Wind Energy Industry Impacts in Oklahoma

Transcription

R E S E A R C H
F O U N D A T I O N
R E P O R T
Wind Energy Industry
Impacts in Oklahoma
November 2015
Prepared by Dr. Shannon L. Ferrell and Joshua Conaway,
Oklahoma State University
Department of Agricultural Economics
Acknowledgments
This project represents an unprecedented collection of data about the Oklahoma wind energy industry,
and would not have been possible without the assistance of a number of state and county personnel who
went far above and beyond their duties in assisting with the collection and analysis of this information.
Ms. Kylah McNabb with the Oklahoma State Energy Office was incredibly generous in sharing
information she had compiled over the course of 12 years regarding Oklahoma’s wind energy industry
and also shared the benefit of her experience as a wind resource researcher and project developer. Her
assistance was absolutely vital to compiling the portrait of Oklahoma’s wind energy industry presented
in Section 1. Importantly, though, Ms. McNabb’s assistance was foundational to the project team’s
understanding of all the issues researched through this project.
Compiling the historical ad valorem tax data and building a sound ad valorem forecast model
– the core of this report’s Section 2 – would have been impossible without the assistance of Gary
Snyder (OSU Center for Local Government Technology Assessor Training Accreditation Program),
Wade Patterson (Garfield County Assessor), Doug Brydon (Deputy Director of the Oklahoma Tax
Commission’s Ad Valorem Division), and Dr. Notie Lansford (Director of the OSU County Training
Program). Each made contributions of advice, experience, insight, data, and personal contacts enabling
our project team to collect an exhaustive dataset on wind energy system ad valorem tax revenues over
20 counties and to build the forecast model. Further, the project team extends its sincere gratitude to all
county treasurers and assessors who, in addition to their ordinary duties, compiled the tax data forming
the foundation of Section 2’s analysis. Several of these county officers also devoted significant time to
explaining the practical mechanics of the assessment and taxation of wind energy systems and to helping
the team validate its research, and we are especially grateful to them: Bab Coker (Roger Mills County
Treasurer), Cassie Springer (Roger Mills County Deputy Treasurer), Julie Louthan (Dewey County
Assessor), Kelly Taylor (Deputy Assessor, Beckham County), Lynette Ingraham (Harper County
Assessor), Sonya Coleman (Woodward County Treasurer), Janet Roulet (Custer County Treasurer),
Rhonda Brantley (Comanche County Treasurer), and Stan Jennings (Caddo County Treasurer).
A mapping project of the scope and detail required for the research presented in Section 3 had
never been attempted for Oklahoma (and, based on research to date, anywhere else), and the results
achieved required hundreds of man-hours in pain-staking, detailed work. Mr. Joshua Conaway, Ms.
Paige Harjo, and Mr. Brian Highfill completed what at first seemed an insurmountable task, and did so
with exceptional precision and speed. In so doing, they also created a resource that will provide value to
Oklahomans for years to come. Additional thanks are also owed to Mr. Conaway who contributed to the
economic analysis of land use trade-offs included in Section 3 of this report. Finally, Dr. Shelly Peper
Sitton very graciously provided valuable editorial and layout support for this report.
Funding
The State Chamber of Oklahoma Research Foundation funded this project through a research contract.
Author’s Note
Data for Figures 2 and 3 appearing on page 9 are current as of June 30, 2015. All other data contained in
this report reflect the most current publicly available information as of May 1, 2015.
2
Contents
Figures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 1: Oklahoma’s Wind Energy Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.1
The History of Oklahoma’s Wind Energy Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.2
Oklahoma’s Wind Energy Industry Today . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.3
The Future of Oklahoma Wind Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2: Wind Energy’s Contributions to Ad Valorem Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1 Oklahoma’s Ad Valorem Tax System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2 Wind Energy’s Contribution to Oklahoma Ad Valorem Revenues. . . . . . . . . . . . . . . . . 14
2.2.1 Historical Payments to Counties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2.2 Forecast Payments to Counties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The Oklahoma Qualifying Manufacturing Concern Exemption and Exempt
2.3
Manufacturing Reimbursement Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3.1 Forecast Reimbursement Fund Obligations for the Wind Industry �� 22
2.3.2 Assessment Methodologies for Oklahoma Counties. . . . . . . . . . . . . . . . . . . . . . 24
Conclusions and Recommendations Regarding Ad Valorem Issues . . . . . . . . . . . . . . . . 24
2.4 Section 3: Spatial Issues and Land Use in Oklahoma’s Wind Energy Industry . . . . . . . . . . . . . . . . . . . 24
3.1
Mapping Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.2
Summary of Spatial and Land Use Findings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.3
Spacing, Compatibility of Land Uses, and Setback Issues. . . . . . . . . . . . . . . . . . . . . . . . 27
3.3.1 Wind Energy and Agricultural Land Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.3.2 Wind Energy and Petroleum Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.3.3
Setback Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.5 Conclusions Regarding Spatial Issues and Land Use . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4: Wind Energy’s Impacts to Oklahoma Utility Ratepayers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5: Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Appendix: Research Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3
Figures
Figure 1: Oklahoma Installed Wind Energy Capacity, 2002 - 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Figure 2: Oklahoma Wind Energy Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figure 3: Summary of Oklahoma Wind Energy Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figure 4: Oklahoma Electrical Power Production by Source, January 2015. . . . . . . . . . . . . . . . . . . . . 10
Figure 5: Oklahoma Wind Power Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Figure 6: SPP Priority Projects Map. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Figure 7: Proposed Route of Plains & Eastern Clean Line HVDC Transmission Project�� 13
Figure 8: Historic Ad Valorem Revenues and Property Values
for Wind Energy Systems, 2004-2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Figure 9: Acre Equivalencies for Average Wind Turbine Ad Valorem Revenues. . . . . . . . . . . . . . . . . 16
Figure 10: Total Historic and Forecast Ad Valorem Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Figure 11: Historical and Forecast Ad Valorem Revenues
from Wind Energy Systems, by County and Source. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Figure 12: Location of Existing Oklahoma Wind Energy Projects Relative
to Population Loss or Below Non-Metropolitan County Average Population Gains�� 18
Figure 13: Total Education Revenues from Wind Energy Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Figure 14: Composition of School Funds Paid over Forecast Model, 2003 – 2043. . . . . . . . . . . . . . . . 20
Figure 15: OTC Ad Valorem Reimbursements by Industry Sector, 2004-2013. . . . . . . . . . . . . . . . . . . 22
Figure 16: Total Historical and Forecast OTC Ad Valorem Reimbursements. . . . . . . . . . . . . . . . . . . . 23
Figure 17: Combined Historical and Forecast Ad Valorem Tax Payments by Source. . . . . . . . . . . . . . . 23
Figure 18: Examples of Project Elements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Figure 19: Summary of Wind Energy Project Land Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Figure 20: Equivalent Area of All Oklahoma Wind Energy Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Figure 21: KODE Novus I Project – Wind, Irrigated Agriculture, and Intensive
Animal Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Figure 22: Blackwell Wind Farm Road Configuration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Figure 23: Increases in Per-Acre Revenues to Agricultural Land from Wind Energy Systems�� 30
Figure 24: Examples of Cattle and Wind Turbines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Figure 25: KODE Novus I Project, Wind and Petroleum Development. . . . . . . . . . . . . . . . . . . . . . . . 32
Figure 26: Setback Radii to Avoid Collision in Event of Mutual Derrick and Turbine Collapse�� 33
Figure 27: Distance of Existing Wind Energy Projects from Nearest Hospital, Airport,
and School. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Figure 28: Map of Radii from Hospitals, Airports and Schools to Nearest Wind Turbine �� 34
Figure 29: Oklahoma Tax Commission Depreciation Schedule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Figure 30: OTC Cost Approach Model Asset Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Figure 31: Ad Valorem Revenue Collections by System Life Year,
Cost Approach Model, Prototype Turbine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4
Executive Summary
◊ In the past 12 years, Oklahoma has grown from having no utility-scale wind energy capacity to now
having nearly 4,000 megawatts of capacity, making it the fourth-largest wind energy state in the
United States. With projects currently under construction, Oklahoma is projected to have more than
5,000 megawatts of capacity by the end of 2015. Possessing one of the nation’s largest wind resource
potentials and an increasingly robust electrical transmission grid, Oklahoma stands poised to be one
of the nation’s leading producers of wind-generated electrical power. A separate study estimates the
wind industry has created more than 1,600 direct, full-time jobs in Oklahoma.
◊ Oklahoma now produces roughly 17 percent of its power from wind, compared to the U.S. average of
6.5 percent (which includes all renewable sources other than hydroelectric power).
◊ In many counties, the equipment installed in wind energy projects represents a significant increase in
the taxable property base, which has led to corresponding increases in revenues for local schools and
county services. Including both historical payments and payments forecasted for planned projects,
the wind energy industry is projected to pay approximately $1 billion in ad valorem taxes. With the
corresponding OTC payments, the wind industry is predicted to pay nearly $1.2 billion to education
funds, including local and county school funds and the Oklahoma CareerTech system.
◊ A review of the tax records for all existing Oklahoma wind energy projects reveals those projects
already have increased the tax base and ad valorem revenues in those counties by installing
equipment with a current appraised value of $3.3 billion dollars.
◊ From the first tax year in which revenues were received from Oklahoma’s first utility-scale wind
energy projects (2004) through the most recently-available data for the 2014 tax year, wind energy
systems in Oklahoma resulted in the payment of nearly $134 million in ad valorem taxes to
Oklahoma counties, including both Oklahoma Tax Commission (“OTC”) reimbursements and
developer tax payments to counties.
◊ Over the span of the entire model, which includes both Oklahoma’s first wind energy projects
(installed in 2003) and the forecast projects (whose last year of projected life is 2043), owners of wind
energy projects will pay approximately $1 billion dollars in ad valorem taxes. Every dollar paid in
Reimbursement Fund distributions yields $1.69 in owner-paid tax revenues to local governments
and schools.
◊ A separate study estimates royalty payments to Oklahoma landowners where wind farms are located
total more than $22 million annually. In addition, the ability to conduct livestock and crop operations
coextensively with wind energy projects provides significant additional returns to landowners.
◊ Importantly, the increased revenue provided to school districts containing wind energy projects
benefits not only those districts, but districts across the state as well. The calculation of state aid
to local school districts takes into account a number of the district’s revenue sources. If, after those
sources are tallied, the district’s projected per-pupil revenue exceeds 150 percent of the projected state
average per pupil revenue, the amount of state aid supplied to that district is reduced proportionately.
This means more state funds are available for the support of all Oklahoma schools.
◊ The results of this project show Oklahoma wind energy projects occupy far less land than suggested
by industry estimates. Turbine spacing allows ample and diverse land uses within project “footprints,”
and existing wind projects largely avoid locations such as hospitals, airports, and schools by wide
margins.
5
◊ On average, the total land use of Oklahoma wind energy projects – including turbines, roads, and
substations, is 0.46 acres per megawatt or 0.87 acres per turbine. These numbers are significantly less
than those estimated by industry sources (which suggest a land use of three acres per megawatt of
capacity). The mapping project indicates wind energy development should pose few or no barriers to
oil and gas development in the same area.
◊ The observations of the mapping project, coupled with operational information about the
construction and operation of wind energy projects, suggest wind energy development should pose
few or no barriers to oil and gas development in the same area.
◊ Oklahoma’s wind energy projects physically occupy a very small footprint, particularly in respect
to their generating capacity. The total area occupied by the projects measured totaled to slightly
more than two 640-acre sections of land, or an area roughly the size of downtown Oklahoma City.
Turbines are spaced sufficiently to allow a variety of land uses to coexist on the same property,
including a wide range of agricultural and petroleum uses. If current patterns of land use continue,
there will likely be few problems with setbacks of wind turbines from facilities such as hospitals,
airports, and schools.
◊ Oklahoma’s two investor-owned utilities have estimated their use of power from wind energy
projects will save ratepayers nearly $2 billion.
6
Section 1 Oklahoma’s Wind Energy Industry
In the past 12 years, Oklahoma has grown from having no utility-scale wind energy capacity to
now having nearly 4,000 megawatts of capacity, making it the fourth-largest wind energy state
in the United States. With projects currently under construction, Oklahoma is projected to have
more than 5,000 megawatts of capacity by the end of 2015. Possessing one of the nation’s largest
wind resource potentials and an increasingly robust electrical transmission grid, Oklahoma stands
poised to be one of the nation’s leading producers of wind-generated electrical power.
1.1 The History of Oklahoma’s Wind Energy Industry
One can hardly think about Oklahoma without thinking about wind, and the proof is in our state song:
“Oklahoma! Where the wind comes sweeping down the plain.” Oklahoma’s wind resource has always
played a vital role in the development of our state. In our days as a Western territory, wind-powered
water pumps – the iconic windmills instinctively associated with the Old West – allowed settlers to
pump water out of deep aquifers, making productive land out of areas that might not see settlement
otherwise.1 What many people do not realize, however, is the arrival of wind-powered electrical
generation was almost simultaneous to the wind-powered water pump, with the first sales of windmills
designed for residential electric power generation occurring in the 1890s.2
Nearly a century later, the American utility-scale3 wind power industry began to take shape. Several
scholars consider early 1980s California (in the wake of the energy crisis of the 1970s) to be the
birthplace of the modern American wind energy industry.4 Its market for electrical power, availability of
transmission capacity near dense wind resources, and energy policies made California the leading state in
U.S. wind energy until 2006.5 In the mid- to late 1990s, the deregulation of electrical markets, dramatic
improvements in turbine efficiency and increasing instability in natural gas prices led power companies
and investors nationwide to look at wind once more.
Utility-scale wind power development depends on a number of factors beyond the quality of the
available wind resources, including the regional market prices for electrical power, accessibility to
electrical transmission lines with the capacity to carry the power generated by a project, and the state
and federal policy environment.6 The mix of these factors in California made that state the leader in U.S.
wind energy until 2006, when Texas would overtake it and move on to a commanding lead.7 Much of
Texas’ explosive growth may be attributed to the fortunate circumstance that one of its largest and most
dense wind resource areas is bisected by one of its largest electrical transmission lines.8 Aggressive state
programs to build transmission capacity in areas most likely to stimulate wind power development –
most notably the Competitive Renewable Energy Zone (CREZ) projects9 – also attracted development
to Texas.
Policies and markets drove much of California’s wind power growth; resources coupled with
transmission capacity and beneficial policies drove much of Texas’ wind power growth. This leads to the
interesting case of Iowa, which frequently swaps positions with California as the state with either the
second- or third-largest wind capacity despite having a smaller wind resource potential than many other
states with more installed capacity. A leader in renewable energy production (as home to over 25 percent
of the U.S. ethanol production capacity and a major biodiesel production state10) and a leading state with
respect to farmer investment in renewable energy projects, Iowa sought to leverage those advantages
with a number of state policies supporting wind power development, including a requirement for utilities
to offer renewable power options to customers,11 a Renewable Portfolio Standard (“RPS”),12 and a state
renewable energy tax credit.13
The factors that made California, Texas, and Iowa early leaders in utility-scale wind development
looked much different in Oklahoma. The market for power in Oklahoma in the early 2000s was
much different than that of California or even Texas in that Oklahoma has historically paid the lowest
cost for electricity of any of its neighboring states. At the same time, most of Oklahoma’s best wind
7
resources were located in the part of the state with the lowest population density, meaning they were
also in the portions of the state with the least electrical transmission capacity. Nevertheless, the quality
of Oklahoma’s wind energy resource in two areas relatively close to existing high-capacity transmission
lines attracted Oklahoma’s first utility-scale wind energy projects in 2003 with the installation of the
Oklahoma Wind Energy Center in Harper and Woodward Counties and the installation of Blue
Canyon Phase I in Comanche and Caddo Counties.
1.2 Oklahoma’s Wind Energy Industry Today
The construction of the Oklahoma Wind Energy Center and Blue Canyon Phase I projects marked the
beginning of an almost-continuous pattern14 of growth in Oklahoma’s wind energy industry, and since
that time, Oklahoma has grown to rank fourth among U.S. states in installed wind energy capacity.15
Figure 1: Oklahoma Installed Wind Energy Capacity, 2002 - 2015
Oklahoma Installed Wind Energy Capacity, 2002 ‐ 2015
6,000
5,346
Installed Wind Energy Capacity (MW)
5,000
4,000
3,782
3,134
3,134
2012
2013
3,000
2,000
1,811
1,480
1,130
1,000
474
0
176
176
2003
2004
594
689
708
2007
2008
0
2002
2005
2006
2009
2010
2011
2014
2015
Oklahoma’s wind power industry has grown from zero capacity in 2002 to 3,782 megawatts by 2014,
making it the fourth-largest wind power state in the United States.
Source: 2002 – 2012 data: Energy Information Administration, “Oklahoma State Electricity Profile
2012,” available at http://www.eia.gov/electricity/state/oklahoma/ (last accessed May 1, 2015); 2013 and
2014 data: AWEA, “Oklahoma Wind Energy Fact Sheet,” available at http://awea.files.cms-plus.com/
FileDownloads/pdfs/Oklahoma.pdf (last accessed April 30, 2015); 2015 estimate: Oklahoma Department of
Commerce State Energy Office.
8
Figure 2: Oklahoma Wind Energy Projects
The map above depicts Oklahoma’s 30 existing wind energy projects consisting of over 2,000 wind
turbines. For a more detailed discussion of the layout of Oklahoma’s wind energy projects and the
mapping process, see Section 3 and Appendix 3 below.
