Wind Energy and Economic Development Workshop

Meeting Summary

March 15, 2001 - Workshop
March 16, 2001 - Work Group Meeting
Holiday Inn Metrodome
Minneapolis, Minnesota

Executive Summary

The purpose of the Wind Energy and Economic Development Workshop was to develop a better understanding of what makes an 'excellent' economic study of wind development and what criteria should be considered when preparing studies, and to discuss a draft set of "Guidelines for Assessing the Economic Development Impacts of Wind Power" prepared by the NWCC Economic Development Workgroup. As the first economic development workshop of the NWCC, this meeting attracted many new participants not previously involved with NWCC activities. Participants included economic development specialists, wind industry representatives, and regional, state, and local economic development officials. It was determined that existing studies of wind energy and economic development have so far not documented the full actual economic impacts from wind development that has already occurred. In addition, better indicators, consistent format, and more reliable data are needed to contribute more effectively to the body of knowledge on this topic. The creation of a series of Case Studies Fact Sheets on the economic development impacts of wind power was identified as a next step and project for the NWCC Economic Development Workgroup.

Welcome and Introductions

After introductions and the adoption of the agenda, Abby Arnold, RESOLVE Inc. facilitator, reviewed the purpose of the meeting and approach:

• Develop better understanding of what makes an "excellent study", what criteria should we consider when preparing studies?
• Based on the day's discussion, suggest modifications to a draft set of 'Economic Development Study Guidelines'.

Meeting Approach

• Briefing and discussion on current Economic Development studies and related activities (to understand insights, lessons learned).
• Discuss studies in relation to one another in order to develop study guidelines/criteria.

[Refer to Attachment A for Workshop and Work Group Participants List and refer to Attachment B, meeting agenda]

Presentation of Discussion Framework and Economic Development Study Guidelines

A. Arnold presented an overview of the NWCC and the Economic Development Workgroup. The NWCC is a national collaborative endeavor formed in 1994 that includes representatives from electric utilities and their support organizations; state legislatures; state utility commissions; consumer advocacy offices; agricultural and economic development authorities; wind equipment suppliers and developers; power marketers; environmental organizations; local, regional, tribal, state and federal agencies; and agricultural and economic development organizations. The NWCC identifies issues that affect the use of wind power, establishes dialogue among key stakeholders, and catalyzes consensus-based activities to support the development of an environmentally, economically, and politically sustainable commercial market for wind power. NWCC meeting summaries and numerous NWCC publications are posted on NWCC's website at www.nationalwind.org.

[For an overview of the NWCC, visit http://www.nationalwind.org.]

Steve Clemmer, Union of Concerned Scientists and Chair of the NWCC Economic Development Workgroup presented the Draft "NWCC Guidelines for Assessing the Economic Development Impacts of Wind Power". The Economic Development Study Guidelines is a consensus-based work in progress of the Economic Development Workgroup designed to guide the assessment of economic development impacts of wind power. The audience for these guidelines has been identified as economists, analysts, and users of the results of economic development case studies. Mr. Clemmer noted that the group would refer to these throughout the meeting and return to them for discussion late in the agenda.

[Refer to Attachment C, Draft NWCC Guidelines for Assessing the Economic Development Impacts of Wind Power]

Presentations of Prospective Development Studies

Speakers presented prospective case studies followed by time for questions and discussion. A brief summary and key points of the presentations are detailed here. Consistent themes drawn from participant discussion of the presentations are covered in the next section, "Reflections on Prospective Studies - Participant Discussion of Panel Presentations".

[Full abstract, study sponsors, scope of study, data sources, economic model used, study audience, and other detailed information can be found in Attachment D, Advance Packet: Study Synopses and Speaker Biographies]

Michael McDiarmid, NM Energy - Minerals & Natural Resource Department
New Mexico Wind Economic Impact Analysis Study (SEP Grant for Phase II)
[Refer to E, Michael McDiarmid Presentation Slides]

This prospective case study identified potential economic development benefits associated with the development and operation of 40 MW wind power plant in five different counties in New Mexico. Study looked at the components (EIS, construction estimates, utility connections, etc.) of project development at each particular site to capture the economic benefits and identify obstacles in order to encourage investment in wind power from state and local government, economic development corporations, banks, businesses, and landowners. The identified benefits to local state and economies were: jobs, lease of acreage, property tax revenues, miscellaneous local sales, sales tax revenues, and tourism. Other possible economic development benefits include tourism, manufacturing and maintenance, and the diversification of the local economy. Feedback from local and state economic development officials on this prospective case study has generated interest in finding next steps to develop local wind resources.

