Institutional - Wind Energy: Renewable Energy and the Environment - page 232

commitment to 2005. Achieving the 80,000 MW goal would result in over a $100 billion investment and
$1.5 billion of rural economic development (where the wind resources are the greatest).

11.6.1.1 State Incentives
States are also competing for renewable energy as a way to offset importation of energy and as a
way to create jobs. The Database of State Incentives for Renewable Energy (DSIRE) is a compre-
hensive source of information on state, local, utility, and selected federal incentives that promote
renewable energy [36]. Overview maps tables are available by type of incentive and policies.
Minnesota passed legislation requiring Northern States Power (now part of Xcel Energy) to
acquire 425 MW of wind power by the year 2002 in exchange for permission from the state legis-
lature to store waste from its Prairie Island nuclear facility in dry casks outside the plant. With the
success of the Renewable Portfolio Standard in Texas, by 2008, twenty-six states had passed RPSs
and another six states had passed renewable energy goals.
Texas passed legislation that the Lower Colorado River Authority could acquire renewable
energy from plants located on state lands outside of its service territory. This paved the way for a
35 MW wind farm (1995) in the Delaware Mountains in the Trans-Pecos region, with an extension
for another 200 MW, of which 40 MW has been installed.
Some states have mandated deregulation of the electric utility industry. Besides giving the con-
sumers choice of producers, most of the states have a system benefits charge (SBC), which lets utili-
ties recover stranded costs of power plants, primarily for nuclear plants. In some states, part of the
SBC is set aside for renewable energy. For example, in California, funds from SBC are available to
offset part of the cost for small wind systems.
The wind farm boom in Texas was fueled by the production tax credit and a Renewable Portfolio
Standard (RPS), enacted in 1999, which was part of electric restructuring. The mandate was for
2,000 MW of new renewables by 2009 in the following amounts, by 2-year steps:

Year MW

2003 400

2005 450

2007 550

2009 600

Total 2,000

Because so much wind power was installed ( Figure 10.11 ), the RPS was increased in 2005 to
5,880 MW by 2015 (again by 2-year steps), with a goal of 10,000 MW by 2025. There was a man-
date of 500 MW from other renewables in that RFP. For the 2015 mandate, the amount that can be
produced by wind will be surpassed in 2008, as wind farm capacity will be an estimated 8,000 MW
( Figure 10.12 ), and if the federal production tax credit is extended, then the goal of 10,000 MW will
be easily be surpassed within another 2 to 3 years.
Another aspect of the electric restructuring in Texas is that electric retailers have to acquire
renewable energy credits (1 REC 1 MWh) from renewable energy produced in Texas or face
penalties of up to $50/MWh. Anybody may participate in the REC market: traders, environmental
organizations, individuals, etc. The market opened in January 2002, and early prices were around
$5/REC. In 2008 the RECs were selling for $5-8. The RECs are good for the year created and
bankable for 2 years.
As always, industries seek tax breaks at every level. States and local entities give tax breaks for
economic development, and wind farm developers would like a property tax break or abatement on
installed costs, as that is the major cost. Conventional power producers can deduct the cost of fuel,
whereas for renewable energy there are not deductions since the fuel is free. Tax abatements have
become common with a payment in lieu of taxes for schools.