Figure 3: Summary of Oklahoma Wind Energy Projects
Name
Operational Location (county & nearest town)
Oklahoma Wind Energy Center
Blue Canyon: Phase I
Weatherford Wind Energy Center
Blue Canyon: Phase II
Centennial Wind Farm
Sleeping Bear Wind Farm
Buffalo Bear Wind Farm
Red Hills Wind Farm
Blue Canyon V
OU Spirit Wind Farm (Keenan I)
Elk City Wind Energy Center
Minco Wind Farm
Keenan II
Elk City II
Blue Canyon VI
Taloga Wind Farm
Minco II Wind Farm
Crossroads Wind Farm
Big Smile Wind Farm at Dempsey Ridge
Rocky Ridge
KODE Novus I Wind Project
Chisholm View Wind Project
Canadian Hills Wind Farm
Blackwell Wind Farm (OSU)
KODE Novus II
Minco III
Origin Wind Energy Project
Mammoth Plains Wind Energy Center
Seiling Wind
Seiling Wind II
Osage Wind
TOTALS
Under Construction
Arbuckle Mountain
Balko Wind, LLC
Breckinridge Wind Project
Chilocco II
Goodwell Wind Project
Kay Wind Project
Kingfisher Wind
Little Elk
TOTALS
Harper & Woodward Counties (Woodward)
Comanche & Caddo Counties (Lawton)
Custer County (Weatherford)
Comanche & Caddo Counties (Lawton)
Harper County
Harper County
Harper County
Roger Mills & Custer Counties (Elk City)
Comanche & Caddo Counties
Woodward County (Woodward)
Roger Mills & Beckham Counties (Elk City)
Grady County (Minco)
Woodward County (Woodward)
Roger Mills & Beckham Counties (Elk City)
Caddo County (Apache)
Dewey County (Taloga)
Grady and Caddo Counties
Dewey County (Canton)
Roger Mills & Custer Counties (Dempsey)
Kiowa and Washita Counties
Texas County
Garfield and Grant Counties (Enid)
Canadian County (north of El Reno)
Kay County (Blackwell)
Texas County
Grady and Caddo Counties
Murray Counties
Dewey and Blaine Counties
Dewey County
Dewey County
Osage County
Murray County
Beaver County
Garfield County
Kay County
Texas County
Kay County
Kingfisher County
Washita County
Capacity # of (MW) Turbines Online Turbine Type
102
74.25
147
151.2
120
94.5
18.9
123
99
101.2
98.9
99.2
151.8
100.8
99
129.6
100.8
227.5
132
148.8
80
235.2
298.45
59.8
40
100.8
150
198.9
198.9
100.3
150.36
3932.16
68
45
98
84
80
45
9
82
66
44
43
62
66
66
55
54
63
98
66
93
40
140
125
26
20
63
75
117
117
59
84
2153
100
299.7
98.1
76.5
200
299
298
74
1445.3
50
162
58
45
100
130
149
37
731
Developer
Owner
2003
2003
2005
2005
2006
2007
2008
2009
2009
2009
2009
2010
2010
2010
2011
2011
2011
2012
2012
2012
2012
2012
2012
2012
2012
2012
2014
2014
2014
2014
2015
GE 1.5 MW
NEG Micon 1.65 MW
GE 1.5 MW
Vestas 1.8 MW
GE 1.5 MW
Suzlon 2.1 MW
Suzlon 2.1 MW
Acciona 1.5 MW
GE SLE 1.5 MW
Siemens 2.3 MW
Siemens 2.3 MW
1.6 MW
Siemens 2.3 MW
48 GE 1.5 MW; 18 GE 1.6 MW
Vestas 1.8 MW
Mitsubishi 2.4 MW
GE 1.6 MW
95 Siemens 2.3 MW; 3 3.0MW direct drive
Gamesa 2.0 MW
GE 1.6 MW
DeWind 2.0 MW D9.2
1.68 GE
73 Senvion 2.05 MM92; 62 Mitsubishi 2.4 MWT102
Siemens 2.3 MW
DeWind 2.0 MW D9.2
GE 1.6 MW
Vestas V100 2.0 MW
GE 1.7 MW
GE 1.7 MW
GE 1.7 MW
GE 1.79 MW
NextEra Energy Resources
Zilkha Renewable Energy; Kirmart Corp.
Goldman Sachs
Chermac Energy Corporation; Invenergy
Edison Mission Group; Chermac Energy Corp.
Edison Mission Group
Acciona
EDP Renewables North America LLC
CPV Renewable Energy
CPV Renewable Energy
Edison Mission Group
RES Americas
Acciona
TradeWind Energy
DeWind
TradeWind Energy
Apex Energy, Inc.
OwnEnergy
DeWind
RES Americas; TradeWind Energy
TradeWind Energy
EDP Renewables North America LLC; Infigen Energy
Oklahoma Gas & Electric
NRG Energy
NRG Energy
Acciona
CPV Renewable Energy; GE Energy Fin. Serv.
NRG Energy
Acciona
Enel Green Power N. Am.
DeWind
GE Energy Fin. Serv.; Enel Green Power N. Am.
Apex Energy Inc.
NextEra
DeWind
Enel Green Power
---------
Vestas V110 2.0 MW
GE 1.85 MW
GE 1.7 MW
GE 1.7 MW
Vestas V110 2.0 MW
Siemens 2.3 MW
Vestas V100 2.0 MW
Vestas V110 2.0 MW
Apex Energy
TradeWind Energy
PNE Wind USA
TradeWind Energy
Apex Energy
Apex Energy
TradeWind Energy
D.E. Shaw Renewable Investments, LLC
PNE Wind USA
Southern Company
First Reserve
Oklahoma’s wind energy industry now consists of 30 projects in 19 counties, with projects currently
under construction in several of these counties and at least one additional county.
Source: Kylah McNabb, Oklahoma State Energy Office
9
Oklahoma’s wind energy industry now makes significant contributions to the electrical power needs
not only of Oklahoma, but also surrounding states as well. Oklahoma set a target of producing 15
percent of its electrical power from renewable sources by 201516 and exceeded that goal in 2014. In fact,
Oklahoma now produces roughly 17 percent of its power from wind, compared to the U.S. average
of 6.5 percent (which includes all renewable sources other than hydroelectric power).17
Figure 4: Oklahoma Electrical
Power Production by Source, January 2015
Oklahoma Electrical Production by Source, January 2015
Natural Gas-Fired
44%
Coal-Fired
37%
Wind
17%
Hydroelectric
2%
This figure presents the percentage of power actually generated from the respective sources. Note
natural gas-fired electrical generation often serves as a compliment to wind-driven generation.
Source: EIA Oklahoma state energy profile data, available at http://www.eia.gov/state/data.cfm?sid=OK
(last accessed May 1, 2015)
10
Figure 5: Oklahoma Wind Power Production
Oklahoma Wind Power Production
14000
11,862
Power Generated from Wind Sources (thousand megawatt hours (MWh))
12000
11,162
10000
8,158
8000
6000
5,605
3,808
4000
2,358
2000
573
1,712
1,849
2006
2007
2,698
848
54
0
2003
2004
2005
2008
2009
2010
2011
2012
2013
2014
The amount of power generated by Oklahoma’s wind energy systems continues to grow, owing to
increased capacity and wind capacity factors above the national average.
EIA Oklahoma state energy profile data, available at http://www.eia.gov/state/data.cfm?sid=OK (last
accessed May 1, 2015).18
Oklahoma’s wind energy industry has provided a significant source of economic benefits to
Oklahoma. Beyond the ad valorem tax revenues paid to counties and schools and the electrical utility
savings to Oklahoma ratepayers (both of which are discussed at length later in this report), Oklahoma’s
wind energy industry has also provided the following benefits according to a study conducted by
Economic Impact Group, LLC:19
◊ Investment of more than $6 billion in the construction and development of wind energy projects
◊ Royalty payments to Oklahoma landowners of more than $22 million annually
◊ Creation of more than 1,600 direct full-time jobs
1.3 The Future of Oklahoma Wind Energy
Even though Oklahoma has made significant strides in developing its wind power potential, the
capacity for significant growth still remains. Practically, the limiting factor for Oklahoma’s wind power
development is not its wind resource,20 but rather the capacity of its transmission grid to convey that
power to market, and the market for wind power itself. The Southwest Power Pool coordinates the
11
projects. This analysis was guided by the Strategic Planning Committee (SPC) to be
presented to stakeholders and the BOD for review in April 2010. The list of projects the BOD
requested staff to study in Phase II of the Priority Projects effort is referred to as Group 1
throughout this report and is listed below and illustrated in Figure 1:
power grid for Oklahoma, Arkansas, Kansas, Nebraska, and parts of Louisiana, Missouri, and Texas.
Group
1 of the SPP region encompasses areas of high wind resource, it has planned for a number
Since
much
Spearville
– Comanche
– Medicine
Lodge
(765current
kV construction
345
kV operation)
of additional
transmission
line projects
to connect
areas–ofWichita
with large
or plannedand
wind
energy
projects with
areas of electrical
powerDistrict
demand.
Further,
Clean
Line Energy
continues
Comanche
– Woodward
EHV
(765 kV
construction
andPartners
345 kV operation)
development
of
a
700-mile
high
voltage
direct
current
(HVDC)
transmission
line
designed
to transport
Hitchland – Woodward District EHV (345 kV DCT1)
wind energyValiant
generated
in Texarkana
the southern
Great
– NW
(345
kV)Plains to demand centers in the eastern United States.
Buildout ofCooper
these lines
will
likely
trigger
additional
wind energy development nearby.
– Maryville – Sibley (345kV)
Riverside – Tulsa Reactor (138 kV)
Figure 6: Southwest Power Pool Priority Projects Map
This map depicts high-voltage transmission projects already approved by SPP or with priority for
Figure 1: Priority Projects (Group 1)
feasibility analysis.
1
Source:toSouthwest
Power Pool, “SPP Priority Projects Phase II Report,” (2010), available at http://www.
DCT refers
double-circuit
spp.org/publications/Priority%20Projects%20Phase%20II%20Report.pdf
(last accessed May 1, 2015).
7
12
Figure 7: Proposed Route of Plains & Eastern Clean Line HVDC Transmission Project
The High Voltage Direct Current (HVDC) Plains and Eastern Clean Line project would transport
wind-generated power from Oklahoma, the Texas Panhandle, and southwest Kansas to the
Tennessee Valley Authority.
Source: Clean Line Energy Partners Plains & Eastern Clean Line Project, available at http://www.
plainsandeasterncleanline.com/site/page/interactive-map (last accessed May 1, 2015).
Section 2 Wind Energy’s Contributions to Ad Valorem Revenues
In many counties, the equipment installed in wind energy projects represents a significant increase
in the taxable property base, which has led to corresponding increases in revenues for local schools
and county services. Including both historical payments and payments forecasted for planned
projects, the wind energy industry is projected to pay approximately $1 billion dollars in ad
valorem taxes.
2.1 Oklahoma’s Ad Valorem Tax System
Ad valorem21 taxes, as the name implies, are based on the value of the items taxed. In Oklahoma, all
personal and real property is subject to ad valorem tax at the county level unless the property is subject
to some form of exemption.22 Three primary factors determine the amount of tax owed for a given
piece of property: the property’s value, the county’s assessment ratio, and the millage rate for jurisdiction
containing the property.
With a limited number of exceptions, the task of determining the market value of property falls to
a county assessor.23 One important exception is property owned by public service corporations, such as
electrical utilities; such property is assessed by the State Board of Equalization.24
Once the assessing entity (either the county assessor or the State Board of Equalization) determines
the fair market value of an asset, that value is multiplied by the county’s assessment ratio to determine
the gross assessed value of the property. Article X, Section 8 of the Oklahoma Constitution limits the
range of assessment ratios from 10 to 15 percent of fair cash value for most personal property25 and
22.85 percent for property owned by a public service company.26 Any applicable deductions are applied
to the gross assessed value to determine the property’s net assessed value.
13
The property’s net assessed value is then multiplied by the “millage rate27” applicable to the tax
district (typically defined by a local school district) containing the property. In most cases, the majority
of county ad valorem taxes paid consist of millages for local schools.28 For example, counties can
impose a four mill levy on all non-exempt property in the county with the funds generated by the levy
apportioned to the school districts in the county in proportion to their average daily attendance. A
combination of other levies can also provide funds to local school districts, Career Tech districts, and
community colleges. County governments can also impose millages for a number of county needs,
facilities, and services such as emergency medical services, fire protection, road improvement, and solid
waste handling.
Understanding how ad valorem taxation works provides the foundation for understanding the impact
of Oklahoma’s wind energy industry on revenues for schools and county governments.
2.2 Wind Energy’s Contribution to Oklahoma Ad Valorem Revenues
Since the assessed value of property represents the single largest variable in ad valorem tax revenues, the
introduction of a high-value asset such as wind energy facilities can create a significant impact on those
revenues. A review of the tax records for all existing Oklahoma wind energy projects reveals those
projects already have increased the tax base and ad valorem revenues in those counties by installing
equipment with a current appraised value of $3.3 billion dollars in those counties. Further, if those
projects currently planned for construction in Oklahoma indeed come into operation, these impacts to
county revenues would be significantly amplified.
2.2.1 Historical Payments to Counties
As an initial step in the research of ad valorem payments made to Oklahoma counties by wind energy
projects, county tax records for all 23 existing Oklahoma wind energy projects with county tax records
(and excluding projects that were centrally assessed) were obtained.29 Since ad valorem tax units
generally follow school districts, these 23 projects were divided into separate units for each of the school
districts they touched, resulting in 65 historic units. These records provided information on the gross
and net assessed values of the personal property associated with each project. For the purposes of this
research, only personal property values were evaluated since most wind energy projects owned no (or
only a negligible amount of ) real property.30 By applying the respective counties’ assessment ratios, the
market value of the wind energy projects’ property were also determined.
From the first tax year in which revenues were received from Oklahoma’s first utility-scale
wind energy projects (2004) through the most recently-available data for the 2014 tax year, wind
energy systems in Oklahoma resulted in the payment of nearly $134 million in ad valorem taxes to
Oklahoma counties, including both Oklahoma Tax Commission (“OTC”) reimbursements and
developer tax payments to counties.
14
$35,000,000
$3,500,000,000
$3,000,000,000
$20,026,105 $1,063,054 2004
2005
2007
$6,938,834 2006
$4,856,962 $1,096,189 $10,000,000
$3,906,333 $15,000,000
$9,661,555 $20,000,000
$5,000,000
$2,500,000,000
$2,000,000,000
$13,440,732 $25,000,000
$4,058,301 Annual Ad Valorem Revenues
$30,000,000
$1,500,000,000
$1,000,000,000
Total Asset Value for Installed Wind Energy Systems
$40,000,000
$4,000,000,000
$32,435,831 $36,339,731 Historic Ad Valorem Revenues and Property Values for Wind Energy Systems
2014Values for Wind Energy Systems, 2004-2014
Figure 8: Historic Ad Valorem Revenues and 2004 ‐
Property
$500,000,000
$‐
$‐
2008
Total OTC reimbursements
2009
2010
Total owner‐paid taxes
2011
2012
2013
2014
Total property value
Oklahoma’s wind energy industry currently has an estimated $3.3 billion of installed generation
equipment, resulting in nearly $134 million in ad valorem payments to counties. Note: A number of
wind energy projects were installed in the latter portion of 2014, and as a result, the tax and valuation
information for those projects will first appear in 2015’s data. The slight decrease in tax revenues
and property value for 2014 reflects the depreciation and resulting decrease in tax revenues from
previously installed projects, without the offsetting increase from these 2014-installed projects.
As this data suggests, wind energy systems can provide a significant increase to the tax base of a
county, particularly rural counties. To illustrate this point, the table below presents the number of acres
required to provide the same annual ad valorem revenue as the average wind energy turbine in the
respective regions of the state with existing wind energy projects or projects under construction given
their average land values31 and millage rates.32 As shown, each wind turbine provides the ad valorem tax
base of hundreds of acres of unimproved land.
15
Figure 9: Acre Equivalencies for Average Wind Turbine Ad Valorem Revenues
Panhandle
Beaver
Cimarron
Texas
West‐Northwest
Blaine
Custer
Dewey
Ellis
Harper
Major
Woods
Woodward
Southwest
Beckham
Comanche
Greer
Harmon
Jackson
Kiowa
Roger Mills
Tillman
Washita
Average values per acre (unimproved land)
Region
Panhandle
West‐Northwest
Southwest
North Central
South Central
Northeast
Pasture
$ 558
$ 1,327
$ 1,081
$ 1,955
$ 1,736
$ 1,908
Cropland
$ 1,002
$ 1,916
$ 1,764
$ 2,123
$ 2,131
$ 2,462
Average total millage
60.7960
81.7930
77.8980
89.2220
94.3400
92.6470
North‐Central
Alfalfa
Canadian
Garfield
Grant
Kay
Kingfisher
Logan
Noble
Oklahoma
Payne
South‐Central
Caddo
Carter
Cleveland
Garvin
Grady
Jefferson
Love
McClain
Stephens
Annual ad valorem revenue per acre
Pasture
$ 34
$ 109
$ 84
$ 174
$ 164
$ 177
Cropland
$ 61
$ 157
$ 137
$ 189
$ 201
$ 228
Annual ad valorem revenue per turbine
$ 86,403
$ 116,243
$ 110,708
$ 126,801
$ 134,075
$ 131,669
Craig
Creek
Lincoln
McIntosh
Muskogee
Nowata
Okfuskee
Okmulgee
Osage
Northeast
Ottawa
Pawnee
Pottawatomie
Rogers
Seminole
Tulsa
Wagoner
Washington
Equivalent unimproved acres
Pasture
2,547
1,071
1,315
727
819
745
Cropland
1,418
742
806
669
667
577
Turbine "Per Acre" Annual Ad Valorem Revenue
$ 86,403
$ 116,243
$ 110,708
$ 126,801
$ 134,075
$ 131,669
The tables above illustrate the number of acres of unimproved agricultural land required to generate
the same amount of ad valorem tax revenue as the average wind turbine in Oklahoma.
As discussed in more detail in section 3 below, much of the historic growth of Oklahoma’s wind
energy industry occurred in counties that either lost population or experienced only nominal growth
between the 2000 and 2010 Censuses, underscoring the importance of these contributions made by wind
energy projects to those counties. However, the historic tax contributions of wind energy projects are
small in comparison to the potential future contributions of the industry in the state.