Larry Leistritz, NDSU Agricultural Economics
North Dakota Economic Development Impact Analysis (SEP Grant)
[Refer to Attachment E, Larry Leistritz Presentation Slides*]

This study in progress is designed to estimate the local and statewide economic impacts of wind energy development in North Dakota and will be performed in two phases. Phase 1 will consist of analysis of local and statewide impacts of an initial 80 MW wind energy facility (located in the Griggs-Steele Co. area). Phase 2 will involve analyzing the statewide impacts of a 1,000 MW scenario representing wind energy capacity that could potentially be developed over a 10-year period. The Phase 2 analysis will also include alternative assumptions about whether wind energy is simply a net addition to North Dakota's power exports or whether it displaces some coal-fired electricity production. Study outputs will include estimates of the effects of wind energy development on gross receipts of various economic sectors, on personal income, on employment, and on revenues from selected state taxes. This study has only recently been initiated and has not yet produced any conclusive results on the impact to local and state economic development.

Steve Clemmer, Union of Concerned Scientists
Iowa and Nebraska State and Local Impacts
[Refer to Attachment E, Steve Clemmer Presentation Slides]

Nebraska has among the best wind energy resources in the nation, but the state currently lags behind its neighbors in developing wind power. The Union of Concerned Scientists (UCS) analyzed the potential economic benefits and costs of generating 10 percent of Nebraska's electricity from wind power by the year 2012, as proposed in a bill before the Nebraska legislature to implement a renewable portfolio standard. UCS found that meeting this target would create 360 more jobs, $8 million more in income, and $35 million more in gross state product than producing the same amount of electricity from coal and natural gas generation. UCS also found that the net benefits to the state economy would exceed the additional cost of developing wind power by nearly $15 million-per-year over a 20-year period. New jobs and economic activity would be created directly from building, operating, and maintaining wind facilities, as well as indirectly from local business supplying goods and services to support those activities. Nebraska's best wind resources are generally located in rural areas with higher poverty rates and lower incomes than the state average. New economic activity from wind development could help counteract these trends while diversifying local economies. The study found that by 2012, wind projects could generate $2.2 million in royalty payments to farmers and landowners and $5.2 million in property tax revenues for rural communities.

Jerry Lonergan, Plains Research Group, LLC
Capturing the Economic Impact of Wind Farm Development in Rural Kansas - Preassessment of Target Counties
[Refer to E, Jerry Lonergan Presentation Slides]

The majority of economic impact assessments of wind farm development have been performed after the wind farm has been installed often relying upon estimates and hindsight guesses of the economic landscape as it appeared prior to development. Projects completed or underway that were conducted for or by either wind industry developers or strong advocates suffer from a perception of promoters seeking to convince communities and people of the value of wind development.

The goal of the study was to provide an accurate economic assessment of Gray County and surrounding counties prior to wind farm construction and operation phases, seeking to understand the region and its citizens to better be able to monitor and attribute impacts to wind farm development. The product of this effort will be a step-by-step methodology for conducting an objective review of wind development for use in Kansas and nationally. As the legislature begins to consider wind energy and its potential in Kansas, a study specific to the state and its rural areas is vital. The authors feel the project can ultimately be a resource to greatly assist wind development and make an important contribution to energy programs and rural development in Kansas.

Reflections on Prospective Studies - Participant Discussion of Panel Presentations

Panel of invited guests (Vince Robinson, Lincoln Co. Enterprise; Janet Streff, Minnesota Dept. of Commerce; Bob Gough, Intertribal COUP; Erik Pratt, Minnesota Environmental Initiative) offered their perspective on the case studies, followed by discussion from the group. Discussion was framed around the following two questions:
What would you recommend to strengthen these studies for your needs?
What modifications to the draft guidelines would you recommend?

Comments made by panelists include:

• Jobs from wind power projects may not benefit the local economy if transient workers are sending their money out of the region.
• Analysis should be undertaken to determine how wind power would effect other energy sources or other land uses.
• Local economic multipliers may not accurately reflect that of a wind development.
• Studies need to consider non-monetary effects such as visual impacts, environmental issues, etc. and provide contingency evaluations.
• Quality control of data should be held to high standards. Develop relationships with economists and universities.
• Wind development needs to involve tribes as stakeholders and a protocol should be established for working with tribal governance on wind development projects.
• Wind development and policy should focus on long term benefits.
• Consider the impact of subassembly and component manufacturing in the "value chain".
• Different tax structures such as production based tax, gross receipts tax, and mil rate tax should be examined.

Presentations of Post-development Studies

A brief summary and key points from the presentations are detailed. Consistent themes drawn from participant discussion of the presentations are covered in the next section, "Reflections on Post-development Studies - Participant Discussion of Panel Presentations".

