Tilting at Windmills: A closer look at Indiana’s expanding wind power industry

Print More

Darrell Hoemann/Midwest Center for Investigative Reporting

Speeding up I-65 just north of Lafayette, Ind., you can’t miss the tall, white windmills in the distance. For drivers, they signal the last leg on a trip to Chicago. For others, though, the windmills mean a new source of income and energy.

Less than 10 years ago, this area was just another stretch of flat farmland used to grow corn and soybeans. But since 2008, boosted by federal and local tax incentives, wind turbines like these have become an increasingly prominent part of the northern Indiana landscape. Six wind farms were completed in Indiana in 2008 and 2009 alone.

Jon Thompson, vice president of Prairie View Farms Inc. in Brookston, Ind., has had 28 wind turbines on his property since he and several other farmers signed a contract with Horizon Wind Energy that year.

“If we had to do it over again, we’d do it again,” Thompson said.

But the coming of the wind farms has not been without concern. Opposition has cropped up around Indiana, with residents voicing fears of decreased property values, increased noise levels, and potential damage to wildlife such as bats and birds.

Opponents of a wind farm planned in Delaware County, for instance, are pushing for two-mile buffers between any wind turbines and residences. That’s far greater than the 1,000-foot setback in counties like Benton.

Officials in Tipton County, meanwhile, are pressing a company planning a 79-turbine farm for assurances that area property values won’t go down because of the development. And in Marshall County, commissioners recently voted unanimously to ban the building of commercial wind turbines there.

Surprising results

Benton was the first county in Indiana to have commercial wind turbines. The county’s economic development director, Kelly Kepner, said farmers were initially asked if meter towers could be erected to evaluate wind power in the area. What the meters showed was shocking, she said.

“There was a two-year study and afterward they thought the machine was broke,” Kepner said.

Wind levels measured at 100 meters in the air were much higher than expected for the flat

Map of 100-meters-per-second speeds across Indiana

U.S. Department of Energy

Map of 100-meters-per-second speeds across Indiana

Indiana farmland. The area surrounding Thompson’s farm in Brookston has wind speeds up to 8.5 meters per second, which is similar to the area around Chicago and Lake Michigan.

Horizon approached Thompson and several other farmers in White County about leasing part of their farmland to set up turbines. White County has the second highest number of commercial wind turbines in Indiana. The group of farmers hired Bose McKinney & Evans of Indianapolis to help negotiate a contract they could all agree on.

“On a farm, the only way to make more money is by working harder or by making an investment that will eventually pay out,” Thompson said. But by bringing turbines onto their land, the farmers have been able to make more money without doing either of these things.

Landowners receive an annual flat fee based on a formula for allowing wind farms to install turbines, run cables or even build access roads. Because of a confidentiality agreement with Horizon, Thompson won’t discuss the rate he is paid for letting the company lease his land. But he said overall, he and the other farmers have been very pleased.

Many of the turbines were built right on Thompson’s property lines, which meant that he only had to give up a small portion of tillable land.

“There have been so many positive things for us financially,” he said. “Some people just aren’t looking at the big picture. It’s called progress.”

Thompson, 43, has worked on Prairie View Farms growing corn and soybeans with his parents, wife and children since they moved to the area 12 years ago.

Property values have gone up and property taxes have gone down as a result of the turbines, Kepner said. And while Thompson said he wasn’t sure how his property values had been affected by the new turbines, he did say he would “absolutely pay more for land with a wind turbine on it.”

Tax Incentives

The economic recession in 2008 meant stagnant growth for many industries, but the wind energy sector saw benefits from federal stimulus program that year. Not only did companies that manufacture turbine parts start receiving sizable benefits, the incentives went so far as to grant immunity from property taxes for owners with turbines on their land.

“These helped to create an environment in Indiana that generated a buzz about a state starting from scratch,” said Tristan Vance of the Indiana Office of Energy Development. “In 2008, these steps began to pay off (and) Indiana had the largest wind growth in the nation. In 2009, they were second.”

Incentives aimed specifically at wind energy include the Business Energy Investment Credit, which allows wind energy participants to write off 30 percent of their expenditures. And under the Renewable Electricity Production Tax Credit, the federal government can pay energy producers using wind turbines 2.2 cents for every kilowatt of energy produced in the first year.

At the state level, the Indiana Renewable Energy Property Tax Exemption provided that “systems that generate energy using solar, wind, hydropower or geothermal resources… are exempt from property tax.” In 2011, the state legislature reduced that property tax incentive for large energy producers.

“Around 2008, Indiana started getting involved in pushing grants and tax credits to wind turbine manufacturers,” Vance said. “It’s not just the companies who own the energy receiving benefits. The companies who craft components used in making the turbines have moved to Indiana as wind energy has grown in the Midwest.”

Kepner said wind farms will continue to receive tax abatements for the next 10 years to help defray costs and encourage business growth.

In Benton County, one of the Fowler Ridge Wind Farm locations in Center Township received an abatement of $358,140 for 2012 making the farm responsible for only $150,360 that year.

Fowler Ridge and the Benton County Wind Farm received an average of about $70,000 in abatements per farm location last year.

Indiana’s financial incentives are drawing attention from some of the world’s largest energy producers. The Meadow Lake Wind Farm, visible from I-65 near Brookston, is one of the largest in the state, comprising more than 600 turbines.

