FIGHT FOR AMERICAN WIND IN SOUTH DAKOTA

That a minority of recalcitrant U.S. Senators mired in 1950s thinking is blocking extension of vital New Energy incentives, including production tax credits that would buoy the domestic wind energy industry’s American Explosion, is not news. How it impacts a local economy like South Dakota's is fascinating, especially since the resource in the Dakotas is plentiful enough to power the nation, were it to be nurtured wisely.

Here’s how the situation looks in Sioux Falls, South Dakota: “South Dakota's wind energy industry is being held hostage in a high-stakes game of political chicken… An important tax subsidy for electricity generated from wind, solar and geothermal sources is set to expire at the end of the year, and House Democrats and Senate Republicans are squabbling over whether to extend it for one year and how to pay the $8.2 billion cost…”

25 wind energy companies are exploring wind projects that would be developed over the next few years in South Dakota representing 1,000 megawatts – IF the production tax credit (PTC) is in place to make the projects economically viable. Are the differences between Democrats and Republicans irresolvable?

Marchant Wentworth, clean energy lobbyist, Union of Concerned Scientists: "...There are thousands of jobs (nationally) at risk here, and we need to get this done…Part of the job of being in Congress is to cut a deal here, and it would not be unusual to pass a piece of legislation that no one was completely happy with."

Both parties have voted to extend the credit in measures that did not get through the legislative process. The difference is over how to fund it. Democrats want to shift budget money now going to the very profitable oil and gas industry in the form of unneeded subsidies. Blue Dog Democrats and Republicans refuse this plan but also refuse to extend the credit without funding and offer no alternative source of budget money to fund the tax credit.

The PTC and other New Energy incentives have been used to play political "gotcha" all year. Both sides continue to praise them, condemn the opposition for high gas prices and offer no direction out of the impasse.

Sen. John Thune (R-S.D.): "Hopefully, at some point, we can just pass (a bill) that we know everybody agrees on."

Senator Tim Johnson (D-S.D.): "The Senate is very close to a deal on extending clean energy tax incentives in a way that doesn't rely on borrowing money. I am hopeful an agreement to extend the credit can be reached this summer."

Washington insiders expect the PTC to finally be extended late this year or early next year but big projects must be planned far in advance and require funding from financial institutions disinclined to invest under tentative circumstances. Most wind industry watchers agree project development is already fated to drop off in the next 12 months.

Which way will the PTC bickering go? (click to enlarge)

Stalemate threatens S.D. wind industry; Deal on incentives stalled in Congress
Faith Bremner, July 13, 2008 (Sioux Falls Argus Leader)

WHO
South Dakota's wind energy industry; South Dakota Democrats (Sen. Tim Johnson, Rep. Stephanie Herseth Sandlin) and South Dakota Republican Sen. John Thune; Basin Electric (Ron Rebenitsch, alternative technologies manager); Navitas Energy (Wanda Davies, director of development)

WHAT
The development of South Dakota’s wind energy industry is hanging in the balance as Democrats and Republicans in Congress bicker over the extension of the production tax credit (PTC), which can be the difference between profit and loss for wind energy developers.

Pink, purple, red, blue = good to superb wind. The Midwest is blessed with immense wind assets. (click to enlarge)

WHEN
- The PTC expires at the end of 2008.
- Basin Electric plans to break ground on a 150-megawatt wind farm in 2010.
- Since it was first instituted 16 years ago, Congress has allowed the PTC to expire 3 times (1999, 2002 , 2004) and all 3 times wind installations have dropped of precipitously.

WHERE
- It is estimated the wind resources of the Dakotas could, if developed along with adequate transmission infrastructure, generate enough electricity to power the entire U.S.
- South Dakota now has 8 wind installations generating 188 megawatts.
- The Basin Electric wind project will be in eastern South Dakota.

WHY
- The PTC gives a tax credit of 2 cents/kilowatt-hour to wind energy installation operators and requires $8.2 billion from the federal budget.
- Rule of thumb: 1 megawatt powers 300 homes.
- Basin Electric supplies power to 126 rural electric co-ops in the Midwest, 25 in eastern South Dakota. If the PTC is not available, the only way the proposed project will be economically viable will be by passing on costs to ratepayers.
- Navitas Energy is building the 200-megawatt White Wind Farm project.

South Dakota has not begun to steward its blessing. (click to enlarge)

QUOTES
- Ron Rebenitsch, alternative technologies manager, Basin Electric: "I'm the project manager. That's been my call…I'm very concerned about the production tax credit. I lie awake at night thinking about it quite often."
- Wanda Davies, director of development, Navitas Energy: "You're not going to get funding based on the assumption it will be there…The bankers are not going to take a risk. If you have a business plan that shows (the project) would work without the production tax credit, you would get the financing. If you say, 'trust Congress,' you're not going to get financing at any affordable rate."
- Senator Tim Johnson (D-S.D.): "The cost of extending the tax credit should not be borrowed and added to the national debt…We need to extend the wind energy tax credit because the incentive creates jobs in South Dakota by building new wind energy projects, such as the MinnDakota wind farm near Brookings…"
- Rep. Stephanie Herseth Sandlin (D-S.D.), member, House Blue Dog coalition: "This isn't emergency spending..."