2.2.2 Forecast Payments to Counties
By the end of 2014, Oklahoma had 3,782 megawatts of installed wind energy capacity. However, as of
early 2015, wind energy developers had filed applications with the Southwest Power Pool (“SPP”) to
connect an additional 4,914 megawatts of wind energy capacity in Oklahoma.33 All of these projects, if
constructed, would more than double the wind energy capacity of the state. Thus, understanding the full
impact of the wind energy industry requires an examination of its future in Oklahoma.
2.2.2.1 Methodology of forecasting
Appendix 1 provides a detailed description of the methodology used to forecast future ad valorem tax
revenues from both current and planned Oklahoma wind energy projects. In summary, tax records
for existing Oklahoma wind energy projects provided the estimated market value of existing projects,
and Energy Information Administration data provided the estimated value of planned projects. Both
existing and planned projects were depreciated using the method applied by the OTC in calculating
reimbursements for the five-year manufacturing exemption (discussed in section 2.3 below), which uses
a 12-year lifespan for moving components of the turbines and a 25-year lifespan for the non-moving
components. Current (tax year 2014-2015) assessment ratios and millage rates were applied to existing
projects and held constant over the remaining lifespan of the equipment to forecast future ad valorem
16
tax payments for those projects; for planned projects (whose school districts, and thus current millage
rates, could not be determined), current county assessment ratios and average millage rates were used to
forecast future ad valorem tax payments.
2.2.2.2 Forecast Results
Over the span of the entire model, which includes both Oklahoma’s first wind energy projects
installed in 2003 and the forecast projects whose last year of projected life is 2043, owners of wind
energy projects will pay approximately $1 billion dollars in ad valorem taxes.
Figure 10: Total Historic and Forecast Ad Valorem Revenues
$100,000,000
$60,000,000
$20,000,000
$1,096,189 $1,063,054 $4,058,301 $3,906,333 $4,856,962 $6,938,834 $9,661,555 $13,440,732 $20,026,105 $40,000,000
$35,846,009 $32,012,180 $37,935,301 $49,115,238 $52,143,963 $50,430,276 Annual Tax Revenues
$80,000,000
$‐
$1,600,000,000
$1,400,000,000
$1,200,000,000
$1,000,000,000
$800,000,000
$600,000,000
$400,000,000
$200,000,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
$‐
Cumulative payments to counties
Historical and forecast payments resulting from wind energy payments are projected to total
approximately $1.5 billion.
17
Cumulative Tax Revenues
$120,000,000
$104,201,185 $97,352,946 $90,785,593 $84,110,172 $77,850,435 $71,698,509 $65,552,819 $60,320,448 $55,483,394 $50,602,434 $46,283,554 $43,837,644 $40,500,779 $38,613,513 $36,547,185 $34,147,770 $31,968,073 $28,718,293 $26,134,725 $21,700,974 $21,059,029 $18,666,056 $14,826,854 $13,171,998 $12,525,781 Total Historic and Forecast Ad Valorem Revenues The figure below presents historical tax payments34 received by counties from wind energy projects
and forecast tax payments, broken out by county and by source (OTC reimbursements under the fiveyear manufacturing exemption or payments made directly by project owners to the respective counties).
Figure 11: Historical and Forecast Ad Valorem Revenues from Wind Energy Systems, by County
and Source
Historical Revenues
OTC County
Reimbursements
Beaver
$ ‐
Beckham
$ 657,435
Blaine
$ ‐
Caddo
$ 8,734,758
Canadian
$ 9,093,267
Comanche $ 8,786,986
Custer
$ 8,530,650
Dewey
$ 4,709,009
Garfield
$ 6,902,905
Grady
$ 7,816,137
Grant
$ 1,101,623
Harper
$ 7,677,653
Kay
$ 2,392,035
Kiowa
$ 6,464,434
Murray
$ ‐
Osage
$ ‐
Roger Mills $ 24,298,729
Texas
$ 3,546,316
Washita $ 3,613,591
Woodward $ 11,796,210
Owner‐Paid Taxes
Total
$ ‐
$ ‐
$ ‐
$ 1,975,834
$ ‐
$ 1,877,660
$ 4,008,487
$ 26,490
$ ‐
$ ‐
$ ‐
$ 2,897,916
$ 12,571
$ 2,662,906
$ ‐
$ ‐
$ 1,554,291
$ ‐
$ 415,493
$ 1,352,869
$ ‐
$ 657,435
$ ‐
$ 10,710,592
$ 9,093,267
$ 10,664,646
$ 12,539,137
$ 4,735,499
$ 6,902,905
$ 7,816,137
$ 1,101,623
$ 10,575,569
$ 2,404,606
$ 9,127,340
$ ‐
$ ‐
$ 25,853,020
$ 3,546,316
$ 4,029,084
$ 13,149,079
Forecast Revenues
OTC Reimbursements
$ 47,131,923
$ 16,697,373
$ 1,239,274
$ 4,568,671
$ 62,404,126
$ ‐
$ 10,210,987
$ 30,718,549
$ 18,975,133
$ 11,463,635
$ 9,688,630
$ 52,218,626
$ 37,454,864
$ 7,864,869
$ 19,208,942
$ 23,326,560
$ 4,626,871
$ 33,881,100
$ 3,626,334
$ 49,279,498
Owner‐Paid Taxes
Total
$ 84,411,590
$ 29,347,704
$ 2,085,081
$ 19,124,327
$ 119,325,551
$ 12,646,350
$ 26,758,191
$ 59,519,028
$ 43,269,971
$ 31,966,352
$ 18,113,169
$ 97,435,891
$ 66,974,558
$ 21,431,584
$ 32,319,089
$ 38,946,939
$ 49,116,980
$ 62,869,405
$ 11,691,353
$ 104,345,867
$ 131,543,513
$ 46,045,077
$ 3,324,354
$ 23,692,998
$ 181,729,677
$ 12,646,350
$ 36,969,178
$ 90,237,577
$ 62,245,103
$ 43,429,987
$ 27,801,798
$ 149,654,517
$ 104,429,422
$ 29,296,453
$ 51,528,031
$ 62,273,498
$ 53,743,851
$ 96,750,505
$ 15,317,687
$ 153,625,366
Overall Totals
OTC Reimbursements
$ 47,131,923
$ 17,354,808
$ 1,239,274
$ 13,303,429
$ 71,497,393
$ 8,786,986
$ 18,741,637
$ 35,427,558
$ 25,878,038
$ 19,279,772
$ 10,790,253
$ 59,896,279
$ 39,846,899
$ 14,329,303
$ 19,208,942
$ 23,326,560
$ 28,925,600
$ 37,427,416
$ 7,239,925
$ 61,075,708
Owner‐Paid Taxes
Total
$ 84,411,590
$ 29,347,704
$ 2,085,081
$ 21,100,161
$ 119,325,551
$ 14,524,010
$ 30,766,677
$ 59,545,518
$ 43,269,971
$ 31,966,352
$ 18,113,169
$ 100,333,807
$ 66,987,129
$ 24,094,490
$ 32,319,089
$ 38,946,939
$ 50,671,271
$ 62,869,405
$ 12,106,846
$ 105,698,736
$ 131,543,513
$ 46,702,512
$ 3,324,354
$ 34,403,590
$ 190,822,944
$ 23,310,996
$ 49,508,314
$ 94,973,076
$ 69,148,008
$ 51,246,124
$ 28,903,421
$ 160,230,086
$ 106,834,028
$ 38,423,793
$ 51,528,031
$ 62,273,498
$ 79,596,871
$ 100,296,821
$ 19,346,771
$ 166,774,444
Ad valorem tax payments to some Oklahoma counties exceed $100 million over the span of the
historical and forecast data.
Importantly, several of the historical and forecast projects reside in counties either losing population
or gaining less population than the non-metropolitan county average in Oklahoma between the 2000
and 2010 Censuses. Thus, the wind energy industry has the potential to make significant ad valorem
contributions to counties where there may be downward pressure on other sources of ad valorem revenue.
Figure 12: Location of Existing Oklahoma Wind Energy Projects Relative to Population Loss or
Below Non-Metropolitan County Average Population Gains
Several Oklahoma counties with population losses or growth rates below the non-metropolitan
average also contain wind energy projects, bolstering ad valorem tax revenues.
18
As mentioned above, several factors could influence the actual future payments of ad valorem
taxes, including whether those projects with approved SPP interconnection agreements are built,
the assessment methods applied to the wind energy equipment by county assessors, and the millages
applicable to the school districts in which the projects are located.
2.2.2.3. Impacts to education funding
Millages for the support of local school districts comprise the majority of ad valorem tax revenues;
concordantly, the largest single beneficiary of the ad valorem taxes paid by the wind energy industry over
the span of the historical and forecast model are local school districts.
Over the entire span of the historical and forecast model, the Oklahoma wind energy industry
(with the corresponding OTC payments) is predicted to pay nearly $1.2 billion to education funds,
including local and county school funds and the Career Tech system. Of these funds, more than
$918 million will be paid in millages to local school districts, more than $78 million will be paid in
the form of counties’ 4-mill levies (which are redistributed to local school districts in proportion to
their average daily attendance), and more than $174 million will be paid in millages attributable to
Career Tech schools.
$80,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$28,583,543 $25,419,756 $33,561,602 $40,211,912 $42,213,308 $40,484,673 $60,000,000
$642,065 $911,775 $3,317,639 $3,234,209 $4,111,897 $5,710,177 $8,670,314 $11,010,283 $16,592,703 Annual Education Revenues
$70,000,000
$‐
$1,400,000,000
$1,200,000,000
$1,000,000,000
$800,000,000
$600,000,000
Cumulative Education Revenues
$90,000,000
$79,567,785 $74,304,684 $69,281,406 $64,185,957 $59,426,605 $54,773,253 $50,126,658 $46,162,340 $42,501,936 $38,843,924 $35,527,233 $33,677,888 $31,110,624 $29,677,445 $28,090,019 $26,241,222 $24,559,338 $21,977,329 $19,983,993 $16,349,677 $15,859,703 $14,057,924 $11,467,377 $9,585,906 $9,405,040 Total Education Revenues from Wind Energy Systems
Figure 13: Total Education Revenues
from Wind Energy Systems
$400,000,000
$200,000,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
$‐
County Schools (4 mill) Total
Local School District Total
Career Tech Total
Over the span of the historical and forecast data, payments from Oklahoma’s wind energy industry
and OTC reimbursements to educational funds total approximately $1.2 billion.
19
Composition of School Funds Paid over Forecast Model, 2003 ‐ 2043
Figure 14: Composition of School Funds Paid over Forecast Model, 2003 – 2043
$918,696,203
$78,067,907
County Schools (4 mill) Total
$174,657,013
Career Tech Total
Payments received by local schools are projected to total nearly $1 billion, with payments received by
the Career Tech system totaling nearly $175 billion.
This source of funding could provide significant benefits to school districts, particularly in a number
of rural districts facing declining asset values or decreased revenues from mineral severance taxes.
Importantly, the increased revenue provided to school districts containing wind energy projects
benefits not only those districts, but districts across the state as well. The calculation of state aid
to local school districts takes into account a number of the district’s revenue sources. If, after those
sources are tallied, the district’s projected per-pupil revenue exceeds 150 percent of the projected
state average per pupil revenue, the amount of state aid supplied to that district is reduced
proportionately.35 This means more state funds are available for the support of all Oklahoma
schools. Further, given the nature of the long-term power purchase contracts under which windgenerated electricity is sold and the relatively long life of wind energy assets, wind energy facilities can
provide relatively stable sources of school revenue for significant periods of time.
2.3 The Oklahoma Qualifying Manufacturing Concern Exemption and Exempt
Manufacturing Reimbursement Program
In 1985, while enduring the throes of simultaneous downturns in both the petroleum and agriculture
sectors, Oklahoma voters approved State Question No. 588, which added Article X, Section 6B to the
Oklahoma Constitution. Seeking to lure new manufacturing assets and the attendant jobs they create to
the state, this amendment created a five year exemption from ad valorem taxation on any real or personal
property36 owned by “a qualifying manufacturing concern,” defined as
a concern that “(1) Is not engaged in business in this state or does not have property
subject to ad valorem tax in this state and constructs a manufacturing facility in this
state or acquires an existing facility that has been unoccupied for a period of twelve (12)
months prior to acquisition; or (2) Is engaged in business in this state or has property
subject to ad valorem tax in this state and constructs a manufacturing facility in this state
at a different location from present facilities and continues to operate all of its facilities or
20
acquires an existing facility that has been unoccupied for a period of twelve (12) months
prior to acquisition and continues to operate all of its facilities.37
Thus, qualifying manufacturing concerns must build or construct a “manufacturing facility.” The
amendment authorized the Oklahoma Legislature to enact statutes defining “manufacturing facility,”
also noting that “a manufacturing facility that qualifies for the ad valorem tax exemption provided
by this section, pursuant to the definition of ‘manufacturing facility’ then applicable, shall be eligible
for the exemption without regard to subsequent changes in the definition of the term ‘manufacturing
facility[.]’”38 Consequently, the Oklahoma Legislature enacted a statutory definition of manufacturing
facility encompassing a number of different sectors. Facilities must generally show defined amounts of
payroll increase attributable to the facility in question, minimum capital investment, and must fit within
specified North American Industrial Classification System (“NAICS”) codes.39 Specifically, wind power
facilities fitting within NAICS code 221119 may qualify if they can demonstrate “a net increase in
annualized payroll at the facility of at least Two Hundred Fifty Thousand Dollars ($250,000.00) or a net
increase of Two Million Dollars ($2,000,000.00) or more in capital improvements while maintaining or
increasing payroll.”40 Besides wind power and general manufacturing concerns (which often fall under
the more general definitions of the statute), several other industrial sectors have specific requirements,
including distribution centers and data processing facilities.41
Recognizing the potential loss of ad valorem revenue for counties containing such qualifying
manufacturing concerns could offset the economic development gains sought by five-year exemption, the
amendment also directed the Oklahoma Legislature to create a means of reimbursing units of county
and local government funded by ad valorem taxes for the loss of revenue caused by the exemption.
Concordantly, also in 1985, the Oklahoma Legislature created the Ad Valorem Reimbursement Fund
“[t]o reimburse counties of this state for loss of revenue due to exemptions of ad valorem taxes for new
or expanded manufacturing or research and development facilities”42 (hereinafter referred to as the
Reimbursement Fund). Counties containing property subject to the five-year exemption can apply to the
OTC for reimbursement of the funds foregone as a result of the exemption.43 The Reimbursement Fund,
in turn, is funded by an apportionment calculated as 1 percent of total income tax revenue received by
the state.44
Reimbursement claims by industrial sector often vary as macroeconomic forces, federal and state
development incentives, and other factors influence the development of specific types of facilities eligible
for reimbursement. Trends in payments from the Reimbursement Fund by sector are illustrated in Figure
15 below.
21
OTC Ad Valorem Reimbursements by Industry Sector
Figure 15: OTC Ad Valorem Reimbursements2004‐2013
by Industry Sector, 2004-2013
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$‐
2004
2005
Wind
2006
Electrical Generation
2007
2008
Data Processing
2009
Distribution
2010
2011
Traditional Manufacturing
OTC reimbursements reflect growth trends in various industries.
2012
2013
2014
Large Manufacturing
The graph above starts with 2004 as that year marked the first reimbursements made on behalf of
wind energy projects in the state (installed in 2003). As the graph illustrates, reimbursements to various
sectors fluctuate over time. The very start of the wind energy industry in Oklahoma coincided with the
end of a significant expansion of electrical co-generation facilities in the state. The late 1990s and early
2000s saw the construction of a number of electrical co-generation plants in the wake of incentives for
such facilities created by the Public Utility Regulatory Policies Act45 and the federal deregulation of
natural gas markets coupled with low natural gas prices. Similarly, Oklahoma’s wind energy industry
continues in the early phases of growth, marked by a larger proportion of projects still within the fiveyear exemption period.
2.3.1 Forecast Reimbursement Fund Obligations for the Wind Industry
As discussed in Section 2.2.2.1, this project forecasted future ad valorem tax payments based on a
cost-approach valuation model using the OTC depreciation schedules to estimate the future value of
both existing and planned wind energy projects within the state. The forecast models provided data
on both expected payments by the owners of wind energy projects and payments to counties out from
the Reimbursement Fund, as illustrated in Figures 10 and 11 in section 2.2.2.2 above. Figure 16 below
shows only the historic and projected Reimbursement Fund distributions, without payments made
directly to counties by wind project owners.
As discussed above, the methodology used to forecast future growth in Oklahoma’s wind energy
industry necessarily “squeezed” the installation of a significant amount of capacity into the year 2018,
with those projects first triggering tax obligations in 2019 and thus leaving the five-year exemption
window after 2023. Accordingly, Reimbursement Fund obligations are projected to grow (with a notable
exception in 2018 as the projects installed in 2013 and 2014 begin to exit the five-year exemption
period) through that year. Over the entire period of the forecast model, total Reimbursement Fund
22
expenditures total approximately $561 million; however, the total taxes paid by wind project owners
over the same period would total over $948 million, meaning every dollar paid in Reimbursement Fund
distributions would yield $1.69 in owner-paid tax revenues to local governments and schools.
Figure 16: Total Historical and Forecast OTC Ad Valorem Reimbursements
Total Historical and Forecast OTC Ad Valorem Reimbursements
$83,201,767 $72,281,969 $80,000,000
$57,892,415 $49,505,500 $44,803,756 $40,000,000
$20,000,000
$10,000,000
$400,000,000
$300,000,000
$200,000,000
$100,000,000
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$‐
$50,000,000
$31,801,660 $26,926,771 $31,669,168 $39,357,339 $38,569,517 $27,304,531 $60,000,000
$1,019,897 $1,053,363 $4,047,108 $3,895,022 $4,843,840 $5,837,520 $8,735,233 $10,588,028 $17,373,296 Annual OTC Reimbursements
$70,000,000
$500,000,000
Cumulative OTC Reimbursements
$90,000,000
$30,000,000
$600,000,000
$‐
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
$‐
Cumulative OTC Reimbursements
With the last projects in the forecast
model constructed
in 2018, OTC reimbursement obligations
Combined Historical and Forecast Ad Valorem Tax Payments by Source
would end after 2023, for a total of approximately $561 million.