Previously owned by Horizon Wind Energy LLC of Texas, the Meadow Lake farm was purchased by Spain-based EDP Renewables in 2007 for $2.15 billion.

The acquisition included all of Horizon’s holdings, which extend across the country to 15 states.

According to a Bloomberg News report from 2007, EDPR said it was focusing attention on the United States market because of increased competition in Europe, as well as an increasing trend in support of wind power in America.

EDPR Chief Executive Officer Antonio Mexia said in an interview at the time of the Meadow Lake purchase: “The U.S. market will be the fastest-growing in the world. If you want to be a top player, you need to be in the U.S.”

Mexia’s prediction was not far off.

In the years since, EDPR has risen from the world’s sixth largest producer of wind energy to the fourth largest.

According to 2012 financial statements, revenues generated from wind production in the United States now make up more than half of total revenues from all of Europe, indicating a significant shift in EDPR’s market abroad.

In May of 2013 the company posted a 45 percent increase in net income for the first quarter.

Brian Sullivan, an Indianapolis-based development representative for EDPR, said the company owes a great deal of its successful venture into the U.S. market to the acquisition of the Meadow Lake Wind Farm.

“The power generated from this farm is tremendous,” Sullivan said. “The high output, in combination with a higher price being paid for electricity right now has lead to a great few years for us.”

In an interview with Reuters, EDPR officials said the average price of the energy it sold rose to 66.3 euros per megawatt-hour, which is 10 percent higher than prices in 2012.

Sullivan says the Meadow Lake Wind Farm has successfully applied for Production Tax Credits and uses a tax depreciation system called the Modified Accelerated Cost Recovery System to its advantage. MARCS apply to many forms of large capital investments that include heavy equipment and machinery, including wind turbines.

“There’s no doubt that tax incentives for green energy production from the federal to the local level have got the attention of global companies like ours,” Sullivan said. “With so much competition abroad and such a friendly environment here, I think you’re only going to see more foreign players get into the U.S. market as we move forward.”

Skeptics Push Back

Despite the tax incentives, there has been minimal talk of renewable energy at the state legislature. A bill passed in 2011 calls for 10 percent of Indiana’s electricity to come from clean energy sources by 2025. However, Jesse Kharbanda, executive director at the Hoosier Environmental Council (HEC), contends that because of the nature of the law, the goal is not enforceable.

Kharbanda said one problem is that there is a lot of skepticism among state legislatures about the potential benefits of wind farms.

“People can’t get beyond the fact that coal and nuclear energy are available all the time and wind energy isn’t,” Kharbanda said. “Renewable energy works in a broader sense.”

The need for the electricity that wind produces and the times when wind is at its highest blowing rate don’t always match up, according to Paul Preckel, a professor of agricultural economics at Purdue University. Wind blows the most at night when the need for electricity is the lowest and blows the least in the summer when the need for electricity is high. And because electricity isn’t directly storable, the energy being produced must be used immediately or it is lost.

“Wind is not dispatchable,” Preckel said.

This means that when the wind isn’t blowing, wind energy isn’t available. It fluctuates over time and it’s not possible to perfectly predict when and where wind will occur.

Other skeptics of wind energy are worried about an impact on local bird populations, which Kharbanda said is an oversized concern. However, other concerns regarding noise and frequency levels have some scientific grounding, as well as support among Hoosiers.

Tipton County Citizens for Responsible Development formed in response to the Wildcat Wind Farm that is currently under construction in Madison and Tipton counties. The group cited concerns with noise and frequency levels as well as a potential decrease in property values. Opposition has also sprouted up throughout the state in Tippecanoe, Whitley, Howard, and DeKalb counties.

Tipton County zoning codes allow for wind turbines to be placed 1,000 feet from homes. According to the citizens group, many houses will be within one mile of up to 10 turbines, each with a blade diameter equal to that of a Boeing 747.

The zoning codes are similar in Benton and White counties. In White County, where Thompson and his family live, regulations also limit the noise level of a non-commercial wind farm to 60 decibels, measured from the nearest home.

“Nobody complained about where they were,” Thompson said of his fellow farmer neighbors. There are currently 120 wind turbines in White County registered under 43 different owners, according to the county surveyor’s office.

Education and tourism

The promise of wind energy has also sparked some interest among school corporations, with six schools around the state now housing turbines.

“Go to any rural school and ask if they have enough funding and they’ll say no,” Thompson said.
Northwestern School Corporation in Kokomo installed a 322-foot turbine last year. School officials acknowledge the initial costs are high but say in the long run, the district will realize significant savings.
A less expected benefit of wind farms to some Indiana counties has included an increase in tourism.

Last year about 1,000 people visited Benton County and participated in wind farm tours conceived and coordinated by Kepner.

A retired teacher leads the tours, which take allows groups to see turbines up close.

Groups of fewer than 20 people pay a flat fee of $75 and groups of more than 20 people must pay $5 per person. Money from the tours pays for promotional materials and improvement of the tour areas.

Most travelers on I-65 likely won’t stop for a tour. For them, the growing number of windmills merely provides relief from the monotonous scenery.

But for some Hoosiers, they signal a change in their lifestyles, businesses and communities for years to come.

Leave a Reply

Your email address will not be published. Required fields are marked *