The power of the Kansas wind: Its alternate-energy use is solid, but several factors will affect boom

By John Green Staff writer jgreen@hutchnews.com

Wind energy in Kansas and the United States is reaching lofty heights.

During the first quarter of 2017, the industry installed more than 900 utility-scale wind turbines across the country, together capable of generating 2 gigawatts of new electricity.

That was the strongest first quarter for installations in eight years – and the second strongest first quarter ever, said John Hensley, deputy director for industry data and analysis with the American Wind Energy Association, or AWEA.

More turbines were turned on in the first five months of this year than in the first nine months of last year. The new development pushed total wind capacity in the U.S. above 84 GW.

Texas, the nation's wind energy leader by far, again topped new development with 724 megawatts.

Kansas, however, was second in new development with 418 MW of additional wind in gear.

The Wheat State now has more than 2,740 turbines spread across 31 wind farms in 23 counties, according to the Climate and Energy Project. About two-thirds are in western Kansas.

Industry experts say the boom in wind is likely to continue, although a number of issues could affect how fast or high wind development in Kansas can or will go.

Millions of homes, thousands of jobs

"The first quarter of 2017 was a very strong three months for the wind industry," AWEA's Hensley said. "It was a good kickoff for the year, with a lot of activity across the country."

Besides bringing 2 gigawatt online, the industry added 4,500 megawatts in either new construction or projects in advanced development.

Hensley said nearly 21 GW of wind power is in some stage of development, almost equal to the amount of power already installed in Texas.

"This is helping to really stabilize and grow the manufacturing base in the U.S., including Kansas, which is home to the Siemens facility in Hutchinson," Hensley said.

Direct employment in the industry has now surpassed 102,000 jobs, including 25,000 in manufacturing. Projections, Hensley said, are for another 8,000 jobs to be added by 2020.

"Wind power continues to be a bargain for consumers," Hensley said. "It's keeping electricity costs down and boosting the industry."

NextEra Energy constructed the first utility-scale wind farm in Kansas for KCPL and the Sunflower Electric Cooperative. Today the state has a total capacity of more than 4,930 MW of power.

Last year, wind provided just under 30 percent of all the in-state electricity production, providing the equivalent power needs of 1.3 million average homes.

On some days, said Dorothy Barnett, executive director of the Climate and Energy Project, wind accounted for upwards of 50 percent of the power within the multistate Southwest Power Pool grid that includes Kansas.

(To see a daily mix of wind generation in the SPP region, including a rolling annual average, visit www.spp.org, and click on "see more" under Generation Mix.)

"We've seen tremendous growth over those 15 years, but in just the last two years we've seen 2,000 MW added in the state," Hensley noted.

There are a lot of players in the state, Hensley said, with 17 different wind farm developers and 15 different companies or utilities drawing on the power.

The four biggest developers, however, account for nearly 60 percent of ownership.

Westar Energy, by far, is the largest owner and buyer of the wind power, controlling more than one-third of what's produced, at 1,544 MW.

When Westar energized its 133-turbine Western Plains wind farm in Ford County in March, it became the third project owned by the state's largest utility, which also has contracts for power from eight others, according to the company.

Later this year, Westar will add a 1 MW solar installation in South Hutchinson, pushing renewable sources to a third of its portfolio.

A portion of Kansas' wind-generated power is leaving the state under power purchase agreements with at least three out-of-state utilities, including the Tennessee Valley Authority.

$8.5 billion investment

"It's always important not to think just about the project, but also the economic employment impact on the local economy," Hensley said. "If you look at the full set of projects involved, it represents some $8.5 billion in investment in the state."

Also, since the majority of projects are built on private property, landowners receive lease payments for turbines on their ground.

"Those payments have grown to be a major contributor to farmers and ranchers across the state," Hensley said. "In 2016 alone, there was up to $15 million paid to landowners."

Every agreement is different and individually negotiated, and prices vary by location, the size of turbines and how much competition there is for leases. Generally, however, they average is $3,000 to $6,000 per megawatt, said Kimberly Svaty, Kansas public policy director with The Wind Coalition.

"It's a cash crop that helps keep some farms up and running," Svaty said.

"Equally as important, the wind industry is a major engine of job growth," Hensley said. "In 2016, the Kansas wind industry employed over 5,000 folks helping develop projects, both on the construction of projects and the men and women who live in the communities on a daily basis and help operate and maintain the operations, and at manufacturing plants such as Siemens."

The average pay for a wind turbine technician – identified by the U.S. Bureau of Labor last month as the fastest growing profession in the country – is $54,000 a year. Technicians can then move into management or more senior positions.

