerly neighbor in terms of megawatt capacity and turbines installed as it produces more wind power for export to states such as Minnesota

According to AWEA, North Dakota has 1,681 MW of wind capacity and 995 turbines, garnering a 12th place ranking among all states. Minnesota fares better yet, with 2,035 MW of wind capacity and more than 2,000 turbines, putting it in the top 10 in both categories Meanwhile Texas, the leading producer of wind energy in the U.S., boasts more than 12,000 MW of wind capacity from nearly 8,000 turbines

Clearly, the Dakotas have only begun to tap into their steady energy resource, but that appears to be beginning to change due to a couple of factors Demand for renewable energy is ratcheting up in states with renewable energy standards and utilities need to meet those requirements as well as the overall increasing demands for power Wind power offers an economic way for utilities to meet those needs and the upper Midwest has an abundance of some of the best feedstock in the world, garnering solid interest from wind farm developers at the local and international levels.

Renewable Powerhouse

“Wind energy offers tremendous economic and environmental benefits, and after energy efficiency, utility-scale wind is the lowest cost way to reduce carbon emissions while providing significant amounts of reliable power, ” says Rob Morgan, chief development officer for Renewable Energy Systems Americas Inc. (RES Americas), a renewable energy company with a portfolio of more than 7,000 MW of renewable energy in locations throughout the continent

The company, which is based in Colorado with regional offices in Texas and Minneapolis, has been developing projects in North America since 1997 but didn’t log its first North Dakota project until earlier this year with the purchase of the Border Winds Project near the Canadian border in Rolette County. Construction began in June and is expected to be complete in October next year, when ownership will transfer to Excel Energy The wind farm will be spread across 23,000 acres and will be capable of producing 150 MW of power from 75 turbines. The cost of the project is not being disclosed, but Morgan says Xcel Energy expects the project could reduce customer costs by about $45 million over its lifetime.

RES Americas purchased the partially developed project from Sequoia Energy and was drawn to the project for several reasons, according to Morgan “We saw it as being a project with good economics in a desirable location,” he says. “Not only is there demand for power in the region, there’s also an interest in renewable energy, so we had confidence that the project would be of interest to buyers, whether they were looking to own the asset, or just contract for the power ”

Morgan says renewable energy standards are a driver in the development of wind projects, but he believes securing an extension of the production tax credit (PTC), which expired at the end of 2013, is the wind industr y ’ s highest priority

Community Project

Rob Johnson, founder and principal of Dakota Plains Energy Inc., says the PTC isn’t vital for his latest project, the massive Dakota Power Community Wind project located in Lincoln County near Sioux Falls in southeastern South Dakota Renewable energy standards definitely play a role in the project however, because the energy produced at the wind farm is expected to be transported via the Rock Island Clean Line to 13 states in the eastern U S , 11 of which have renewable energy standards. “When you look at what they can generate for renewable, it’s pretty hard for most of them,” he says “So they’re going to need power to be imported in, and that’s where we come along ”

The DPCW has been in development since 2011, when Johnson began the site selection process. The company zeroed in on Lincoln County in 2012 due to its ample wind, local support and close proximity to the Rock Island Clean Line, which will begin about 60 miles away in O’Brien County, Iowa The scope of DPCW is massive if built to its proposed 1,000 MW capacity it would be one of the largest wind farms in the country Even if the final megawatt capacity is reduced by half, it would still be the largest wind farm in South Dakota and one of only about 10 wind farms of its size in the U.S., Johnson says.

The vast majority of wind energy projects in the U S are backed by private investors, but because the size of the DPCW project is so large, Dakota Plains Energy opted to use a community-fund model to finance its development The company was granted an intrastate public offering to allow South Dakotans to purchase shares of the project for $1,000 each, which Johnson says is affordable enough to allow many people to participate. “We’re making it very equitable for citizens,” he says “It’s probably the broadest community wind project in the United States ever done, as far as the opportunity for investors.”

By Sept 12, the company had raised $1 25 million of its $1 5 million equity goal and Johnson expected the goal would soon be reached. The project was in Phase 2, which includes signing on additional acreage to the approximately 23,000 acres already netted for the project, as well as conducting necessar y environmental studies and continual monitoring of the wind energy through meteorological towers.

Eventually, after the site has been prepared, the company intends to sell the project to a larger company or a large utility to build out the wind farm rather than complete the project on its own. “A 500 megawatt project will cost about $1 billion when it’s done and we just can’t raise that kind of capital in South Dakota,” Johnson says He anticipates the project could be complete by 2018.

As a native South Dakotan, Johnson is a proponent of the state’s wind energy potential he’s also developing the 98 MW Campbell County Wind Farm near Pollack, S.D. but he admits the challenge lies in transporting that energy to population-heavy markets such as the East Coast He hopes to change that with the realization of the DPCW

“It’s my vision that DPCW will open the door for other entrepreneurs to follow suit,” he says “When we prove it can be done and the Rock Island project is profitable and works for their investors, other folks will come knocking on the door.” PB

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