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Harvesting the Breeze: The Value of Wind Energy in the US

18 days ago
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Although growing in popularity, harvesting the breeze isn’t a new concept. In fact, it is believed that people began using wind energy as early as 5,000 BC to help propel boats along the Nile River, according to the U.S. Energy Information Administration (EIA). As early as 200 BC, China utilized basic wind-powered water pumps, while Persia and the Middle East employed windmills equipped with woven-reed blades to grind grain.

In the 1930s, however, the number of wind pumps and wind turbines started to decline as power lines extended throughout the country, reaching rural areas almost everywhere.

In recent years though, the world has begun to turn to clean, renewable energy sources, and the popularity of wind energy is gaining ground. In 1990, the share of U.S. electricity generation from wind energy was less than 1%, but in 2022, it had grown all the way to 10.2%. In 1990, 16 countries generated a total of about 3.6 billion kWh of wind electricity, but in 2021, 128 countries generated about 1,808 billion kWh of wind electricity, according to the U.S. Energy Information Administration.

Switching to wind energy makes sense and has several benefits. Wind is an emissions-free source of energy and has fewer negative effects on the environment. Wind turbines don’t pollute the atmosphere like many other energy sources — simply put, it’s a clean and inexhaustible energy resource.

The Value Proposition

The value of wind energy in the U.S. is difficult to overstate. According to the American Wind Energy Association (AWEA), wind power has become one of the most cost-effective sources of new electricity generation, competing favorably on a cost basis with fossil fuels. 

All landowners who embrace wind energy stand to gain not only financially but also environmentally, reducing carbon emissions and mitigating climate change.

One of the key advantages of wind energy is its scalability. Unlike finite resources like coal or oil, wind is a perpetually renewable resource, available in abundance across various regions of the country. This scalability allows for the development of wind farms ranging from small-scale community projects to massive utility-scale installations, catering to the diverse energy needs of different communities.

Size Matters

Generally, advances in technology mean increased miniaturization of components — not with wind energy generation. From the early “sails” used in ancient windmills, harnessing the wind has transformed the work to turbines. 

Wind projects take two general approaches, on- and off-shore generation. The colossal nature of these projects is difficult to overstate. Wind turbines continue to grow in size and power, contributing to competitive costs and prices. The average capacity of newly installed wind turbines grew 7% from 2021 to 2022, to 3.2 MW, while the hub height — distance from the ground to the middle of the turbine’s rotor — increased 4% from 2021 to 2022, to 98.1 meters, which is slightly taller than the Statue of Liberty. Taller wind turbines can create more electricity by benefitting from the better wind resources available further from the ground. 

Manufacturing

The manufacturing process of turbines involves a series of intricate steps that require careful planning, precision and expertise.

The process of making a wind turbine begins with the design phase. Engineers and designers work together to create a detailed plan that specifies the size, capacity and efficiency of the turbine. This phase involves deciding on the materials to be used, the blade length and the tower height. Advanced software and modeling tools are used to simulate the performance of the turbine under various wind conditions to optimize its design.

Once the design is finalized, the manufacturing process kicks off with the production of the turbine blades. These enormous blades, which can reach lengths of up to 80 meters, are typically made from fiberglass-reinforced polyester or epoxy resin. The manufacturing process involves laying up multiple layers of fiberglass cloth and resin in a mold, which is then cured to form a single, solid piece. The blades are carefully designed to maximize aerodynamic efficiency and withstand the forces exerted by the wind.

And while all that’s happening, the tower of the wind turbine is being manufactured as well. Towers are usually made of steel and are constructed in sections that are later assembled on-site. The steel sections are manufactured using a process called roll forming, where flat steel plates are rolled into cylindrical shapes and welded together. The tower sections are then coated with corrosion-resistant paint to protect them from the elements.

Another crucial component of a wind turbine is the nacelle, which houses the generator, gearbox and other key components. The nacelle is typically made of steel and is assembled on the ground before being lifted to the top of the tower. The generator, which converts the kinetic energy of the wind into electricity, is one of the most critical components of the turbine and requires precision engineering to ensure optimal performance.

Once the blades, tower and nacelle are ready, they are transported to the wind farm site for assembly. 

Land Leasing

Central to the growth of wind farms is the concept of land leasing. Unlike traditional energy generation methods that often require large tracts of land for extraction or drilling, wind farms can coexist with existing land uses, such as agriculture or ranching. Wind turbines occupy only a fraction of the total land area, allowing landowners to continue using the remaining space for farming, grazing or other purposes.

Land leasing for wind turbines can present a win-win proposition for both landowners and developers. For landowners, it offers a steady, and often lucrative, income stream. This can be particularly appealing for farmers or rural landowners seeking additional revenue streams to supplement traditional agricultural income. 

On the other hand, developers benefit from access to suitable land for wind farm development without the hefty upfront costs of land acquisition. Land leasing agreements typically include terms such as lease duration, rental payments, land use restrictions and maintenance responsibilities, providing clarity and structure to the partnership.

Tax Benefits

Leasing land can also present landowners with significant tax benefits. These advantages can make wind farm leasing an even more attractive proposition.

One of the most substantial tax benefits for landowners is the eligibility for renewable energy tax credits. Programs like the Production Tax Credit (PTC) and Investment Tax Credit (ITC) provide incentives based on the energy generated by wind farms. This translates into tangible reductions in tax liabilities, enhancing the financial viability of land leasing arrangements.

Landowners may enjoy property tax exemptions or reductions for dedicating their land to renewable energy projects like wind farms. These exemptions alleviate the property tax burden, providing additional financial incentives to participate in renewable energy development.

State and local governments often sweeten the deal with further incentives to promote clean energy. These incentives can include exemptions from sales tax on equipment purchases, reduced permit fees or direct grants for renewable energy projects. Such support not only boosts the financial benefits but also encourages sustainable energy practices at the local level.

Tax-deferred exchanges offer yet another avenue for optimizing tax obligations. By reinvesting proceeds from wind farm leasing into qualifying properties, landowners can defer capital gains taxes, facilitating continued investment and financial growth.

Accelerated depreciation of wind farm assets is also a valuable tax benefit. This provision allows for faster cost recovery through depreciation deductions, ultimately reducing taxable income and bolstering overall financial returns.

However ...

While land leasing for wind farms presents several benefits, it’s not without its challenges. Concerns over visual impact, noise pollution and potential effects on wildlife can lead to opposition from local communities. Moreover, navigating regulatory hurdles and securing financing for large-scale projects can be daunting tasks for developers. Successful implementation often requires careful stakeholder engagement, environmental impact assessments and adherence to regulatory frameworks.

And, when wind turbines reach the end of their operational lifespan, they must be decommissioned and removed, which, of course, can be costly and complex.

Article written by Brian Ethridge


Catalyst

Farmers Hot Line is part of the Catalyst Communications Network publication family.