Nebraska wind farm stalled for now

Source: By Kevin O'Hanlon, Columbus Telegram • Posted: Monday, December 2, 2013

A massive wind farm planned by a Kansas company in northeast Nebraska is a no-go, at least for now.

TradeWind Energy Inc. of Lenexa, Kan., had hoped to begin construction on the Rattlesnake Creek Wind Project by the end of the year in order to qualify for federal tax benefits. But the company was unable to secure a commitment from a large power company to buy electricity generated by the project.

“We’re still very much interested in building that project, and yet the hoped-for export (contract) … just didn’t come together in time for us to be able to make the commitments we need to meet the start of construction that the IRS is requiring by the end of this year,” said Frank Costanza, executive vice president of TradeWind Energy.

In order to qualify for the tax credits, Tradewind would have to spend 5 percent of the project’s total cost of $400 million to $500 million by the end of December. But without a commitment to buy the electricity, Tradewind cannot take the risk

“We’d have to spend $20 million to $25 million,” Costanza said.

Tradewind is required under a bill (LB104) passed by Nebraska lawmakers last session to offer 10 percent of the power it generates to Nebraska utilities while shipping 90 percent out of state.

“We are still trying to see if we can get something done with one of the local utilities in Nebraska, but we’re up against it,” Costanza said. “You can do the math on how many days we’ve got until the end of the year. It’s getting more and more problematic with every day that passes.”

The project is planned in Dixon County, near the towns of Allen, Emerson and Wakefield. More than 100 landowners and more than 20,000 acres will be involved in the project. When completed, the project could produce enough power for about 60,000 homes.

Because Nebraska is a public-power state, building the project was contingent on state lawmakers passing LB104 by Omaha Sen. Steve Lathrop that removed a barrier to the development and export of wind-generated energy in Nebraska. Proponents of LB104 said the state needed to act if it wanted to develop its abundant wind resources, because a major wind energy incentive — a federal production tax credit — is scheduled to expire at the end of the year.

Nebraska lags in the production of wind energy. Iowa, for example, generates more than 11 times as much wind power as Nebraska — 5,137 megawatts to 459, according to the American Wind Energy Association. Nebraska ranks last among its neighboring states and 26th of the 39 states that generate wind energy, despite having the fourth-best wind resources in the country.

Lathrop’s bill fell under the Nebraska Advantage Act, which took effect in 2006 and is meant to encourage companies to expand and create jobs by offering them tax incentives. Costanza said the company has yet to apply for the Nebraska tax incentives.

The 200-megawatt wind farm would provide lease payments to local landowners of $10,000 to $15,000 per turbine, create 200 construction jobs and 12 to 16 permanent jobs and pay $700,000 a year in local taxes.

Before LB104 passed, Sen. Ken Schilz of Ogallala unsuccessfully proposed gutting Lathrop’s bill and replacing it with another (LB402), by Omaha Sen. Heath Mello, that would encourage more local ownership of renewable energy projects. It would allow a sales tax exemption on materials used as long as 25 percent of gross revenues went to Nebraska businesses or individuals. LB402 again will be considered by lawmakers next session.

Costanza said the tax credit deadline could be extended by Congress, but he was not optimistic that will happen given the political gridlock over such issues as the federal health care law and the budget.

“They have shown a history over the last 10 years … to after-the-fact extend these things out for another period of time,” Costanza said. “Washington has become dysfunctional. There is nobody focused on anything. There is just dead silence at the moment.

“I wish I had better news,” he said. “We’ve got our fingers crossed, but I can’t promise anything at this point.”