Thursday, October 29, 2009

That Miracle of Geography

I need to share something that I just recently learned at this year’s West Virginia Wind Working Group. The working group meeting is an annual event that is usually well attended. I like to go to learn a little bit about the big wind companies and the projects that they have ongoing – I just find it very interesting.
This year I missed the morning session, but I did have the pleasure of listening to Erik Duncan from Invenergy LLC whose talk was entitled “The Cost of Developing and Constructing Wind Farms.” Invenergy works all over the U.S. developing wind farms. In WV they are most famous for the Beech Ridge farm that is under development in Greenbrier County and which has struggled due to a lot of opposition. What I found most striking about the talk was the fact that it costs six times as much to develop a wind farm in the Appalachians as it does to develop one in the Midwest.
Now I might have missed the significance of this, but a fellow audience member asked for clarification and this really peaked my interest. If it costs six times more then why develop here in West Virginia? The simple answer was that the sale price for the electricity makes it more than worthwhile. Wow!
OK. So let’s look at a map. The premium market for electricity is the east coast. Aside from developing coastal wind farms what is the next best location? That’s right….check out the bulls eye on West Virginia. (You can click on the map to make it easier to see.)

Wind, like coal, is an energy resource that is driven by geography/geology. You either have it or you don’t. West Virginia has a wind resource that is highly rated and relatively close to a premium market. As renewable portfolio standards go into effect in neighboring states the value of wind power will increase dramatically. We, as West Virginians, need to be aware that what we have is unique and highly valuable. It would behoove our state legislators to be aware of this fact too so that they don’t sell us out for a wink and a handshake. At present, utility-scale wind projects receive a 30% break on B&O taxes and their property tax is assessed at only 24.95% of the fair market value. These state “incentives” short change county government and the residents of the counties in which the wind farms are installed. Given the growth in the renewable energy market and the geographic advantage that West Virginia maintains it would probably be a wise move to end the incentives or drastically revise them so that local governments see more revenue from these projects. It’s geography, not incentives that make West Virginia an attractive (albeit difficult) location for wind farm development.