Wind energy another cash crop for harvest
A meeting was held in Primghar, Iowa, on Nov. 5 to discuss the future of the Rock Island Clean Line (RICL) DC wind energy transmission line from O’Brien County, Iowa, to Grundy County, Ill.
O’Brien County Economic Development Corporation Executive Director Kiana Johnson requested this meeting. Johnson became concerned in late October over the increasingly negative views expressed in Illinois newspapers.
The Illinois Farm Bureau and some state legislators now oppose RICL’s $1.7 billion project. Financing for this project is to come from Wall Street investment banks, bond markets, private equity firms and other capital markets.
Asked to attend the meeting in Primghar were representatives from the O’Brien County Farm Bureau, the O’Brien County Value Added Ag Committee, the County Economic Development Corporation Board and other local Ag producers. Beth Conley from RICL was present to further explain the 3,500 Megawatt (MW) project and address land owner concerns.
At 3,500 MW, the RICL project is significantly larger than the proposed 3,000 MW Duke Energy/American Transmission Company (DATC) wind energy transmission line from a $300,000,000 AC to DC converter station in Audubon County, Iowa, to a DC to AC converter station near Brookston, Indiana.
Both the RICL and the DATC projects have been awarded Federal Energy Regulatory Commission approval. Duke is the largest power holding company in the U.S. with 52,000 MW of generating capability.
The proposed project is slated to have a $250,000,000 intermediate converter station in McLean County, east of Peoria. The plan calls for connecting 2,000 MW of Illinois wind energy onto the line for shipment further east.
Johnson monitors sentiments expressed regarding the power line project by reading newspaper reports from the two states impacted by the project.
The Bureau County Republican and the Morris Daily Herald have been Johnson’s primary Illinois newspaper sources for keeping an eye on local sentiment. An Oct. 26 Morris Daily Herald story reported, “The Illinois Farm Bureau opposes the project and filed a petition to intervene,” said Laura Harmon, attorney for the Farm Bureau.
Illinois State Senator Sue Rezin said in the same story, “The project does more harm than good. I oppose the project and the current path as it runs through some of the greatest farmland in the world.”
Rezin goes on to say, “The project has failed to show its necessity to Illinois electric consumers, and serves to help Iowa wind farms, and it has chosen a path that is harmful to the Illinois agriculture industry.”
Here in O’Brien County, one Farm Bureau board officer recently said that landowners are concerned about the transmission line taking too much cropland out of production. That’s another concern of Illinois farmers. But the reality doesn’t agree with that view.
MidAmerican Energy and ITC Midwest are in the early planning and engineering stages of building a new 345,000 volt, AC transmission line across northern Iowa. One starting point is near Sanborn, with another starting point near Lakefield, Minn. The new high-voltage power line will terminate at a substation near Hazelton in Buchanan County, east of Waterloo.
Let’s suppose that Mid-American plans to use lattice supports with a base measuring 50 feet by 50 feet. One tower base takes up 2,500 square feet. With the towers 900 feet apart, it takes seven towers to span a one-mile distance. For the line to span that mile, it then takes 17,750 square feet. An acre measures 43,560 sq. ft. Much less than one half an acre of cropland is taken out of production for every mile. With the new power line being about 420 miles long, less than 210 acres of cropland is taken out of production.
If the transmission line were located on the half-mile line, MidAmerican would ask for a quarter acre from each landowner. It’s quite likely that MidAmerican will use a steel pole, thereby requiring a much smaller concrete foundation.
MidAmerican is holding landowner meetings to explain this $952,000,000 project.
RICL plans to ship 3,500 MW of wind energy. If 1.5 MW units are used, then divide 3,500 MW by 1.5 MW. This means that wind energy developers would eventually need to build 2,333 wind turbine sites to get the transmission line to its full capacity.
Not all 2,333 wind turbine sites would be built in O’Brien County. Wind energy from future wind farms in Clay, Dickinson, Osceola, Lyon, Sioux, Plymouth and Cherokee counties could ship their wind energy to the AC to DC converter station site near Primghar. Two southwest Minnesota counties, Rock and Nobles, are within 60 miles, and that wind energy could also go to the converter station.
According to Executive Director Harold Prior at the Iowa Wind Energy Association (IWEA), the installed cost of one wind turbine site is $3,000,000. Take $3 million dollars x 2,333 and that comes to a net acquisition cost of $6,999,000,000.00 for an imaginary 3,500 MW wind farm.
Besides serving as efficient, pollution-free generators of electricity, wind energy conversion is also a prolific revenue generator through the collection of property taxes for county governments and local school districts. Just how much property tax would a $6,999,000,000 wind farm generate? The end result is truly enormous.
Thanks to the Clay County Assessor’s Office staff and their 10-digit calculators, obtaining these astonishing figures wasn’t so hard. For property tax calculation purposes only, let’s suppose the entire 2,333 unit wind farm will be built within Clay County.
Clay County doesn’t currently have a county wind energy conversion ordinance, but let’s imagine that they do. Most wind energy conversion ordinances provide a 7-year graduated abatement period. No property taxes are paid the first year. At the beginning of the 7th year, the rate is 30 percent and continues out into the future.
These calculations are based on an average tax levy of $24 per thousand. With a net acquisition cost of $6,999,000,000, a property tax payment of $8,398,000 results in the second year. At the fourth year, a property tax payment of $25,196,400 is realized. At the sixth year, a $41,944,000 property tax payment results. At the seventh and final year of the abatement period, the property tax payment totals $50,392,800.
How much property tax revenue would go back to the school districts in the county? Basically, the school districts would receive half of the $50,392,800 seventh- year payment. The school districts would then receive $25,196,400 and split among them.Clay County government would get the other half of the $50,392,800 figure.
The 3,500 MW wind farm will eventually mean a huge property tax break for landowners in Clay County school districts. Because the state of Iowa limits how much districts can spend per student, expanding the tax base so significantly will trickle down to landowners in a big way.
With a 15 cent-per-thousand-levy, Sioux Township in Clay County would re-ceive $4,199,000 at the seventh year. But each township would need to have the same number of wind turbine sites in each township.
According to Harold Prior at the IWEA, the amount of concrete it takes for a typical wind turbine site is 450 cubic yards. Take 450 cubic yards x 2,333 wind turbines. It takes 1,049,850 cubic yards to pour the foundations for a 2,333-unit wind farm. A Spencer Ready Mix salesman quoted a cubic yard of high strength concrete at $97. The total concrete cost comes to $101,835,450 for 2,333 foundations.
The recently announced $1.7 billion expansion to the CF Industries fertilizer plant at Sioux City is projected to generate $127 million in property tax revenue over the next 20 years. A 20-year $121 million property tax waiver also came with the expansion, the Sioux City Journal reported.
It seems like wind energy is just one more crop that can be harvested from farmland in the windier areas of the Upper Midwest and the High Plains east of the Rocky Mountains. Three turbine blades can then capture this wind energy, convert it to electrical energy, convert it again to DC voltage and then economically ship it to distant markets. And not one cup of water is used.