Wind Farm Divides North Carolina Republicans

Source: By Valerie Bauerlein and Cassandra Sweet, Wall Street Journal • Posted: Tuesday, February 28, 2017

GOP-controlled state legislature has been cooler to renewable energy, but wind project has helped some residents

Horace Pritchard, who agreed to have nine turbines on his 1,300 acres, says he hopes elected officials will see that wind energy helps farmers like him.

Horace Pritchard, who agreed to have nine turbines on his 1,300 acres, says he hopes elected officials will see that wind energy helps farmers like him. Photo: Alex Boerner for The Wall Street Journal

HERTFORD, N.C.—More than 100 giant wind turbines started producing power this month amid 22,000 acres of cotton, soy and wheat fields.

But North Carolina’s first wind farm may remain its only one as the state, like some others, rethinks its commitment to green energy.

The recent wind-energy push has caused an unusual fight among North Carolina Republicans, with some GOP politicians opposing the project because of its reliance on federal tax credits and potential risks to the military, and rural Republicans embracing the property taxes and extra income paid by the operators.

In red states around the country where wind power is growing and displacing some conventional sources of energy, some Republicans are pushing back, in an attempt to support the coal industry. But others are backing the clean-energy expansion and the jobs and economic development that often come with it.

North Carolina’s contentious $400 million wind farm, run by a unit of Spanish energy giant Iberdrola SA, was built to provide power to an Inc. data center. State lawmakers have renewed a push against the project, citing risks to nearby military operations. The company says it wants to build more wind farms in North Carolina, but has put its plans on hold because of the political uncertainty. Another planned project is currently stalled: Apex Clean Energy of Charlottesville, Va., is scaling back its 105-turbine project after county commissioners denied a necessary zoning permit.

Other developers say they are staying away as the state legislature weighs tighter permitting guidelines.

“Until we get to a stable policy climate, we’re going to continue to see a lot of unknowns, and that is never good for multimillion-dollar investments,” said Katharine Kollins, president of the Southeastern Wind Coalition, a trade group.

President Donald Trump ​is planning to sign an executive order that would call for the repeal of​ an Obama-era rule aimed at cutting carbon emissions from power plants. He also has pledged to renew focus on coal and fossil fuels, both of which could limit renewable energy growth.

Wind power “gets a lot of subsidies. People end up paying more for it,” said state Sen. Bill Cook, a Republican who represents the northeastern North Carolina region where the wind farm is located. Mr. Cook opposed the project.

Turbines turn on a breezy February evening in North Carolina’s first wind farm. The farm is now the largest taxpayer in two counties.

Turbines turn on a breezy February evening in North Carolina’s first wind farm. The farm is now the largest taxpayer in two counties. Photo: Alex Boerner for The Wall Street Journal

But the project has brought relief for some residents in the region, one of the state’s poorest. The wind farm is now the largest taxpayer in two counties, employing 17 full-time staffers. Roughly 60 landowners signed deals to host turbines at $6,000 per turbine a year, funds that help offset increased competition and declining crop income from their fields.

Third-generation farmer Horace Pritchard, 68, said he agreed to have nine turbines on his 1,300 acres because the $54,000 annual payment can help offset uncertainty in commodity prices and bouts of bad weather, like last fall’s flooding from Hurricane Matthew.

Mr. Pritchard, who typically votes Republican and cast his ballot for Donald Trump in November, said he hopes elected officials will see that wind energy helps farmers like him.

“We’re not going to get an automobile factory or big buildings in here, but this is something that we can produce and sell,” he said. “Raleigh needs to understand that.”

U.S. wind and solar power markets have been booming, thanks to federal tax credits, state clean-energy requirements and falling prices. Wind, solar, hydropower and other renewables supplied about 15% of the nation’s power supply last year through November, up from less than 10% in 2008, according to a Wall Street Journal analysis of Energy Department data. Nationwide, renewable energy consumption is forecast to increase by 6% from 2016 to 2018, according to the Energy Department.

Congress extended federal tax credits for wind and solar power in December 2015, but energy companies say they don’t expect much in the way of new renewable-energy incentives from the Trump administration.

Some states are taking a fresh look at their alternative-energy policies. Oklahoma Gov. Mary Fallin, a Republican, is proposing a new tax on wind power.

​In other states, proposals seeking to limit renewable energy growth have failed. In Wyoming, a coal-producing state that also has some of the nation’s best wind resources, lawmakers proposed barring utilities from using wind or solar power to serve customers. The measure failed earlier this month. Ohio Republican Gov. John Kasich vetoed a bill in December that would have extended a freeze on the state’s renewable energy requirement, arguing that the bill would hurt the state’s competitiveness in attracting companies. And in Maryland, lawmakers earlier this month approved a bill to boost the state’s renewable energy requirement after Republican Gov. Larry Hogan vetoed the measure last May.

North Carolina’s foray into wind dates back to 2009, when Democrats controlled the state government and created policies meant to spur investment in renewables. As a result of that push, the Tar Heel State now has the second-largest fleet of solar panels after California, according to GTM Research and the Solar Energy Industries Association.

Republicans took over the state legislature in 2011 and have been cooler to renewable energy subsidies and policies than their Democratic predecessors.

Last month, North Carolina’s Senate president and House speaker sent a joint letter to Homeland Security Secretary John Kelly saying the Amazon wind farm should never have been approved because it interferes with military radar roughly 20 miles north in Chesapeake, Va.

Mr. Kelly hasn’t yet responded to the legislators’ letter, though the Navy said in a recent statement that it had already conducted tests showing the wind turbines wouldn’t affect its radar equipment.

The lawmakers’ objections concern farmers like Mr. Pritchard.

“There are some people that have a negative idea towards anything other than fossil fuel,” he said while sitting on his tractor. “But if they’d look at the overall picture, wind energy has its place.”

How the federal government subsidizes wind farms

Wind-farm developers are able to tap one of two federal tax programs for new projects.

The Production Tax Credit, established in 1992, offers wind farms tax credits in proportion to the electricity they generate in their first 10 years of operation.

Wind projects that started construction by Dec. 31, 2016, can obtain credits of 2.3 cents for every kilowatt-hour of power each turbine generates. For farms built after that, the amount of the tax credit drops by 20% each year until it expires at the end of 2019.

There is also the renewable-energy Investment Tax Credit, which is equal to 30% of the value of a project that started construction by Dec. 31, 2016. The credit steps down gradually each year to 12% in 2019, after which it expires.