Combined Historical and Forecast Ad Valorem Tax Payments by Source
Figure 17: Combined Historical and Forecast Ad Valorem Tax Payments by Source
$560,707,701
37.15%
$560,707,701
37.15%
$948,483,495
62.85%
$948,483,495
62.85%
Wind energy project owners are forecast to pay approximately 63 percent of the total ad valorem
revenues to counties from wind energy systems, meaning each dollar of OTC reimbursements leads
to payments of $1.69 to counties.
23
As one will note from referring back to Figure 16, the five-year limit on the ad valorem exemption
and the corresponding reimbursement obligation by the Reimbursement Fund will naturally eliminate
itself over the lifetime of a project.
2.3.2 Assessment Methodologies for Oklahoma Counties
Pursuant to the law creating the Reimbursement Fund, all properties subject to the five-year exemption
are assessed by the OTC; after the exemption has expired, assessment of the properties falls to the
county assessors.46 However, discussions with all county assessors for counties with existing wind energy
projects indicate no consensus exists as to the proper methodology for valuing wind energy systems.
Some county assessors believe the OTC methodology is binding on the counties; although assessors do
have an obligation to apply consistent valuation methodologies,47 the assessment methods established
by OTC for various assets – such as that for wind energy systems as stated in the Oklahoma Business
Personal Property Valuation Schedule – are not binding on county assessors. Other county assessors
believe the OTC methodology depreciates wind energy systems too rapidly and industry conditions
and asset characteristics weigh in favor of either a more gradual depreciation while still using the Cost
Approach or another method, such as the Income Approach. Still other assessors believe all three
valuation methods should be used together each year to develop a value for the wind energy system. The
challenge posed by this lack of consensus is that while county assessors obviously operate only within
their respective counties, wind energy companies frequently operate across counties. Inconsistency
between the OTC and county assessors, and among county assessors, have led to a number of tax
protests by wind energy facilities when county-assessed values do not follow the OTC methodology.
2.4 Conclusions and Recommendations Regarding Ad Valorem Issues
Wind energy systems have already provided significant additional revenues to counties, and have the
potential to make even larger contributions in the future. Oklahoma schools – both those with wind
energy projects in their districts and counties, and those across the state – stand to benefit significantly
from the additional ad valorem revenues provided by wind energy projects.
Conversations with OTC staff, county assessors, and county treasurers indicate some policy issues
to be resolved surrounding the valuation of wind energy systems and the Reimbursement Fund.
The Reimbursement Fund has been underfunded for a number of years, and reform of its funding
mechanism may be needed to accommodate any new qualifying manufacturing concerns, whether those
facilities are wind power projects or other eligible facilities. Alternative valuation methods for wind
energy systems, such as the Income Approach, might also reduce obligations of the Reimbursement
Fund by “smoothing” the value of wind energy projects over their lifespan instead of providing significant
depreciation in the early years of the projects. A facilitated dialogue among county assessors, the OTC,
and wind energy developers could also lead to development of a consensus regarding valuation of wind
energy systems in Oklahoma, providing greater certainty for both counties and developers while also
reducing the potential for tax protest proceedings.
Section 3: Spatial Issues and Land Use in Oklahoma’s Wind Energy
Industry
The topics of how much land wind energy projects occupy and their potential impacts on other land
uses continue to see vigorous discussion, but little research exists to inform this discussion. As a result,
this research study undertook a first-of-its-kind project in mapping all utility-scale wind energy systems
in Oklahoma for which aerial imagery was currently available. The results of this project show
Oklahoma wind energy projects occupy far less land than suggested by industry estimates. Turbine
spacing allows ample and diverse land uses within project “footprints,” and existing wind projects
largely avoid locations such as hospitals, airports, and schools by wide margins.
24
3.1 Mapping Methodology
Appendix 3 contains a discussion of the methodology used to map the wind project elements. In short,
the planimetry tools of the Google Earth Pro software package were used to trace and measure all wind
energy system components (turbines, roads, and supporting systems such as substations, maintenance
and operation buildings, transformers, etc.) for which aerial imagery was available. Examples of some
project elements are shown in Figure 18 below. In total, 1,687 turbines, 396 road segments, and 78
support systems and structures were individually traced in the course of the mapping project for a total
of 2,161 map elements created for this project.
Figure 18: Examples of Project Elements
The photo on the left shows an example of delineation of a turbine road segment and the associated
turbine pad (shaded in orange) from the Big Smile Project; note also the co-location of the turbines
and the oil well pad. The photo on the right shows an electrical substation trace for the KODE
Novus II project in Texas County (shaded in orange).
3.2 Summary of Spatial and Land Use Findings
On average, the total land use of Oklahoma wind energy projects – including turbines, roads, and
substations, is 0.46 acres per megawatt or 0.87 acres per turbine. These numbers are significantly
less than those estimated by industry sources, which suggest a land use of three acres per megawatt
of capacity.48
25
Figure 19: Summary of Wind Energy Project Land Use
Project
Big Smile Dempsey Ridge
Blackwell Wind Farm
Blue Canyon I
Blue Canyon II
Blue Canyon V
Blue Canyon VI
Buffalo Bear
Elk City II
Keenan II Wind Project
Minco I, II, and III
KODE Novus I
KODE Novus II
OU Spirit Wind Farm
Red Hills Wind Farm
Rocky Ridge Wind Project
Sleeping Bear Wind Project
Taloga Wind Farm
Location
SW Roger Mills County
NW Kay County
SW Caddo, N Central Comanche Counties
SE Kiowa, SW Caddo Counties
N Central Comanche County
SW Caddo County
Central Harper County
NW Canadian County
South Central Harper County
NE Garfield, SE Grant Counties
NE Dewey County
SW Roger Mills County
S Central Roger Mills / NE Beckham Counties
SW Woodward County
NW Grady, SW Canadian, NE Caddo Counties
SE Texas County
S Central Texas County
N Central Woodward, SE Harper Counties
SW Woodward County
SE Roger Mills County
S Central Washita, N Central Kiowa Counties
SE Harper County
SE Dewey County
SE Custer, NE Washita Counties
Predominant land use
Pasture
Crop
Rocky, limited grazing
Pasture
Mixed crop and pasture
Pasture
Crop
Pasture
Pasture
Pasture
Pasture
Pasture
Pasture
Pasture
Pasture
Pasture
Pasture
Pasture
Crop
Turbines
66
26
45
84
66
55
9
135
80
139
98
43
48
66
188
40
20
68
44
82
93
45
54
95
Avg. Total land Turbine Support Total Total land use per use per Capacity Spacing Turbines Avg. pad Roads Systems Land turbine (ac)
Used (ac) MW (ac) (MW)
(ft.)
(ac)
size
(ac)
(ac)
132.0
1046
9.99
27.86
0.02
38.02
0.29
0.58
0.15
59.8
1698
1.76
13.34
4.74
19.91
0.33
0.77
0.07
74.3
875
3.66
0.08
23.21
4.27
31.22
0.42
0.69
151.5
1239
4.97
0.06
52.72
1.32
59.07
0.39
0.70
99.0
1072
8.75
6.72
48.22
6.72
70.41
0.71
1.07
99.0
975
11.51
6.72
49.26
6.59
74.08
0.75
1.35
18.9
2257
2.08
0.23
5.41
0.27
7.99
0.42
0.89
322.5
1184
6.51
0.05
61.97
4.84
73.37
0.23
0.54
120.0
722
6.50
0.08
26.14
5.00
37.72
0.31
0.47
233.5
1283
4.73
72.40
15.69
92.85
0.40
0.67
0.03
227.5
1314
21.69
0.22
91.25
5.91
119.06
0.52
1.21
98.9
1539
2.25
0.05
46.16
6.97
55.43
0.56
1.29
74.6
2026
1.60
0.03
36.89
2.76
41.29
0.55
0.86
151.8
1069
3.86
30.50
8.87
43.29
0.29
0.66
0.06
300.8
1622
6.31
137.24
19.81
163.41
0.54
0.87
0.03
80.0
1640
8.19
0.20
30.54
7.44
46.38
0.58
1.16
40.0
1572
6.13
0.31
17.61
0.00
24.04
0.60
1.20
102.0
602
3.11
0.05
15.37
0.07
18.59
0.18
0.27
101.0
1072
6.10
0.14
23.73
50.36
80.33
0.80
1.83
123.0
663
1.90
0.02
35.24
6.13
43.29
0.35
0.53
148.8
1151
3.27
0.04
45.67
5.14
54.11
0.36
0.58
94.5
919
5.69
0.13
31.14
3.80
40.75
0.43
0.91
130.0
1630
4.81
0.09
31.10
3.94
39.93
0.31
0.74
142.5
773
13.55
0.14
59.65
2.37
75.72
0.53
0.80
Total
1350.27
Averages
0.46
0.87
Oklahoma’s wind energy projects occupy significantly less land than industry estimates suggest.
Many concerns have been voiced about the “footprint” of wind energy projects, suggesting they take
up a significant amount of space, particularly relative to other energy sources. However, the total area of
all wind energy projects measured in the project – 1,350 acres – could fit inside the area of downtown
Oklahoma City bordered by I-40, I-235, Northwest 10th Street, and Western Avenue. Further, this area
represents a combined generation capacity of 3,126 megawatts or 2.3 megawatts/acre, making wind
energy land use per unit of generating capacity comparable to that for other sources of electrical power.
All existing Oklahoma projects reside in predominantly rural areas, although some projects such
as Canadian Hills (Canadian County) and the Minco I, II, and III projects (Canadian, Grady, Caddo
Counties) exist in rural areas into which urban growth continues. The predominant land use types
surrounding projects were pasture and crop production, with some projects (primarily the Blue Canyon
projects) in rocky outcrops, likely used for limited grazing applications.
26
Figure 20: Equivalent Area of All Oklahoma Wind Energy Projects
The area of downtown Oklahoma City (bordered in red) represents 1,348 acres, roughly
the same area of all Oklahoma wind energy projects combined.
3.3 Spacing, Compatibility of Land Uses, and Setback Issues
As the area of all wind turbines were measured, the distance between each turbine and its closest
neighboring turbine was also measured. On average, turbines were spaced 1,248 feet (or slightly less than
¼ mile) apart. However, it should also be noted that this spacing is largely dependent on the topography
of the project, the size of the turbines used, and the location’s wind profile.49 The project with the
smallest average spacing (the Oklahoma Wind Energy Center in Woodward and Harper Counties) had
an average turbine spacing of 602 feet, and the project with the largest average spacing (the Buffalo Bear
Project in Harper County) had an average turbine spacing of 2,257 feet.
3.3.1 Wind Energy and Agricultural Land Uses
In all areas, observation of land uses surrounding the wind energy project elements conformed tightly
to the elements, suggesting little impact to land uses beyond the areas directly occupied by the elements
themselves. In fact, in the course of the mapping project, many land uses were found to co-exist with
wind energy projects. For example, the KODE Novus I and KODE Novus II projects in Texas County
present an excellent example of how wind energy can provide a complimentary land use to both
intensive agricultural production and petroleum production.
27
Figure 21: KODE Novus I Project – Wind, Irrigated Agriculture, and Intensive Animal
Production
The KODE Novus I project illustrates how wind projects can allow intensive
agricultural use of land. Shown in this picture are center-pivot irrigation systems and
confinement swine operations.
In the figure above, wind energy project elements (including turbines, roads, and one laydown area
located at the top center of the image) are shown interspersed among center-pivot irrigation systems,
dryland crop systems, and hog production facilities. Importantly, this picture demonstrates how
coordinated planning among wind developers and landowners can maximize benefits to both parties.
For example, in this particular segment of the KODE Novus I project, the developer placed turbines
on the periphery of the irrigation pivots. Thus, an intensive agricultural use of the land was preserved,
while also providing the landowner the additional returns of wind energy royalties from less-productive
dryland farming applications. Turbine roads were also configured to minimize the amount of road area
needed to access all turbines, reducing overall land use impact. Another example of turbine access road
configuration maximizing the use of pre-existing public roads and section lines to minimize loss of
agricultural land comes from the Blackwell Wind Farm, shown in Figure 22 below.
28
Figure 22: Blackwell Wind Farm Road Configuration
Use of county roads and section / quarter lines for turbine access roads can reduce the
amount of land lost from agricultural production.
Lastly, wind energy development appears to impose little negative impact on livestock production. In
observations of aerial imagery from the project, cattle were frequently noticed in close proximity to the
turbines, as confirmed by observations of landowners and project developers. With the ability to conduct
livestock and crop operations coextensively with wind energy projects, the wind energy projects can
provide significant additional returns to rural landowners that dramatically offset any potential revenue
losses from the removal of land occupied by wind energy systems. One way to illustrate these gains is
to compare the net change in per-acre returns to landowners caused by the installation and operation
of a wind energy project on agricultural land. One proxy for the per-acre returns to agricultural land is
the cash rental rate for land in a similar production system. Cash rental rates for a variety of crop and
pasture systems were obtained from the Oklahoma Cooperative Extension Service lease rate surveys. 50
These rates were used to estimate the revenue forgone from the loss of land caused by the installation
of one megawatt of capacity (0.46 acres, as shown in Figure 19 above) and one turbine (calculated by
multiplying the per-megawatt land use of 0.46 acres by the weighted average capacity of an Oklahoma
wind energy turbine – 1.78 megawatts). As shown below, royalty revenue to the landowner outweighs
any losses of revenue from the occupation of agricultural land by wind energy systems by over $5,500
dollars on a per-megawatt basis or over $9,900 on a per-turbine basis.
29
Figure 23: Increases in Per-Acre Revenues to Agricultural Land from Wind Energy Systems
Ag land revenue foregone Royalty revenue gained
Crop System
Per acre cash rental rate
Per megawatt
$28.10
$32.07
$38.48
$32.19
$29.66
$41.00
$39.38
$66.25
$ 12.92
$ 14.74
$ 17.69
$ 14.80
$ 13.64
$ 18.85
$ 18.11
$ 30.46
Dryland Wheat
Northwest Southwest North Central East Dryland Grain Sorghum Dryland Alfalfa
Other Dryland Crops
Other Irrigated Crops
Per Per turbine megawatt Per turbine Per megawatt Per turbine
$ 23.00
$ 26.25
$ 31.49
$ 26.34
$ 24.27
$ 33.55
$ 32.23
$ 54.22
$ 5,606
$ 5,606
$ 5,606
$ 5,606
$ 5,606
$ 5,606
$ 5,606
$ 5,606
$ 9,979
$ 9,979
$ 9,979
$ 9,979
$ 9,979
$ 9,979
$ 9,979
$ 9,979
Ag land revenue foregone Royalty revenue gained
Pasture System
Native Pasture
Northwest
Southwest
North Central East Bermuda Pasture
Southwest
North Central East Per acre cash rental rate
Per megawatt
$8.76
$12.83
$14.20
$13.03
$ 4.03
$ 5.90
$ 6.53
$ 5.99
Net gain in landowner revenue
$ 5,593
$ 5,592
$ 5,589
$ 5,592
$ 5,593
$ 5,588
$ 5,588
$ 5,576
$ 9,956
$ 9,953
$ 9,948
$ 9,953
$ 9,955
$ 9,946
$ 9,947
$ 9,925
Net gain in landowner revenue
Per Per turbine megawatt Per turbine Per megawatt Per turbine
$ 7.17
$ 10.50
$ 11.62
$ 10.66
$ 5,606
$ 5,606
$ 5,606
$ 5,606
$ 9,979
$ 9,979
$ 9,979
$ 9,979
$ 5,602
$ 5,601
$ 5,600
$ 5,600
$ 9,972
$ 9,969
$ 9,968
$ 9,969
Turbine capacity factor
Price of power sold
Landowner royalty percentage
$17.91 $ 8.23 $ 14.66 $ 5,606 $ 9,979 $ 5,598 $ 9,965
$20.25 $ 9.31 $ 16.57 $ 5,606 $ 9,979 $ 5,597 $ 9,963
$18.56 $ 8.53 $ 15.19 $ 5,606 $ 9,979 $ 5,598 $ 9,964
Royalty revenue assumptions
40% Percent of nameplate capacity
$ 0.04 Power purchase agreement (PPA) price for wind power
4% Percentage of gross revenues (power sales only)
Increased revenues from wind turbine royalties significantly outweighed revenues lost from the
removal of land from agricultural production caused by installation of wind energy systems.
30
Figure 24: Examples of Cattle and Wind Turbines
Observations from a number of Oklahoma wind energy projects suggest cattle are not bothered by
the wind energy equipment.
Image on left courtesy of Western Farmers Electric Cooperative, image at top right from Google Earth Pro view of Keenan II project, with cattle
grazing in area and image on bottom right courtesy of Apex Wind Energy,
3.3.2 Wind Energy and Petroleum Development
The ability of wind energy development to co-exist with petroleum development poses another
frequently-asked question. The KODE Novus I project also provides an excellent example of how wind
and petroleum development can indeed occur in the same area. In Figure 25 below, one can easily see
18 oil and gas well pads interspersed among 29 wind turbines,51 with the minimum turbine-to-well pad
spacing of 242 feet. Another example of how closely wind turbines and petroleum operations can work is
shown in Figure 18 above (taken from the Big Smile Project in Roger Mills County).
31
Figure 25: KODE Novus I Project, Wind and Petroleum Development
A number of petroleum well pads are interspersed among wind turbines in the KODE
Novus I project (and extending into the Noble Great Plains Project in Texas), showing
how wind and petroleum development can coexist.