[Full abstract, study sponsors, scope of study, data sources, economic model used, study audience, and other detailed information can be found in Attachment D, "Advance Packet: Study Synopses and Speaker Biographies]

Dan Juhl, DanMar & Associates
Farming Wind Generated Electricity as a Cash Crop

The wind resource in the Great Plains has the potential to supply the country with thousands of megawatts of power. Based upon his initial work on "Economic Impact Analysis of Windpower Development in Southwest Minnesota" for the Southwest Regional Development Commission, September 1996, Dan Juhl discussed the utilization of commercial scale wind technology in a disbursed method of development to help eliminate transmission barriers. The development of wind resources in a distributive model would help the rural economy while bringing online clean, sustainable energy. This model creates the opportunity for farmers to develop a cash crop that can provide a long term income stream that is not affected by the fluctuating commodity prices of traditional crops. Given that the cost of financing the initial phases of wind development is a significant obstacle to project development, farmers need mechanisms to obtain long term, low cost financing. Use of a "cookie-cutter" or standardized approach to development for steps such as a power contract, permitting, and preliminary study would help farmers reduce their start-up costs by eliminating fees incurred as a result of contract negotiation. As aggregators, rural electric co-ops and utilities would also benefit from standardized contracts.

Alexander DePillis, State of Wisconsin department of Administration and Marshall Goldberg, MRG and Associates
Wisconsin Siting Analysis and Development Assessment
[Refer to Attachement E, Alexander DePillis and Marshal Goldberg Presentation Slides]

Wisconsin Energy Bureau presented a study that will evaluate both existing wind farms and future projects to evaluate alternative approaches and sites for new development, assess the local and state economic impacts associated with this development and determine the impact that wind development has on property values of adjoining parcels. The assessment will take place beginning 2001 and be concluded about a year later. Five locations were chosen in order to evaluate the economic impacts of 4 wind energy siting approaches, which utilize a 30 MW capacity scenario. Input-Output modeling and industry development data will be used to develop specific economic models for individual counties and for the state. This study will also seek to assess Wisconsin's wind manufacturing industry potential by evaluating regional and national wind energy growth, analyzing Renewable Portfolio Standards across the nation, and identifying opportunities for new and existing industries to start-up or expand in Wisconsin.

Lisa Daniels, Windustry
Perspectives on Wind Energy in the Rural Community
[Refer to Attachment E, Lisa Daniels Presentation Slides]

"Perspectives on Wind Energy in the Rural Community" is a study in progress designed to profile the needs of rural economic development professionals, phase one, and to model an approach to make existing economic development studies more accessible and more visible, phase two. The project process has value as well, in that it creates a network of economic development professionals from different communities and different sectors that are identifying how wind power can fit into their communities. Lisa Daniels presented preliminary results of the first phase of the study. The first phase is to create a profile of the information needs of rural economic development professionals who work in several different capacities in rural communities in several Plains states. Information was gathered in the form of telephone and in-person interviews and responses to questionnaires via email. The professionals work in organizations such as rural outreach centers, academic agriculture and economic departments, state legislatures, state executive and administrative branches, and government, and community economic development organizations. Initial response from surveys and interviews revealed interest in creating public policy favorable to wind development, maximizing local benefit, analyzing both short term and long term benefits, and determining a fair price for use of private land.

Virinder Singh, Renewable Energy Policy Project (REPP)
Direct Labor Requirements for Wind, PV, and Biomass Co-Firing
[Refer to Attachment E, Virinder Singh presentation slides]

The study summarizes the result of U.S. industry surveys and literature reviews, the purpose of which are to determine the direct labor required for each component and service for wind, solar photovoltaic, and biomass co-firing. The study also estimates the hourly requirements for development based on labor skills, thereby providing key information to labor unions and other labor experts. Renewable energy appears to offer substantial labor benefits, particularly photovoltaic. Its is currently unclear how it compares to direct jobs created from the construction and operation of fossil fuel power plants.

For wind, the study found that 1 MW of wind supports 3.7 direct jobs, with blades, installation, and towers creating the most jobs. Wind power currently employs 25% more people than coal on a MWh basis, but it is certain that economies of scale and tech development will reduce this figure in the future. Structural work, machine trades, and professional/managerial/technical were the skills with the greatest demand in wind power. By identifying specific skills and requirements for components, the study offers a clearer idea of the kinds of jobs wind power can provide. The author acknowledges that the survey format introduces the potential for overstated labor requirements, however he claims it appears that the figures reached are within the realm of credibility.