"It's really an exciting dynamicm," Hensley said.

The estimated wind employment doesn't include local engineers who help design the sites or workers who build and maintain the roads within wind farms, Svaty said.

Ninety-nine percent of wind farms, which today are built to last 30 or more years, are in rural areas, with 70 percent in low-income regions, according to the AWEA.

Accessibility to wind is becoming a drawing card to major U.S. corporations looking to turn to renewable energy. One Kansas project coming on line this year will provide 178 megawatts of power to Microsoft, although the company isn't physically located in the state. 

Of the 1,800 MW in new power purchase agreements signed in the first quarter of 2017, Hensley said, many are directly with commercial users and agencies, the most since AWEA started tracking such agreements in 2013.

"We've seen a large volume of new contracts signed, with a lot of interest from non-utility and corporate purchases – Home Depot and Intuit and TurboTax," Hensley said. "

"We think the next big opportunity for wind power is corporate wind purchases," Barnett said. "There is a lot of big national push for large Fortune 500 and Fortune 100 companies who want access to more renewable energy."

Made in the U.S.

The development of energy in Kansas has been a bit like the wind itself: light some years and near gale force in others.

The push to build wind started in 2007 with a voluntary portfolio standard initiated by Gov. Kathleen Sibelius, Barnett said. Then, in 2009, as part of an agreement brokered by Gov. Mark Parkinson to move expansion of the Holcomb coal plant forward, a mandatory Renewable Portfolio Standard became law, noted Barnett.

"Initially, they (Kansas utilities) had to meet an RPS of 10 percent by 2010, 15 percent by 2015 and 20 percent by 2020," Barnett said. "Obviously, they blew past that by 2015."

In 2010, German multinational Siemens AG, which already had a blade-manufacturing plant in Iowa, opened its turbine nacelle manufacturing plant in Hutchinson, employing more than 350 people and helping drive down the cost of installing wind in the U.S.

Before, most nacelles were manufactured overseas, including in Germany, China and Spain, and shipped to the U.S. at high cost.

Besides Siemens, there were three other nacelle manufacturing plants in the U.S. – operated by Vesta in Colorado, GE in Pensacola, Florida, and Phoenix Inc., in Massachusetts – as well as eight utility-scale turbine blade makers and nine tower facilities, according to the U.S. Department of Energy.

Some of the parts going into nacelles – each turbine contains over 8,000 parts – still come from overseas, but that percentage has significantly decreased. In 2016, 85 percent of U.S.-produced nacelle parts and 80 to 85 percent of towers were made in the U.S.

The latest public data available, from the U.S. Department of Energy, shows turbine prices in 2015 ranged from $850 to $1,250 per kilowatt. That was down from a high of more than $1,500 per kW in 2008. That means a 2.3 MW turbine, the size produced by Siemens, dropped from a high of $3.45 million each to a range of $1.9 million to $2.8 million.

The "capacity-weighted average installed project cost" in 2015, according to the DOE report, was roughly $1,690 per kW, down $640 per kW from its peak.

Hensley, however, said the cost of producing wind power today is down even more, off 69 percent from 2009, and experts project industry efforts will continue to bring prices down before the PTC fully expires.

Kansas wind is 'gold'

More efficient turbines, longer blades and higher towers that capture steadier winds  drove down the price of producing wind, said Scott White, of the Kansas Energy Information Network.

"In the early 2000s, if you got 30 percent efficiency that was really good for a wind farm," White said. " Now they're bumping 40 percent and the newest (turbines) are near 50 percent. That's pretty remarkable."

Swings in federal tax credits supporting wind development also impacted development. They expired, then temporarily extended, sometimes retroactively, by Congress.

Kansas saw a massive surge in wind development in 2013,before a tax credit expired. Development plunged the following year, then gradually increased.

The credit provides tax benefits to power companies buying the energy, rather than to companies building the wind farms. But it still lowers the cost of energy.

Two years ago, Congress extended the Renewable Energy Production Tax Credit for five years. But the amount of the credit drops 20 percent annually until it expires in 2019. That added a lot of stability to the marketplace, the experts say.

Kansas is in good shape when the PTC expires, Hensley said.

"You already have a gold class wind source in the state," Hensley said of Kansas. "We continue to see improvements in wind technology with lighter materials, most advanced systems in the machines themselves, measuring wind speeds more accurately to capture as much as possible. Those advancements continue to bring down costs of projects."

All of those factors have combined to bring down the cost for utilities of buying wind power to its lowest levels ever, making it competitive with natural gas and offsetting coal.

Said Barnett: "It's really the best economic choice now for utilities."