The observations of the mapping project, coupled with operational information about the
construction and operation of wind energy projects, suggest wind energy development should pose
few or no barriers to oil and gas development in the same area. The period of greatest concern for
potential interference would be during the operation of a drilling rig when certain minimum spacing
may be required to avoid potential hazards of a derrick or turbine coming into contact during a collapse
of either structure, but as Figure 26 below demonstrates, even assuming the direct outward collapse of
both structures (a worst-case scenario and an extremely remote possibility), ample room would exist on
most parcels for both land uses to be accommodated, as the wellbore center and turbine base would only
have to be 570 feet apart to avoid any collision. Further, beyond turbine foundations which may vary
from 20 to 40 feet in depth and buried electrical connector lines which are generally shallower than ten
feet,52 wind energy projects have minimal subsurface uses that would interfere with collection lines or
other petroleum infrastructure.
32
Figure 26: Setback Radii to Avoid Collision in Event of Mutual Derrick and Turbine Collapse
165 feet
140 feet
430 feet
570 feet
At most, to avoid a “worst-case scenario” in which an oil derrick and wind turbine both
simultaneously collapse directly toward each other, the turbine base and wellbore would be located
570 feet apart.
3.3.3 Setback Issues
The location of wind turbines relative to homes, businesses, and other potentially sensitive sites
continues to generate debate about wind energy development. Concerns about the impact of turbines
ranging from acoustic and aesthetic impacts to “infrasound” and “wind turbine syndrome” continue
to permeate the wind energy debate. Importantly, though, a reading of the peer-reviewed scientific
literature shows there is no clear evidence that “wind turbine syndrome” exists, but rather suggests
reports of the alleged ailment are more likely linked to psychosomatic responses to aesthetic issues and
social influences.53
Setbacks from areas such as schools, hospitals, and airports continue to pose a policy concern for
some constituencies, however, and in response to these concerns, the Oklahoma Legislature enacted
Senate Bill 808, signed by Governor Fallin on April 17, 2015. Among its provisions, Senate Bill 808
restricts construction of wind turbines within 1.5 nautical miles from an airport, public school, or
hospital.54 To estimate the impact of the new law, the distances from Oklahoma’s existing wind energy
projects to the nearest airport, public school, and hospital were calculated. Of all the potential setback
sites, only two – Weatherford Elementary School West and the Concho School on the CheyenneArapaho Tribal Complex – were within a setback distance defined by Senate Bill 808. This suggests
that if current wind energy development trends continue, setbacks from these facilities should not
significantly hamper wind energy development.
33
Figure 27: Distance of Existing Wind Energy Projects from Nearest Hospital, Airport, and School
Project
Blue Canyon: Phase I
Blue Canyon: Phase II
Sleeping Bear Wind Farm
Buffalo Bear Wind Farm
Red Hills Wind Farm
Blue Canyon V
OU Spirit Wind Farm
Minco Wind Farm (1, 2, & 3)
Keenan II
Elk City II
Big Smile Wind Farm at Dempsey Ridge
Blue Canyon VI
Taloga Wind Farm
Rocky Ridge Wind Project: Phase I
KODE Novus I Wind Project
Blackwell Wind Farm (OSU)
KODE Novus II
Closest Hospital
Woodward Regional Hospital
Reynolds Army Community Hospital
Weatherford Regional Airport
Tri County Hospital (Carnegie)
Harper County Community Hospital
Harper County Community Hospital
Great Plains (Elk City) Medical Center
Reynolds Army Community Hospital
Cheyenne Hospital
El Reno Hospital
Great Plains (Elk City) Medical Center
Seiling Hospital
Cheyenne Hospital
Tri County Hospital (Carnegie)
Seiling Hospital
Hobbart Hospital
Guymon Hospital
St. Mary's (Enid) Medical Center
El Reno Hospital
Blackwell Hospital
Guymon Hospital
Distance (mi)
9.91
15.12
4.05
14.91
12.54
14.13
4.48
7.94
9.48
9.71
12.59
11.63
10.94
6.81
5.46
6.84
11.96
19.04
4.66
11.41
12.06
6.01
5.86
5.83
Closest Airport
Mooreland Municipal Airport
Ft. Sill (Henery Post) Air Field
Weatherford Municipal Airport
Carnegie Municipal Airport
West Woodward Airport
Buffalo Airport
Elk City Airport
Ft. Sill (Henery Post) Air Field
Mignon (Cheyenne) Airport
El Reno Airport
Elk City Airport
Seiling Airport
Mignon (Cheyenne) Airport
Carnegie Municipal Airport
Thomas Airport
Hobbart Airport
Guymon Airport
Pond Creek Airport
Okarche Municipal Airport
Blackwell‐Tonkawa Airport
Guymon Airport
Distance (mi)
6.86
15.63
3.54
16.27
14.09
12.92
6.03
6.8
9.77
6.75
10.85
7.9
10.62
8.47
5.89
5.28
13.02
11.56
6.03
11.91
6.57
6.37
7.13
5.74
Closest School
Mooreland Public School
Apache High School
Weatherford Elementary (West)
Carnegie Jr. High School
Laverne High School
Woodward High School
Laverne High School
Elk City Public School
Apache High School
Fargo High School
Sweetwater Public Schools
Minco High School
Fargo Elementary School
Elk City High School
Seiling Public Schools
Cheyenne High School
Apache High School
Thomas‐Fay‐Custer School
Hobbart Middle School
Prarie Elementary (Guymon) School
Kremlin School
Concho School
Deer Creek Lamont School
Prarie Elementary (Guymon) School
Distance (mi)
9.28
11.12
1.43
14.32
13.84
15.33
13.73
7.32
6.96
5.42
4.04
2.09
6.7
6.19
4.98
6.97
9.64
9.99
4.66
9.99
2.02
0.63
4.22
4.65
Among existing turbines, only two hospitals, airports, or schools were located within 1.5 miles of the
nearest utility-scale wind turbine.
Figure 28: Map of Radii from Hospitals, Airports and Schools to Nearest Wind Turbine
In the figure above, red circles represent the radius from a hospital to the nearest
turbine, blue circles represent the radius to the nearest airport, and white represents the
radius to the nearest school.
34
3.5 Conclusions Regarding Spatial Issues and Land Use
Oklahoma’s wind energy projects physically occupy a very small footprint, particularly in respect
to their generating capacity. As this project mapped all wind energy systems for which aerial
imagery was available, the total area occupied by those projects totaled to slightly more than two
640-acre sections of land, or an area roughly the size of downtown Oklahoma City. Turbines are
spaced sufficiently to allow a variety of land uses to coexist on the same property, including a wide
range of agricultural and petroleum uses. If current patterns of land use continue, there will likely
be few problems with setbacks of wind turbines from facilities such as hospitals, airports, and
schools.
Section 4: Wind Energy’s Impacts to Oklahoma Utility Ratepayers
The public discussion of wind energy includes a number of potential advantages posed by this
energy source, ranging from its lack of greenhouse gas (GHG) emissions to creation of local jobs and
technological innovations. Of course, utilities and other for-profit entities hold deep interest in how
wind energy affects both their profits and their ratepayers’ bills. In this regard, Oklahoma’s abundant
wind energy resources have provided important benefits both to Oklahoma utilities and their customers.
All four of Oklahoma’s largest generation and transmission (“G&T”) utilities – Oklahoma Gas and
Electric (OG&E), American Electric Power – Public Service Company of Oklahoma (AEP-PSO),
Western Farmers Electric Cooperative (WFEC) and the Grand River Dam Authority (GRDA) have
integrated wind energy projects into their utility portfolios.
While calculating the precise amount of ratepayer savings from all Oklahoma wind energy projects
would require a detailed analysis of all OCC rate cases involving Oklahoma’s existing wind energy
projects, samples of information from a handful of those cases indicate the savings to Oklahoma
ratepayers are indeed significant. Oklahoma’s two investor-owned utilities have estimated their use
of power from wind energy projects will save ratepayers nearly $2 billion. For example, OG&E has
estimated its wind energy fleet will save ratepayers a total of more than $1 billion over the lifespan of
its wind energy facilities.55 In its testimony to the Oklahoma Corporation Commission regarding the
planned Balko, Seiling and Goodwell projects, AEP-PSO estimated ratepayers would realize a savings of
$723.9 million.56 Additionally, GRDA has estimated the savings associated with its wind energy projects
at approximately $300 million.57 Although specific calculations regarding ratepayer savings were not
available, WFEC has added wind power to its portfolio to benefit ratepayers as a hedge against volatility
in fuel prices, a hedge against potential future regulatory costs for fossil fuels, and to provide diversity to
its generation technology mix.
Market data suggests wind power will continue to provide increased ratepayer savings, as the cost
of wind energy generation equipment continues to decrease,58 and the cost of wind-generated electrical
power continues to decrease as well.59 At the same time, a number of market and policy factors continue
to add uncertainty to the future costs of other generation fuels. Of greatest note in recent times, the
continued efforts by EPA to implement its Clean Power Plan have caused much speculation about how
the electric utility sector will respond, and to what extent additional pollution control equipment will
be required for existing generation assets. If significant additional controls are required, wind energy
systems could provide an important price hedge since wind energy systems do not require such controls
and have set “fuel costs” in the sense that their only fuel costs are the lease payments to landowners for
accessing the wind on their property.
Section 5: Conclusions
In a relatively short period of time, Oklahoma has gone from having no utility-scale wind power
projects to having the fourth-largest installed wind power capacity in the nation, and now produces
approximately 17 percent of its electrical power from wind. Oklahoma stands poised for further growth
35
of its wind industry, but a historical analysis of other leading wind energy states suggests the policy
environment of a state can play an important role in that state’s wind development.
Wind energy projects have made significant contributions to the tax base of several counties, notably
including several counties with population losses or growth rates below the state average. The current
market value of wind energy projects in the state stands at $3.3 billion, leading to ad valorem payments
to counties of $134 million to date (including both OTC reimbursements and payments directly to
counties by project owners). Over both the historical period and the life of all of the projects included
in the project’s forecast model, owners of wind energy projects will pay approximately $1 billion in ad
valorem taxes. Coupled with OTC reimbursements, the ad valorem tax payments of Oklahoma’s wind
energy industry will mean payments of nearly $1.2 billion to education funds, including local and county
school funds and the Career Tech system. Importantly, the increased revenue provided to school districts
containing wind energy projects benefits not only those districts, but districts across the state as well.
Because the state education funding formula takes into account local revenue sources (such as wind
energy projects), tax revenues from wind energy projects can increase the amount of state aid available to
other schools.
While wind energy projects have significant impacts to ad valorem tax revenues, their land use has
much less impact than industry estimates suggest, with an average land use of 0.46 acres per megawatt
(or 0.87 acres per turbine) compared to the industry estimate of 3 acres per megawatt. When added
together, the total land use of all existing Oklahoma wind projects sums to only 1,350 acres – an area
approximately the same size as downtown Oklahoma City. The observations collected through the
mapping project also show wind development poses few or no barriers to agricultural or petroleum uses
of the same property. Similarly, if current patterns of land use continue, there will likely be few problems
with setbacks of wind turbines from facilities such are hospitals, airports, and schools.
Estimates by Oklahoma’s two investor-owned utilities indicate their use of wind power from
wind energy projects will save ratepayers nearly $2 billion. The relative stability of wind power pricing
resulting from the fact that its only “fuel cost” is scheduled payments to landowners can provide an
importance tool to manage price risk for utility ratepayers.
In conclusion, Oklahoma’s relatively young wind energy industry has made important contributions
to the state and stands poised to make even greater contributions in the future.
36
Appendix: Research Methodology
Ad Valorem Tax Methodology
Evaluating the impact future wind energy projects may have on ad valorem tax revenues in Oklahoma
requires establishing a significant number of parameters regarding the projects’ locations, capacities,
initial costs and depreciation, and the ad valorem tax environment in which they are located.
Predicting the future of any industry poses daunting challenges, as even projects well-along in the
“development pipeline” face innumerable variables in input and output markets, capital availability,
and both state and federal policies. To provide a conservative estimate of the future of Oklahoma’s
wind energy industry, forecast models were completed for all existing projects, all projects either under
construction at the time of the research, and all projects with SPP interconnection requests listed as “on
schedule” or “on suspension.”
All existing projects for which separate tax records could be obtained were forecast to the end of an
assumed 25-year lifespan to comport with the OTC methodology. As mentioned above, some projects
cut across school districts, and thus each portion of a project within a different school district was treated
as a separate unit, meaning 65 existing units were included in the model.
Projects under construction include those projects with physical development of their locations
underway. These projects were assumed to come into service at some point in 2015, first triggering ad
valorem reimbursements in 2016. Where information on specific school districts and millage rates was
available, this information was applied to these projects. Thirteen construction units were included in the
model.
Projects with SPP interconnection agreements listed as “on schedule” or “on suspension” possess
approved requests to provide power to the SPP grid. To reach this stage of the SPP interconnection
process means the project has completed a significant (and costly) amount of feasibility analysis for the
project, has demonstrated the ability to complete the project and deliver power by a specified future date,
and has secured the rights to all of the land necessary to deploy the project.60 Projects listed as having an
interconnection agreement “on schedule” remain on the timetable for power delivery established in their
application, while projects listed as having an interconnection agreement “on suspension” anticipate some
delay in that timetable. In either case, approved agreements must begin delivering power within three
years; for this reason, the forecast model deployed all projects on or before 2018 (within three years of
2015). An additional reason for placing these projects in service in 2018 is the Plains & Eastern Clean
Line Project is anticipated to be online that year,61 and that the addition of such significant additional
transmission capacity will trigger the buildout of several planned wind energy projects. The SPP
interconnection application database also provides the approximate location (generally by county) of
the proposed projects and the capacity of those projects; this information was also used for each forecast
project in the model. Fourteen of these units were included in the model.
In total, combining all historical, “under construction,” and “on schedule / on suspension” projects
resulted in a total of 92 units for the forecast model.
Establishing an initial cost of the equipment comprising each forecast project defines the initial
point for the depreciation function of the project, which in turn drives the estimates of ad valorem
revenue for the project. The cost of wind energy generation equipment can vary significantly depending
on the manufacturer and turbine model selected, to say nothing of the significant market forces
operating on the costs of such equipment. For existing projects, county tax records provided a starting
point for estimating the initial cost of the project; dividing the assessed value of the project by the county
assessment ratio to provide a market value for the equipment in “year 1” of its life, and dividing this
number by the “year 1” factors in the OTC depreciation schedule (discussed below) was used to estimate
the “year 0” or initial value of the equipment. For forecast projects, the estimate contained in the U.S.
Department of Energy Office of Energy Efficiency and Renewable Energy 2013 Wind Technologies
37
Market Report62 presented the number generally regarded as the most reliable estimate of installed wind
energy equipment costs at this time, estimated at $1,750,000 per megawatt of nameplate capacity.63 All
forecast projects used this value for the cost of their installed capacity.
In Oklahoma, school districts define the boundary units for ad valorem taxation64 with all property
within that district paying the millage rate for that district. For existing projects, county tax records
indicated the amount of wind energy asset value within each school district and the millages applicable
to that district. Without the ability to predict future millages, the forecast model assumed that all
millages remained constant for the predicted life of existing projects. Since the SPP queue database
provided only county-level location information (and not locations specific enough to identify the school
district or districts within which the projects would lie if constructed), the millage applied was the
county average millage as calculated in the most recent (tax year 2014-2015) county database maintained
by the OTC Ad Valorem Division.
Selecting a depreciation method for the forecast model obviously represents a critical piece to the
research since it defines the values of the future projects and their ad valorem tax payments. However,
the correct method of valuing wind energy equipment over its lifetime poses one of the most contentious
issues in the taxation of these projects. In briefest summary, assessors and other property appraisers
generally use three methods to estimate the value of an asset. The first method, the Cost Approach,
attempts to determine the cost of the asset either by taking the asset’s initial cost (either by construction
or acquisition cost) and applying a depreciation factor based on the estimated lifespan of the asset and its
value over that lifespan relative to its initial cost. The second method, the Sales Comparison Approach
(sometimes called the “comparable sales” approach) estimates an asset value by the cost of similar assets
sold in arms-length sales between willing sellers and buyers. The third method, the Income Approach,
estimates the present value of an asset as a function of the income to be produced by the asset divided by
a desired rate of return (discount rate), in the functional form V = I/R where V is the current asset value,
I is the annual income attributable to the asset (assuming the annual income remains relatively constant)
and R is the required rate of return for the asset.65
All three valuation methods face significant challenges when applied to utility-scale wind energy
systems. The Sales Comparison approach relies on data from sales of similar assets, and the robustness of
this method comes from larger numbers of such sales. At this point in the development of the U.S. wind
energy industry, significant databases of such sales do not exist, and available sales figures are almost
always inextricably bound up with sales of other assets, goodwill, and other intangible property, and
other corporate assets that makes determining the value of the wind energy equipment itself difficult to
discern.
This leaves the Cost Approach and the Income Approach. The Income Approach could provide a
viable method for wind energy system valuation as the revenues from a wind energy project could be
determined from the power purchase agreement (“PPA”) terms and rate information available through
SPP, the Oklahoma Corporation Commission (“OCC”) and other public sources. Given the nature of
long-term PPAs, the revenue function of the project should provide a relatively predictable value adding
stability to the model. Additionally, the asset values provided by the Income Approach are generally
lower in the first years of the asset’s life, and are generally higher later in the asset’s life, than those
provided by the Cost Approach. This could mean comparatively lower ad valorem revenues in the early
years of an asset’s life, but comparatively higher revenues later in the asset’s life as well. Although the
Cost Approach was ultimately selected as the method for the forecast model, the Income Approach
could indeed provide a viable alternative.