Reflections on Post-development Studies - Participant Discussion of Panel Presentations

Panel of invited guests (Madinia Cavendish, Northwest Co-op Development Center; Gerry Galinato, Idaho Energy Division; John Dunlop, AWEA; Paul Helgeson, Public Service Commission of Wisconsin) offered their perspective on the case studies, followed by discussion from the group. Comments made by panelists include:

• Types of ownership (landowner, electric co-op, utility/power company, etc.) of wind development projects varies widely and can produce vastly differing outcomes on the local, state, and regional economy.
• Costing of large versus small-scale wind development projects should be examined in relation to appropriate market arenas.
• Case studies should be examined in the context of potential next steps for implementation.
• Potential and real social-economic impacts of tourism generated from wind development should be detailed.
• Evaluations should provide reliable and valid data with assumptions and multipliers, which are clearly identified.
• Standardized contracts and tariffs can particularly benefit smaller scale distributed model of wind development.

Project Recommendations and Next Steps
Project Ideas Distilled from Common Themes
Based on discussion of common themes from Prospective and Post-Development Study presentations, the following list of project ideas was created:

• Sponsor a major study exploring the integration of wind and other power sources into rural economies to understand local economic impacts.
• Produce 'Case Studies' on the economic impact of wind development sites (2 page fact sheets).
  • Create a Lessons Learned or Synthesis Paper on the findings of Case Studies.
• Create a 'Development Guide' to develop and attract wind power from locals' perspective.
• Facilitate and/or establish communication/dialogue with regional and state level economic development experts and policy makers.
• Develop 'Issue Briefs' on the following topics:
  • payment to landowners/value of land
  • ownership models: distributed, coop, landowners, large scale, etc
  • property and other taxes
• standardized contracts/tariffs
• Create a Renewable Portfolio Standard for co-ops and tribes.
• Develop a guide on how to form a power producer.

A multi-vote exercise was used to prioritize the list of projects. Case Studies, Facilitation of regional dialogue/communication, Development Guide, and Issue Briefs received the highest number of votes.

Participant Discussion of Case Studies Fact Sheets
The workgroup recommended producing Case Study Fact Sheets for its primary project. There was discussion on the feasibility of other projects as listed and on the budget available to produce them. Participants provided the following comments:

• Provide language appropriate to audience.
• Caution overselling the economic benefits of wind development.
• Incorporate existing statistics and proposals.
• Be submitted for peer review.
• Retain a common format, output data, and units of measure.
• Tell a story, identify players, include photos, and provide lessons learned.
• Follow the flow of money to areas such as:
  • investment
  • debt service
  • payments to local, state, regional, and tribal units of government
  • equity
  • # of turbines
  • construction
  • O&M jobs
  • transmission lines/substation
  • ancillary impacts to community and industry
  • net impacts to tourism

Next Steps

• A conference call scheduled for Monday, April 2nd at 2pm ET.
• Discuss the budget available for other projects such as Issue Briefs.
• Discuss projects that could be done by sources other than the NWCC.
• Discuss how Case Studies should be selected.
• Revisit format for Case Studies.
• Revisit key elements for Case Studies.

Discussion of Draft Guidelines for Assessing the Economic Development Impacts of Wind Power
Some comments made on this section were recorded directly on the one-text and are not listed here.
Discussion and Recommendations

• Keep the audience in mind for appropriate language and content.
• Consider reorganizing the guidelines into input and output categories. Suggested split-up of Guideline 3 between model data/input and output.
• Address small wind turbine development and the distributed model.
• Recognize the importance of monitoring. Suggested creating language on monitoring in Guideline 5.
• Compare wind with other available sources of energy, both renewable and traditional.
• Differentiate costs for short term versus longer term siting process.
• Look at the opportunities lost to economies for not diversifying their energy portfolio.
• Consider the impact of subassembly and component manufacturing in the "value chain". Modify first bullet under Guideline 8 to reflect this impact.
• Address the impact of ownership at a higher level of analysis. Suggested that 'ownership' be a separate guideline or subprinciple to identify financiers and power purchasers and its effects on property tax, local equity, and balance of trade.
• Differentiate between essential elements and like-to-know information. Suggested listing of key outputs, e.g. 5 indices and their common units of measure.

Next Steps

• Incorporate changes and new language from meeting.
• Review revised Guidelines with incorporated language from the meeting.
• Identify and/or revisit new guideline items and principles raised at the meeting. Propose new language for a revised draft.

Attachments

1. Final Workshop and Work Group Meeting Participants Lists
2. Meeting Agenda
3. Draft NWCC Guidelines for Assessing the Economic Development Impacts of Wind Power
4. Speaker Biographies and Study Synopses
5. Speaker slides and overheads

• Michael McDiarmid Presentation Slides
• Larry Leistritz Presentation Slides*
• Steve Clemmer Presentation Slides
• Jerry Lonergan Presentation Slides
• Alexander DePillis (map,model) and Marshal Goldberg Presentation Slides
• Lisa Daniels Presentation Slides
• Virinder Singh presentation Slides (charts)