This leaves the Cost Approach, and it should be noted that the Cost Approach carries significant
limitations as a method for valuing utility-scale wind energy systems. First, even the Cost Approach
relies, to some extent, on the availability of equipment sales data to help establish a depreciation curve for
equipment. As mentioned in the discussion of the Sales Comparison Approach above, this data is scarce
for U.S. wind energy projects. Second, any depreciation schedule established as part of a Cost Approach
38
methodology must contend with the issue of “functional obsolescence.” Functional obsolescence refers
to the fact that future advancements in technology will accelerate the depreciation of current assets’
value because future assets will be more efficient or productive (for example, today’s smartphone will
lose value quickly as more advanced smartphones are constantly entering the marketplace). Continuing
improvements in wind energy technology continue to drive down the price of equipment, while that
equipment continues to grow more efficient.66 At the same time, though, existing assets can continue to
generate a predictable income stream despite the existence of “newer and better” systems (a consideration
weighing in favor of the income approach).
Ultimately, the Cost Approach was chosen for the forecast model, principally because it is the
method used by the OTC in its guidance document “Oklahoma Business Personal Property Valuation
Schedule,”67 which in turn provides the basis for calculation of the ad valorem reimbursements to
counties (as discussed in section 2.3 below). The Cost Approach represents a fit to the OTC’s obligations
to administer the ad valorem reimbursement fund (discussed in section 2.3 below) as eligibility for
such reimbursements are based on the investment cost of the property.68 Since both determining future
obligations for ad valorem reimbursements from the state and determining future payments by wind
facility owners to counties were both central objectives of this research, utilizing the Cost Approach
facilitated creation of a forecast model that could simultaneously address both objectives.
OTC’s research into wind energy system valuation led to the conclusion moving components such
as turbine blades, transmissions, and generators (sometimes referred to as “nacelle components” since
they are attached to or contained by the turbine’s nacelle) should be assigned an expected lifespan of 12
years, and are thus depreciated according to the 12-year property depreciation schedule.69 Similarly, nonmoving components such as turbine towers, connecting lines, transformers, and other such equipment
(defined for this project as “non-nacelle” components) should be assigned a lifespan of 25 years.70 Since
it may be difficult to separate the value of these nacelle and non-nacelle components (particularly if
the systems were part of a bulk purchase of components by the wind energy developer), OTC adopted
the policy of ascribing 60 percent of the total project value to nacelle components and 40 percent to
non-nacelle components.71 As a result, the forecast model calculated the value of nacelle components
by multiplying the initial (“year 0”) value of the projects by the corresponding 12-year or 25-year values
in the OTC depreciation tables. Both historical and forecast projects were assumed to have a 25-year
lifespan, both to fit the OTC depreciation methodology and to accommodate the facts that several
industry sources have estimated turbine equipment to have a 25-year lifespan and that many of the PPAs
held by wind energy projects are for a 20- to 25-year span.72
39
Figure 29: Oklahoma Tax Commission Depreciation
Schedule
Section X
January 2015
Effective
DEPRECIATION-FIXTURES AND EQUIPMENT
ECONOMIC LIFE DEPRECIATION - PERCENT GOOD
Age
3
5
6
7
8
9
10
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
70
50
30
20
85
69
52
34
23
20
87
73
57
41
30
23
20
89
76
62
48
37
28
23
20
90
79
67
54
43
33
26
22
20
91
82
72
61
51
41
33
26
22
20
92
84
76
68
58
49
39
30
24
21
20
Typical Life Expectancy in Years
11
12
13
14
15
16
17
18
20
25
26.5
30
93
86
78
70
62
54
45
37
30
25
22
20
94
87
80
73
66
58
50
43
36
29
23
22
20
94
88
82
75
69
62
54
47
41
34
29
25
22
20
95
89
84
77
71
65
58
51
45
39
33
28
24
22
20
95
90
85
79
73
68
62
55
49
43
37
31
26
23
21
20
96
91
86
81
75
71
65
58
53
47
42
36
31
27
24
22
20
96
91
87
82
77
73
68
62
57
51
46
40
35
31
28
25
21
20
96
92
88
83
79
75
70
65
60
54
49
44
39
34
31
27
23
22
20
97
93
90
86
82
78
74
70
65
60
55
50
45
40
35
31
27
24
22
21
20
98
95
93
90
87
84
81
78
75
71
68
64
60
56
52
48
44
39
34
30
28
26
24
23
22
20
98
96
94
91
89
86
83
80
78
74
71
68
64
61
57
53
50
45
41
37
34
32
29
27
26
23
20
98
97
95
93
91
89
86
84
82
79
76
74
71
68
65
61
58
54
51
47
43
40
37
34
31
28
25
23
22
21
20
145
Oklahoma Tax Commission – Ad Valorem Tax Division, “Oklahoma Business Personal Property
Valuation Schedule,” 145, available at http://www.tax.ok.gov/advform/2015BusPPValSchedFinal.pdf
(last accessed April 29, 2015).
For existing projects, the year 0 value was calculated by taking the market value of the equipment
(reverse-calculated by applying the respective counties’ assessment ratios to the gross assessed value
indicated in the tax records), applying the OTC’s “60/40” rule to determine the proportion of that value
assignable to nacelle and non-nacelle components, and then dividing those values by the year 1 factors
from the OTC deprecation table to reverse-calculate a year 0 initial cost of the project. Actual assessed
values were used to calculate system values for any time periods for which tax records were available;
for all future years, the year 0 value was multiplied by the indicated factor from the OTC table. In some
cases, this resulted in a significant change in system values between year 5 (the last year in which the
system would be eligible for the ad valorem reimbursement, with the system value determined strictly
by the OTC Cost Approach methodology) and year 6 (when the county began local assessment of the
system); the potential sources of this disjunction are discussed below in section 2.3. Historic data was
used for all existing projects’ ad valorem payments data; to forecast future ad valorem revenues, the last
known millages for the project were held constant for the remainder of the project’s life.
For forecast projects, the U.S. Department of Energy Office of Energy Efficiency and Renewable
Energy 2013 Market Report value of $1,750,000 per megawatt of capacity was used as the year 0 value
for the project, and the OTC 60/40 value split with 12-year and 25-year lifespans for nacelle and non40
nacelle components, respectively, were applied. 2014-2015 county average millage rates as reported by
OTC73 were applied to determine the overall ad valorem taxes paid by the respective projects. To break
out payments to education funds as discussed in section 2.2.2.3 below, county average millage rates (for
the county in which the project is to be located) for these respective funds (county 4-mill, school general,
school building, school sinking, Career Tech general, Career Tech building, and Career Tech sinking)
were used since there was not sufficient information to locate the forecast projects within a specific
school district.
As a demonstration of these methods, the results for a hypothetical 2.0 megawatt turbine, using an
assessment ratio equal to the overall average assessment ratio of all Oklahoma counties with existing
wind energy projects and a millage rate equal to the overall average over the same counties is depicted in
Figures 29 and 30.
Figure 30: OTC Cost Approach Model Asset Value
OTC Cost Approach Model Asset Value
$4,000,000
$3,500,000
Wind Energy System Value
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$‐
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Year of System Life
Total value
Nacelle value (60%)
41
Non‐nacelle value (40%)
18
19
20
21
22
23
24
25
Figure 30: OTC Cost Approach Model Asset Value
Ad Valorem Revenue Collections by System Life Year, Cost Approach Model
$450,000
$40,000
$400,000
$35,000
$300,000
Tax Payments
$25,000
$250,000
$20,000
$200,000
$15,000
$150,000
$10,000
Cumulative Payments to County
$350,000
$30,000
$100,000
$5,000
$50,000
$‐
$‐
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Year of System Life
OTC Reimbursements
County‐collected payments
Cumulative payments to county
Figure 31: Ad Valorem Revenue Collections by System Life Year, Cost Approach Model, Prototype
Turbine
42
$(500,000)
County Schools Total
43
Cumulative County Education Revenues
2043
$2,063,269 $2,003,509 $1,196,034 $1,219,035 $1,242,036 $1,500,000
2042
$2,242,551 $2,123,030 $3,698,248 $3,322,057 $2,993,055 $3,158,102 $2,791,546 $1,471,609 $1,417,105 $4,064,621 $3,500,638 $80,000,000
$60,000,000
$‐
$80,000,000
$60,000,000
$40,000,000
$20,000,000
$500,000
$‐
$2,728,376 $1,444,357 $4,523,689 $4,315,685 $3,893,131 $2,854,170 $5,414,284 $4,906,650 $7,702,856 $6,430,196 $5,861,894 $8,872,184 $8,277,748 $7,079,723 $9,983,169 $9,431,186 $12,000,000
2043
2042
2041
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
$2,000,000
2041
2040
2039
2038
2037
$2,527,593 $2,674,632 $2,835,430 $2,996,228 $3,143,267 $3,359,308 $2,385,072 $2,500,000
2036
2035
$3,871,892 $3,540,848 Total owner‐paid taxes
2034
2033
2032
2031
2030
2029
2028
$4,687,899 Total OTC reimbursements
$4,301,716 $6,735,048 $3,646,653 $6,000,000
2027
2026
$5,708,034 $5,163,517 $5,500,000
2025
2024
$6,500,000
$6,238,791 2022
2021
2020
2019
2018
$3,961,421 $3,799,159 $8,000,000
2023
2022
$7,500,000
$7,251,943 $7,745,837 $8,242,094 $8,500,000
2021
$3,102,672 $2,930,683 2017
2016
Tax Payments
$10,000,000
2020
$3,439,769 $9,500,000
2019
2018
2017
$3,500,000
$3,288,419 $4,000,000
2016
$4,500,000
2015
Annual Education Revenue
Beaver County Forecast Model
Total Wind Energy Ad Valorem Tax Receipts (Personal Property)
$140,000,000
$120,000,000
$100,000,000
$40,000,000
$20,000,000
$‐
Beaver County Education Revenues from Wind Energy Systems
$120,000,000
$100,000,000
44
Career Tech Total
2043
2042
2041
2040
2039
$1,084,108 $975,674 $1,031,783 $819,440 $665,795 $678,599 $691,403 2043
2042
2041
2040
2039
2038
2037
$1,648,997 $1,318,132 $1,382,577 $1,447,118 $1,558,811 $996,482 $1,079,191 $1,186,235 $1,254,501 $809,642 $825,212 $840,782 $871,922 $25,000,000
$20,000,000
$‐
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$‐
$10,000,000
$5,000,000
$‐
$903,062 $934,202 $2,072,590 $1,841,394 $3,409,418 $2,978,262 $2,502,118 $3,830,340 $3,611,211 $3,194,084 $2,740,190 $2,287,402 $30,000,000
$717,010 $742,618 $768,225 2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
$1,000,000
2038
2037
$1,190,182 $1,137,106 $887,425 $1,000,000
2036
2035
2034
$1,356,196 $1,282,029 Total county‐collected taxes
2033
$1,704,541 $1,514,415 2026
2025
$1,500,000
2032
2031
2030
$1,500,000
2029
$2,057,763 $2,000,000
2028
2027
$2,000,000
$1,881,191 2024
2023
$2,500,000
2026
2025
Total OTC Reimbursements
$2,253,540 2022
2021
$3,000,000
2024
$2,626,816 $2,449,318 $2,500,000
2023
2022
$3,000,000
$2,803,903 2020
2019
$117,458 $125,719 $134,534 $143,491 $162,211 $176,723 $168,092 $143,334 $3,500,000
2021
$3,150,147 $3,500,000
$2,969,893 2018
2017
2016
2015
2014
2013
2012
$7,075 $4,000,000
2020
$96,976 $103,823 $111,134 $118,561 $134,017 $146,173 $137,246 $117,043 2011
2010
Tax Payments
$4,500,000
2019
2018
2017
2016
2015
2014
2013
2012
$500,000
2011
$5,541 $500,000
2010
Beckham County Forecast Model
$50,000,000
$45,000,000
$40,000,000
$35,000,000
$15,000,000
$10,000,000
$5,000,000
$‐
Axis Title
Beckham County Education Revenues from Wind Energy Systems
$45,000,000
$40,000,000
$35,000,000
45
Career Tech Total
2039
2038
2037
2036
2035
2034
2033
$74,811 $49,874 $50,833 $51,792 $53,711 $55,629 $57,547 $61,384 $66,179 $70,975 2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
$100,261 $90,934 $67,618 $62,955 $65,286 $60,623 $1,500,000
$50,000
$‐
$2,000,000
$1,500,000
$1,000,000
$50,000
$500,000
$‐
$‐
$74,613 $80,442 $86,271 $61,789 $113,085 $104,924 $95,598 $69,950 $133,487 $119,497 $166,130 $150,392 $278,633 $262,894 $248,321 $232,582 $216,844 $199,356 $181,869 $2,000,000
2032
2031
2030
$82,484 $78,648 2027
2026
2025
2024
2023
2022
$100,000
2029
2028
$86,321 $93,035 $100,000
2027
$109,819 $98,310 Total OTC reimbursements
2026
2025
$136,675 $123,726 2021
2020
$150,000
2024
2023
$150,000
2022
$164,009 $149,623 2019
2018
2017
$200,000
2021
2020
$178,396 $191,344 $200,000
2019
$204,292 2016
2015
$250,000
2018
2017
$216,281 $229,230 $250,000
2016
Tax Payments
$300,000
2015
Annual Education Revenues
Blaine County Forecast Model
$3,500,000
$3,000,000
$2,500,000
$1,000,000
$500,000
$‐
Blaine County Education Revenues from Wind Energy Systems
$3,000,000
$2,500,000
46
Career Tech Total
2037
2036
2035
2034
2033
2032
2031
2030
2029
$199,483 $869,441 $756,593 $793,967 $831,332 $492,749 $510,308 $527,876 $552,932 $631,408 $471,263 $‐
$3,000,000
$20,000,000
$15,000,000
$10,000,000
$‐
$5,000,000
$‐
$676,061 $480,221 $982,678 Total county‐collected revenues
2028
2027
2026
2025
$1,188,750 $1,063,760 $920,748 $1,000,000
2024
2023
2022
2021
$1,322,885 $1,451,255 $1,585,471 $206,165 $942,984 $861,285 $820,860 $730,433 $594,480 $516,700 $530,024 $548,923 $567,832 $507,042 $1,065,472 $998,103 $901,702 $682,305 $1,286,954 $1,152,244 $2,020,415 $1,871,661 $1,570,767 $2,419,016 $2,169,069 $1,866,172 $1,715,500 $1,432,076 $1,500,000
2020
$1,500,000
2019
2018
$1,867,272 $1,729,881 Total OTC reimbursements
2017
2016
$2,004,192 $2,227,982 $2,500,000
2015
$2,557,266 $354,300 $443,260 $588,604 $555,181 $2,500,000
2014
$1,668,425 $582,554 $569,943 $2,842,977 $3,000,000
2013
$2,000,000
2012
$403,344 $378,828 $514,507 $482,344 $497,300 $489,809 $248,791 $2,000,000
2011
2010
2009
2008
2007
2006
$218,535 $239,795 $1,000,000
2005
$500,000
$191,767 $500,000
2004
Caddo County Forecast Model
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$‐
Caddo County Education Revenues from Wind Energy Systems
$35,000,000
$30,000,000
$25,000,000
47
Career Tech Total
2043
2042
2041
2040
2039
2038
2037
2036
$4,297,443 $3,554,198 $3,731,325 $3,908,507 $4,085,792 $3,162,900 $2,069,295 $1,855,230 $1,890,908 $1,926,585 $1,997,940 $4,915,391 $4,633,503 $3,358,507 $2,146,320 $5,999,886 $5,412,355 2043
2042
2041
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
$5,514,926 $4,556,763 $4,786,808 $5,016,916 $5,247,147 $2,790,319 $2,597,883 $2,694,101 $2,501,665 $100,000,000
$‐
$100,000,000
$80,000,000
$60,000,000
$‐
$40,000,000
$2,000,000
$20,000,000
$‐
$4,037,940 $2,549,774 $6,304,208 $5,946,027 $4,297,302 $2,893,172 $7,731,112 $6,956,734 $12,676,455 $10,855,430 $9,179,300 $14,385,996 $13,489,117 $11,725,177 $10,038,372 $8,454,221 $150,000,000
Total county‐collected revenues
2035
2034
2033
2032
2031
2030
2029
2028
2026
2025
$8,000,000
2027
2026
2024
2023
2022
2021
$10,000,000
2025
$8,383,486 $7,760,589 $8,000,000
2024
2023
$9,824,173 $9,067,284 2020
2019
$3,441,790 $3,269,010 $12,000,000
2022
$10,000,000
2021
$11,174,579 $12,000,000
$10,465,844 2018
2017
$4,104,741 $3,687,267 $14,000,000
2020
$3,151,416 $2,986,337 2016
2015
$4,411,280 $4,681,987 Annual Tax Revenues
$16,000,000
2019
2018
2017
$3,754,668 $3,378,337 2014
2013
$4,000,000
2016
$4,000,000
2015
$4,056,990 $4,233,833 $6,000,000
2014
$6,000,000
2013
Canadian County Forecast Model
$250,000,000
$200,000,000
$50,000,000
$2,000,000
$‐
Canadian County Education Revenues from Wind Energy Systems
$160,000,000
$140,000,000
$120,000,000
48
Career Tech Total
2034
2033
2032
2031
2030
2029
2028
2027
2026
$613,463 $542,611 $569,155 $495,148 $320,453 $416,307 $443,861 $299,535 $278,616 $283,846 $289,075 2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
$710,184 $628,173 $658,890 $573,207 $371,478 $481,867 $513,796 $347,229 $322,979 $329,042 $335,104 $10,000,000
$‐
$2,000,000
$15,000,000
$10,000,000
$‐
$5,000,000
$200,000
$‐
$545,724 $359,353 $833,535 $751,998 $600,690 $1,021,632 $930,615 $1,726,376 $1,888,608 $1,762,980 $1,578,576 $1,411,830 $1,218,204 $1,112,649 $15,000,000
$471,416 $309,994 $719,977 $649,592 $518,879 $882,331 $803,769 Total county‐collected taxes
2025
2024
2023
2022
2021
2020
$800,000
2019
$1,052,034 2014
2013
2012
$391,246 $395,139 $409,858 $369,302 $1,000,000
2018
2017
$1,000,000
$960,894 Total OTC Reimbursements
2016
$1,200,000
2015
$1,219,282 $1,635,291 $1,608,267 2011
2010
2009
2008
$365,634 $365,097 $1,500,000
2014
2013
$1,800,000
2012
$1,400,000
$1,348,614 $1,473,416 $1,600,000
2011
$340,108 $341,729 2007
2006
2005
2004
Annual Tax Revenues
$2,000,000
2010
2009
2008
$356,889 $316,821 $600,000
2007
2006
$313,279 $316,473 $400,000
2005
$500,000
2004
Comanche County Forecast Model
$25,000,000
$20,000,000
$5,000,000
$‐
Comanche County Education Revenues from Wind Energy Systems $25,000,000
$20,000,000
49
Career Tech Total
2043
2042
2041
2040
2039
$663,416 $484,042 $521,857 $559,673 $589,926 $393,284 $400,847 $408,410 $423,536 $438,663 $453,789 $500,000
2038
2037
2036
2035
2034
$725,542 $694,479 $1,572,029 $1,067,991 $1,116,612 $1,214,394 $1,338,107 $1,455,068 2043
2042
2041
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
$499,503 $509,108 $518,714 $537,926 $557,138 $576,349 $614,772 $662,802 $710,831 $749,254 $841,660 $500,000
$‐
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$‐
$10,000,000
$5,000,000
$‐
$1,679,293 $1,337,694 $1,399,079 $1,522,902 $2,656,143 $2,329,923 $1,974,885 $2,970,986 $2,809,555 $2,496,298 $2,149,139 $1,827,089 Cumulative Tax Revenues
$881,095 $920,530 $713,869 $30,000,000
2033
2032
2031
2030
2029
2028
2027
2026
2025
$1,710,331 $1,854,037 $2,000,000
2024
$1,986,398 $2,113,356 $2,235,292 2019
2018
$826,037 $775,565 $2,500,000
2023
2022
$2,500,000
2021
$587,597 2017
2016
$921,039 $1,043,883 $1,166,042 $1,203,515 $1,423,711 $1,743,885 $1,629,593 $1,373,127 $3,000,000
2020
$679,638 $638,248 2015
2014
$1,531,579 $1,423,801 $3,500,000
2019
2018
2017
2016
$912,138 $757,877 2013
2012
2011
2010
2009
2008
2007
2006
$1,000,000
2015
2014
$980,209 $1,151,392 $1,330,806 $1,341,166 $1,168,930 $959,731 $1,000,000
2013
2012
2011
2010
2009
2008
$1,238,912 $1,500,000
$1,162,876 $1,500,000
2007
Annual Tax Revenues
$2,000,000
2006
Custer County Forecast Model
$60,000,000
$50,000,000
$40,000,000
$20,000,000
$10,000,000
$‐
Custer County Education Revenues from Wind Energy Systems
$45,000,000
$40,000,000
$35,000,000
50
Career Tech Total
2043
2042
2041
$1,000,000
$242,534 $247,198 $251,862 $261,190 $1,943,443 $1,100,945 $1,126,243 $1,160,869 $1,216,129 $1,576,604 $1,632,707 $1,724,405 $1,833,924 $289,858 $295,432 $301,006 $312,154 $2,766,920 $2,474,925 $2,334,594 $2,194,262 $2,006,160 $1,481,074 $1,550,586 $1,405,987 $1,437,956 $3,146,202 $2,951,920 $2,620,464 $2,077,064 $3,612,688 $3,395,061 $50,000,000
$40,000,000
$‐
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$‐
$10,000,000
$‐
Cumlative Tax Revenues
$5,714,689 $6,205,321 $5,644,388 $5,231,077 $4,402,631 $6,337,385 $6,016,813 $5,254,929 $4,802,021 $3,974,012 $60,000,000
2043
2042
2041
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
$1,000,000
2040
2039
2038
2037
2036
2035
$2,173,510 $2,058,295 Total county‐collected revenues
2034
2033
2032
2031
2030
$2,476,283 $2,320,894 2026
2025
$3,000,000
2029
2028
2027
$2,673,065 $2,845,892 $3,000,000
2026
2024
2023
2022
2021
2020
2019
2018
2017
$4,000,000
2025
2024
2023
$4,000,000
$3,777,682 $4,113,565 $4,491,697 $4,875,723 $5,222,283 $1,649,076 $1,498,299 $5,000,000
2022
2021
2020
2019
$4,357,496 $6,000,000
2018
2016
2015
2014
$1,588,124 $6,000,000
2017
$4,645,801 $4,880,210 $5,000,000
2016
$1,186,037 2013
2012
Annual Tax Revenues
$7,000,000
2015
2014
$1,302,761 $1,265,924 $2,000,000
2013
$2,000,000
2012
Dewey County Forecast Model
$100,000,000
$90,000,000
$80,000,000
$70,000,000
$30,000,000
$20,000,000
$10,000,000
$‐
Dewey County Education Revenues from Wind Energy Systems
$80,000,000
$70,000,000
$60,000,000
Career Tech Total
51
Total Education Revenues
2041
2040
2039
$1,000,000
$417,202 $425,225 $433,248 $449,294 $1,862,720 2041
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
$498,673 $508,263 $517,853 $537,033 $1,320,038 $1,353,555 $1,406,252 $1,482,875 $1,559,498 $1,626,532 $1,722,239 $1,832,284 $1,942,328 $2,066,805 $2,176,897 $2,349,324 $2,545,725 $2,777,377 $2,986,609 $3,307,992 $50,000,000
$40,000,000
$30,000,000
$‐
$40,000,000
$30,000,000
$20,000,000
$‐
$10,000,000
$‐
$5,019,057 $4,667,218 $4,324,969 $3,666,132 $3,126,989 $2,927,034 $3,995,551 $3,577,272 $3,325,633 $6,000,000
$1,130,941 $1,159,479 $1,204,063 $1,269,162 $1,334,261 $1,391,337 $1,473,396 $1,567,947 $1,662,498 $1,768,626 2026
2025
2024
2023
$1,000,000
2038
2037
2036
2035
2034
2033
2032
2031
$2,550,428 $2,372,614 2022
2021
2020
2019
2018
2017
2016
2015
$2,000,000
2030
2029
2028
$2,000,000
2027
2026
2025
$3,132,516 $2,825,459 $3,697,579 $3,415,048 Total OTC reimbursements
2024
2023
2022
2021
2020
$4,000,000
2019
$3,991,622 $4,293,688 $4,556,161 2014
2013
$5,000,000
2018
$2,724,602 $5,000,000
2017
$3,113,480 $3,000,000
2016
2015
$3,000,000
$2,897,306 Annual Tax Revenues
$4,000,000
2014
2013
Garfield County Forecast Model
$80,000,000
$70,000,000
$60,000,000
$20,000,000
$10,000,000
$‐
Garfield County Education Revenues from Wind Energy Systems
$70,000,000
$60,000,000
$50,000,000
52
Career Tech Total
$500,000
$‐
$392,124 $1,005,977 $967,701 2043
2042
2041
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
$‐
$339,841 $346,377 $352,912 $1,091,732 $1,048,854 2030
2029
$526,014 $476,700 $460,262 $427,386 $435,605 $1,791,828 $1,160,043 $1,206,923 $1,258,755 $1,310,587 $1,396,128 $1,483,770 $1,629,788 $30,000,000
$‐
$3,271,907 $3,023,810 $2,792,102 $2,597,549 $2,426,114 $2,089,565 $1,940,696 $1,579,029 $2,250,761 $1,865,973 $2,088,446 $2,347,479 $2,094,833 $1,726,040 $1,439,762 $1,117,689 $808,237 $493,138 $443,824 $500,000
$365,983 $379,054 $1,234,932 Total county‐collected revenues
$933,191 $1,000,000
$1,161,749 2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
$1,000,000
$651,649 $1,488,031 $1,355,196 $2,006,215 $1,731,428 $1,609,729 $2,503,637 $2,308,668 $3,000,000
$1,862,930 $1,520,293 $2,000,000
$1,390,504 2014
2013
$1,285,379 $3,000,000
$2,148,194 $1,839,761 $1,644,190 $2,500,000
2012
2011
$1,500,000
$2,090,341 $2,500,000
$1,267,909 $2,000,000
$1,835,821 $3,500,000
$418,266 $1,500,000
Grady County Forecast Model
Total Wind Energy Ad Valorem Tax Receipts
$60,000,000
$50,000,000
$40,000,000
$20,000,000
$10,000,000
$‐
Grady County Education Revenues from Wind Energy Systems
$50,000,000
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
53
Axis Title
2041
2040
2039
2038
2037
2036
2035
2034
$311,493 $317,483 $323,474 $335,454 $951,119 $664,080 $676,743 $701,386 $732,702 $764,018 $789,344 $816,035 $843,408 $870,781 $915,443 $862,482 $779,512 $707,992 $743,752 $623,172 $452,106 $589,703 $405,337 $413,132 $420,927 $436,517 $980,529 $928,497 $819,852 $15,000,000
$‐
$20,000,000
$15,000,000
$10,000,000
$‐
$5,000,000
$‐
$664,437 $1,205,415 $1,083,228 $1,992,940 $1,716,309 $1,441,362 $2,263,068 $2,122,316 $1,855,770 $1,571,027 $1,319,807 $20,000,000
2033
2032
2031
2030
$1,115,320 $1,025,732 $1,000,000
2029
2028
$1,000,000
2027
2026
2025
2024
$435,598 $1,500,000
2023
$1,484,077 $1,384,022 $1,500,000
2022
$1,574,463 $1,664,849 $499,476 $467,537 $2,000,000
2021
2020
2019
$1,841,766 $1,750,312 $572,609 $529,014 Annual Tax Revenues
$2,500,000
2018
$2,000,000
2017
$429,132 $419,614 $500,000
2016
2015
$476,011 $437,934 $500,000
2014
2013
Grant County Forecast Model
$35,000,000
$30,000,000
$25,000,000
$10,000,000
$5,000,000
$‐
Grant County Education Revenues from Wind Energy Systems
$30,000,000
$25,000,000
$2,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$12,378,252 $11,672,260 $11,027,880 $10,337,791 $9,648,402 $8,886,728 $8,120,291 $7,426,447 $6,738,067 $6,011,179 $5,372,692 $5,090,803 $4,739,990 $4,537,640 $4,086,325 $3,831,658 $3,635,163 $3,389,544 $3,143,925 $2,947,429 $2,849,182 $2,750,934 $2,652,687 $2,603,563 $2,554,439 $155,606 $164,980 $165,776 $162,665 $1,189,355 $1,465,074 $1,543,240 $1,522,279 $1,523,110 $1,501,338 $1,182,146 $934,419 $847,781 $758,569 $680,476 $12,000,000
$‐
$‐
Career Tech Total
54
$80,000,000
$100,000,000
$80,000,000
$60,000,000
$40,000,000
$20,000,000
$‐
$100,000,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
Annual Tax Revenues
$14,000,000
$10,639,763 $10,032,906 $9,479,078 $8,885,865 $8,293,266 $7,638,556 $6,979,741 $6,383,360 $5,791,698 $5,166,926 $4,617,378 $4,375,095 $4,073,573 $3,899,646 $3,511,163 $3,293,820 $3,124,906 $2,913,764 $2,702,621 $2,533,708 $2,449,251 $2,364,794 $2,280,337 $2,238,108 $2,195,880 $133,825 $144,102 $144,375 $146,705 $1,055,760 $1,250,857 $1,323,225 $1,135,955 $1,334,600 $1,289,016 $1,013,953 $801,374 $727,069 $650,585 $583,714 $2,000,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
Harper County Forecast Model
Total Wind Energy Ad valorem Tax Receipts (Personal Property)
$180,000,000
$160,000,000
$140,000,000
$120,000,000
$60,000,000
$40,000,000
$20,000,000
$‐
Harper County Education Revenues from Wind Energy Systems
$160,000,000
$140,000,000
$120,000,000
55
Career Tech Total
2043
$586,637 $2,551,303 $1,684,691 $1,732,229 $2,053,250 $2,152,779 $2,263,589 $2,400,599 $1,642,794 $902,519 $597,919 $2,836,640 $2,748,832 $2,444,742 $‐
$80,000,000
$60,000,000
$40,000,000
$‐
$20,000,000
$‐
$1,792,822 $1,746,274 Cumulative Tax Revenues
$2,205,970 $2,318,259 $60,000,000
$738,076 $3,048,730 $2,899,312 $4,852,892 $4,047,983 $3,421,437 $5,843,555 $7,907,095 $7,400,577 $6,891,657 $6,352,899 $5,357,665 $4,405,611 $3,705,696 $3,245,729 $2,591,256 $1,846,466 $1,135,502 $752,270 $1,000,000
2042
$1,000,000
2041
2040
2039
2038
2037
2036
2035
2034
$3,732,582 $3,424,310 $2,696,365 $4,461,923 $4,045,697 $3,000,000
2033
2032
$3,000,000
2031
2030
2029
2028
$4,000,000
2027
2026
$5,392,602 $4,937,591 $6,378,386 $5,869,516 Total OTC reimbursements
2025
2024
2023
$7,000,000
2022
$7,000,000
2021
$7,338,477 $8,000,000
$6,863,061 $5,142,067 $4,830,409 $8,000,000
2020
$4,966,641 $3,665,006 $9,000,000
2019
$6,000,000
$5,283,026 $1,090,634 $4,000,000
2018
$5,000,000
$4,181,855 $6,000,000
2017
$971,166 $1,250,909 $1,153,697 Annual Tax Revenues
$5,000,000
2016
2015
$996,192 $959,689 $2,000,000
2014
$2,000,000
2013
Kay County Forecast Model
Total Wind Energy Ad valorem Tax Receipts
$120,000,000
$100,000,000
$80,000,000
$40,000,000
$20,000,000
$‐
Kay County Education Revenues from Wind Energy Systems
$120,000,000
$100,000,000
56
Career Tech Total
2043
2042
2041
2040
2039
$264,739 $274,194 $245,829 $250,556 $255,284 $523,501 $20,000,000
$‐
$2,500,000
$20,000,000
$15,000,000
$10,000,000
$‐
$5,000,000
$‐
Cumualtive Tax Revenues
$724,558 $687,552 $659,289 $631,026 $602,763 $573,992 $545,221 $292,791 $283,031 $273,271 $263,512 $258,632 $253,752 $1,860,899 $2,203,729 $2,061,228 $1,923,607 $1,776,734 $1,637,156 $1,520,071 $1,400,061 $1,308,871 $1,217,680 $1,121,609 $1,041,651 $989,041 $1,532,976 $1,408,771 $1,299,346 $1,216,604 $1,120,905 $25,000,000
$576,954 $550,773 $496,228 $283,649 $500,000
2038
2037
2036
2035
2034
$629,314 $662,765 $603,134 $921,971 $874,778 Total county‐collected revenues
2033
2032
2031
$1,254,168 $1,085,379 $996,257 $1,469,278 $1,363,057 $1,169,773 $1,723,418 $1,593,196 $500,000
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
$988,333 $910,447 $2,000,000
2020
$1,143,872 $1,055,816 $1,490,073 $2,500,000
2019
2018
2017
2016
2015
$1,500,000
$1,221,799 $947,219 $895,721 $896,132 $905,935 $732,907 $697,062 $658,489 $1,500,000
2014
$508,045 $535,507 $562,969 $697,181 $686,488 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
Annual Tax Revenues
$2,000,000
2013
2012
2011
2010
2009
2008
$698,954 $739,139 $1,000,000
2007
$1,000,000
2006
Kiowa County Forecast Model
Total Wind Energy Ad valorem Tax Receipts (Personal Property)
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$15,000,000
$10,000,000
$5,000,000
$‐
Kiowa County Education Revenues from Wind Energy Systems
$35,000,000
$30,000,000
$25,000,000
57
Career Tech Total
$500,000
$284,837 $843,557 $717,571 $731,265 $750,437 $777,825 $805,213 $1,792,594 $1,582,976 $1,676,942 $‐
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$‐
$5,000,000
$‐
$1,026,404 $946,894 $964,965 $990,263 Cumulative Tax Revenues
$1,113,143 $1,192,653 $1,283,006 $1,366,130 $1,438,412 $1,510,694 $1,062,545 $2,173,881 $3,702,645 $3,198,479 $2,672,627 $4,172,478 $3,939,369 $3,458,694 $2,927,421 $2,591,310 $2,428,675 $1,938,965 $30,000,000
$375,866 $500,000
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
$1,000,000
2040
2039
2038
2037
2036
2035
2034
$972,281 $903,811 $1,000,000
2033
2032
2031
$1,199,603 $1,144,827 2027
2026
2025
2024
$1,500,000
2030
2029
2028
$1,270,812 $1,358,455 $1,500,000
2027
2026
$1,647,400 $1,469,377 2023
2022
2021
2020
$2,000,000
2025
$2,025,357 $1,840,487 $2,000,000
2024
$2,423,856 $2,218,444 2019
2018
2017
$2,500,000
2023
2022
2021
$2,621,051 $2,805,921 $2,985,314 2016
2015
$3,500,000
2020
2019
$3,000,000
2018
$3,500,000
$3,161,968 $4,000,000
2017
$2,500,000
$1,963,734 $4,500,000
2016
Annual Tax Revnues
$3,000,000
2015
Murray County Forecast Model
$60,000,000
$50,000,000
$40,000,000
$20,000,000
$10,000,000
$‐
Murray County Education Revenues from Wind Energy Systems
$45,000,000
$40,000,000
$35,000,000
58
Career Tech Total
$1,000,000
$678,591 $1,853,374 $1,175,371 $1,192,063 $1,216,036 $1,249,421 $1,282,807 $1,330,751 $1,404,802 $1,488,266 $1,564,451 $1,631,222 $1,697,994 $1,764,765 $538,469 $2,169,256 $1,914,184 $2,032,355 $1,348,000 $1,445,460 $1,554,342 $1,240,184 $1,142,724 $1,164,500 $1,196,631 $40,000,000
$30,000,000
$‐
$40,000,000
$30,000,000
$20,000,000
$‐
$10,000,000
$500,000
$‐
Total Tax Revenues
$1,652,868 $1,739,973 $1,827,078 $1,283,737 $2,643,538 $2,356,334 $4,484,170 $3,879,077 $3,242,920 $2,948,939 $5,050,354 $4,767,795 $4,190,189 $3,552,433 $2,907,991 $6,000,000
2041
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
$1,000,000
2041
2040
2039
2038
2037
2036
2035
$1,500,000
2034
2033
2032
2031
2030
$2,551,711 $2,316,944 2024
2023
2022
2021
$2,000,000
2029
$2,000,000
2028
2027
2026
2025
2024
2023
2022
$3,503,202 $3,263,729 $3,500,000
2021
2020
2019
2018
2017
2016
$4,000,000
2020
$3,728,556 $3,946,629 $4,000,000
2019
$4,162,569 $4,500,000
2018
$2,500,000
$2,396,805 $5,000,000
2017
$‐
$3,000,000
2016
Annual Tax Revenues
$3,000,000
2015
Osage County Forecast Model
$70,000,000
$60,000,000
$50,000,000
$20,000,000
$10,000,000
$‐
Osage County Education Revenues from Wind Energy Systems
$60,000,000
$50,000,000
Career Tech Total
59
$1,206,570 $1,237,592 $377,926 $‐
2036
$573,740 $1,326,987 $1,271,842 $767,734 $1,000,000
2035
$1,474,786 $1,395,933 $508,592 $2,846,540 $2,499,647 $2,636,079 $2,255,941 $2,020,989 $2,140,550 $1,802,854 $1,905,729 $1,555,907 $50,000,000
$40,000,000
$6,000,000
$‐
$‐
$1,640,874 $1,596,306 $3,449,109 $5,104,875 $5,290,358 $4,688,626 $4,264,435 $3,838,783 $3,138,598 $2,362,581 $1,712,770 $1,012,481 $761,586 $1,000,000
2034
2033
2032
2031
2030
2029
$1,564,152 $1,657,160 $1,746,939 $1,829,626 $1,934,921 $2,040,213 $2,200,732 Total county‐collected taxes
2028
2027
2026
2025
2024
2023
2022
$2,662,997 $2,424,863 $3,000,000
2021
$3,295,343 $2,965,028 Total OTC Reimbursements
2020
2019
2018
2017
$3,947,416 $3,624,216 $5,000,000
2016
$4,004,261 $3,689,570 $3,072,612 $6,000,000
2015
2014
$3,000,000
$4,781,278 $1,510,962 $6,166,238 $6,123,280 $7,000,000
2013
$4,735,104 $5,000,000
2012
$3,264,791 $4,000,000
$2,875,444 $4,000,000
2011
$2,000,000
2010
$1,189,933 $2,000,000
2009
Annual Tax Revenues
Roger Mills County Forecast Model
$90,000,000
$80,000,000
$70,000,000
$60,000,000
$30,000,000
$20,000,000
$10,000,000
$‐
Roger Mills County Education Revenues from Wind Energy Systems
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$2,000,000
60
$‐
Career Tech Total
$2,002,851 $1,911,049 $1,278,989 $1,242,462 $739,051 $1,000,000
$711,679 $860,056 $2,558,931 $2,297,399 $‐
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$‐
$2,072,928 $1,545,644 $893,135 $2,835,285 $2,695,228 $2,185,164 $1,501,502 $876,595 $3,204,649 $3,032,372 $2,422,633 $1,589,787 $3,823,934 $4,137,712 $3,477,023 $5,423,419 $7,339,904 $6,863,901 $6,387,842 $5,887,832 $4,984,736 $4,523,400 $3,651,265 $60,000,000
2043
2042
2041
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
$1,000,000
$725,365 $2,306,782 $2,417,424 $2,529,035 $2,686,767 Total county‐collected revenues
$1,315,516 $3,045,071 $2,823,970 $3,000,000
$3,327,850 $3,583,212 $5,398,017 Total OTC reimbursements
$3,898,079 $4,272,193 $4,629,237 $5,000,000
$5,777,013 $6,000,000
2019
2018
$4,157,232 $3,904,512 $6,000,000
$5,000,272 $7,000,000
$6,155,964 2017
$4,000,000
$3,087,084 $3,280,034 $1,616,485 $5,000,000
2016
2015
$7,000,000
$2,196,140 $4,000,000
$8,000,000
$2,094,653 $1,356,874 $1,696,377 $1,849,939 $2,000,000
2014
2013
$3,000,000
$1,411,470 $1,967,383 Annual Education Revenues
Texas County
$120,000,000
$100,000,000
$80,000,000
$40,000,000
$20,000,000
$‐
Texas County Education Revenues from Wind Energy Systems $100,000,000
$90,000,000
$80,000,000
$70,000,000
61
Career Tech Total
2037
2036
2035
2034
2033
2032
2031
$442,590 $401,691 $421,817 $259,442 $264,312 $269,182 $278,921 $288,661 $298,400 $317,879 $376,696 $400,000
2030
2029
$484,136 $463,363 2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
$586,217 $535,862 $486,254 $510,684 $350,962 $362,803 $386,486 $327,279 $315,437 $321,358 $10,000,000
$‐
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$‐
$4,000,000
$2,000,000
$‐
$455,903 $339,120 $668,085 $631,407 $561,039 $836,624 $745,138 $1,547,001 $1,378,300 $1,440,699 $1,199,738 $1,286,471 $1,102,577 $1,007,753 $922,188 $15,000,000
2028
2027
$551,762 $521,433 2022
2021
2020
2019
$600,000
2026
2025
2024
$600,000
2023
$690,673 $615,299 $831,683 $800,000
2022
2021
$800,000
$761,178 2018
2017
$1,000,000
2020
$1,000,000
2019
$989,948 Total OTC reimbursements
$909,804 2016
2015
$1,200,000
2018
2017
$1,061,464 $1,137,393 $1,200,000
2016
2014
2013
$97,070 $131,885 $158,513 $160,533 $156,238 $1,400,000
2015
$1,276,525 $1,400,000
$1,188,852 2012
2011
2010
2009
2008
$174,976 $162,169 $1,600,000
2014
$83,080 $112,709 $135,730 $137,350 $133,401 2007
2006
Annual Tax Revenues
$1,800,000
2013
2012
2011
2010
2009
2008
$150,398 $200,000
$138,928 $200,000
2007
$400,000
2006
Washita County Forecast Model
Total Wind Energy ad Valorem Tax Receipts (Personal Property)
$25,000,000
$20,000,000
$5,000,000
$‐
Washita County Education Revenues from Wind Energy Systems
$18,000,000
$16,000,000
$14,000,000
$235,859 $238,185 $232,557 $243,244 $239,074 $195,009 $4,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$10,000,000
$8,000,000
$6,000,000
$2,000,000
$12,256,329 $11,454,037 $10,726,658 $10,054,198 $9,361,687 $8,649,285 $7,941,542 $7,309,678 $6,677,242 $5,995,473 $5,334,139 $5,043,369 $4,715,976 $4,512,077 $4,307,974 $4,118,865 $3,933,852 $3,005,966 $2,792,598 $2,622,989 $2,537,212 $2,341,553 $2,257,926 $2,216,113 $2,174,299 $2,614,636 $2,940,440 $2,766,912 $2,826,315 $3,145,507 $2,947,666 $2,706,396 $2,484,757 Annual Tax Revenues
$14,000,000
$‐
$12,000,000
$‐
Career Tech Total
62
$80,000,000
$80,000,000
$60,000,000
$40,000,000
$20,000,000
$‐
$100,000,000
$335,154 $284,186 $286,896 $282,176 $291,790 $286,887 $233,687 $4,000,000
$9,542,108 $8,912,142 $8,342,908 $7,822,681 $7,285,174 $6,735,823 $6,189,511 $5,699,677 $5,208,866 $4,678,251 $4,157,877 $3,930,634 $3,676,948 $3,519,199 $3,361,451 $3,215,984 $3,072,949 $2,302,582 $2,138,230 $2,007,478 $1,941,494 $1,813,513 $1,748,744 $1,716,360 $1,683,976 $2,122,725 $2,435,981 $2,272,074 $2,083,251 $2,562,184 $2,358,875 $2,162,074 $1,982,185 2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
$2,000,000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
Woodward County Forecast Model
$180,000,000
$160,000,000
$140,000,000
$120,000,000
$60,000,000
$40,000,000
$20,000,000
$‐
Woodward County Education Revenues from Wind Energy Systems
$140,000,000
$120,000,000
$100,000,000
The results of the historical data collection and forecast modeling for each county with either an
existing or planned wind energy project are provided below.
Mapping Methodology
While most local residents can describe the location of wind energy projects in their area, at the time
this research commenced no comprehensive map of Oklahoma wind energy project locations had been
compiled. Thus, determining the location of all Oklahoma utility-scale wind energy projects posed the
first task for the research. Using the compilation of information provided by the State Energy Office
located within Oklahoma Department of Commerce and information from Oklahoma Cooperative
Extension Service staff, the approximate locations of all existing Oklahoma wind energy projects were
estimated.
Next, Google Earth Pro software was used to locate each project. Google Earth Pro uses a
combination of both satellite imagery sources (such as Landsat and DigitalGlobe imagery) and
aerial orthophotographic sources that are composited with a number of other data layers to create an
interactive Geographic Information System (GIS) interface. In most cases, Google Earth Pro imagery
was sufficiently new to include all existing projects except those constructed in 2014 (specifically, Seiling
I and II [Dewey and Woodward Counties], Mammoth Plains [Dewey and Blaine Counties], and Origin
Wind [Murray County]).
After the general area for each project was located, Google Earth Pro’s measurement tools were
used to determine the area of every element of each respective project, which were categorized into
turbines, roads, and support systems. Turbine areas were defined as the area immediately adjacent to a
turbine’s foundation and which represented a material deviation from the pattern of the road leading
to the turbine. Roads were defined as the areas identifiable as roads leading specifically to a wind
project element such as a turbine, transformer, or substation. Support systems were defined as electrical
substations associated with a wind energy project, maintenance and operation (“M&O”) buildings,
electrical transformers, equipment laydown yards, or any features other than turbines or roads readily
identifiable with a wind energy project.
For all areas, the area assigned to a feature (turbine, road, support system) were defined by marking
the line where a clear disturbance of the surrounding vegetation existed. This method naturally
depends on the resolution of the imagery available, but also depends on the terrain and condition of the
vegetation – demarcation lines were more difficult to establish in areas of exceptionally rocky terrain with
limited vegetation and in areas most severely affected by the recent drought. When vegetation lines were
difficult to discern, other factors such as areas clearly graveled or overlaid with some other contrasting
material were used to establish the borders of project features.
Each project element (turbine, road, support system) was traced as precisely as possible given the
resolution of the available imagery by describing each element using Google Earth Pro’s polygonal
63
measurement tool, which provides both the perimeter of each traced object and the area within that
perimeter.74
Endnotes
1 See D. Hays and B. Allen, Windmills and Pumps of the Southwest, 2 (1983).
2 See T. Lindsay Baker, A Field Guide to American Windmills 45 (University of Oklahoma Press,
1985).
3 Hereinafter, “utility scale” refers to turbines or projects consisting of turbines with a “nameplate”
capacity of 500 kilowatts (kW) or more. The smallest size of turbine used in Oklahoma utilityscale projects is 1.5 megawatts (MW).
4 P. Gipe, Wind Energy Basics: A Guide to Home and Community-Scale Wind Energy Systems,
2d Ed. (Chelsea Green, 2009), 91
5 See J.F. Manwell, McGowan, J.G., and Rogers, A.L., 2002. Wind Energy Explained: Theory,
Design and Application. Wiley, West Sussex. See also Gipe, 91.
6 See, generally, S. Ferrell, R. Rumley. 2012. Wind Energy Leases: A Handbook for Farmers and
Ranchers. Oklahoma Cooperative Extension Service Circular E-1033.
7 U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, 2012. “U.S.
Installed Wind Energy Capacity.
8 E. Smith, DeWolf, S., Wetsel, R., 2011. Texas Wind Law. Matthew Bender, New Providence.
9 See, generally, Public Utility Commission of Texas, “CREZ Program Overview,” available at
http://www.texascrezprojects.com/overview.aspx (last accessed May 1, 2015).
10 American Council on Renewable Energy, “Renewable Energy in Iowa,” available at http://www.
acore.org/files/pdfs/states/Iowa.pdf (last accessed May 7, 2015).
11 Iowa Code, § 476.47.
12 Iowa Code § 476.41. A Renewable Portfolio Standard requires utilities to incorporate a specified
amount of renewable energy capacity or power purchases/sales into their operations.
13 Iowa Code § 476B.
14 Those few periods marked by relatively flat growth in Oklahoma’s wind energy industry
coincide with national trends caused by uncertainty about the federal Production Tax Credit
(“PTC”). Inconsistency in policy regarding the PTC has caused a number of intensive wind
energy development cycles followed by marked slowdowns, underscoring the importance of clear
development policy in stabilizing the growth of the industry. See Phillip Brown, Congressional
Research Service, R42576, “U.S. Renewable Electricity: How Does the Production Tax Credit
Impact Wind Markets?” (2012).
15 American Wind Energy Association (AWEA) Fourth Quarter 2014 Market Report, 7.
16 House Bill 3028 (signed May, 2010).
17 EIA Oklahoma state energy profile data, available at http://www.eia.gov/state/data.cfm?sid=OK
18 Wind power production is a function of both the installed capacity of wind turbines and the
wind resource in a given year. The percentage of a wind power project’s rated capacity that
is actually produced in electrical power is referred to as its “capacity factor.” Interviews with
operators of Oklahoma wind energy projects indicates projects in the state typically operate at a
capacity factor of approximately 40 percent, which is at the high end of the national range of 20
to 40 percent (see EIA, “Monthly Generator Capacity factor Data Now Available by Fuel and
Technology, available athttp://www.eia.gov/todayinenergy/detail.cfm?id=14611 (last accessed
May 12, 2015)).
19 K. Dean and R. Evans, “The Statewide Economic Impact of Wind Energy Development in
64
Oklahoma: An Input-Output Analysis by Parts Examination,” Economic Impact Group, LLC
(2014).
20 The National Renewable Energy Laboratory estimates the technical potential for Oklahoma’s
wind energy capacity at 517,000 megawatts. See A. Lopez, B. Roberts, D. Heimiller, N. Blair, and
G. Porro, 2012. “U.S. Renewable Energy Technical Potentials: A GIS-Based Analysis,” National
Renewable Energy Laboratory, , 14, available at http://www.nrel.gov/docs/fy12osti/51946.pdf
21 Latin for “according to the value” commonly used to refer to a tax based on the value of the item
taxed.
22 68 Okla. Stat. § 2804.
23 68 Okla. Stat. § 2815.
24 68 Okla. Stat. § 2841(A). As discussed in more detail within section 2.2, determining the value of
a very large and technically complex asset like a wind energy project poses a significant challenge.
The complexity of this task has led to a number of theories as to how to determine the value
of wind energy systems, which has in turn led to a number of tax protest cases regarding the
projects.
25 Oklahoma Constitution, Article X, § 8(A)(1).
26 Oklahoma Constitution, Article X, § 8(A)(3) sets the assessment ratio for public service
company property at the values in place on January 1, 1996, which was 22.85 percent.
27 A “mill” is a thousandth of a dollar, or in other words, one-tenth of a cent. For example, a tax of
exactly four mills would mean a tax liability of $0.004 per dollar of net assessed value.
28 See generally Oklahoma Constitution Art. IX, §§ 9, 10 for the authorized levies (and their
corresponding limits) for school districts, Career Tech, and community colleges. An thorough
discussion of these millages can be found in the publication “School Finance Technical
Assistance Document,” Oklahoma State Department of Education (2013) available at http://
www.ok.gov/sde/sites/ok.gov.sde/files/documents/files/FY%202013%20FINAL%20TAD_0.pdf
29 Oklahoma Gas and Electric Co. (OG&E), which falls under the definition of a “public service
corporation” for the purposes of 68 Okla. Stat. § 2841(A), directly owns three wind energy
projects: – Centennial (Harper County), OU Spirit (Woodward County), and Crossorads
(Dewey County). As a result, separate tax documents were not available for these projects. Thus,
no historical or forecast data was obtained for these projects.
30 Almost universally, wind energy developers lease the land upon which the wind power facilities
are located.
31 Average values for pasture and cropland were taken from the OSU Regional Cropland and
Pasture Values Survey, available at http://agecon.okstate.edu/oklandvalues/regional.asp (last
accessed May 6, 2015).
32 Millage rates for each region were calculated as the average of the effective millage rates over all
counties in each region, as reported by the OTC.
33 This number represents the total capacity of SPP interconnection requests listed as either
“on schedule” for connection or “on suspension” for connection as of the query to the SPP
interconnection application database made on March 19, 2015.
34 That is, payments made through the 2014-2015 tax year.
35 70 Okla. Stat. § 18-201.1(B)(3)(c).
36 Okla. Const. Art. X, §6B(A).
37 Okla. Const. Art. X, §6B(B).
38 Okla. Const. Art. X, §6B(D). It should be noted the statute enacted pursuant to this directive, 68
Okla. Stat. § 2902, has been amended 40 times since it initial enactment in 1988.
39 See, generally, 68 Okla. Stat. 2902(C)(4).
65
40 68 Okla. Stat. 2902(C)(8).
41 See 68 Okla. Stat. 2902(B)(1)(c),(e).
42 62 Okla. Stat. § 193(A)(1), first enacted by HB 1536, c. 14, § 4 (1985).
43 62 Okla. Stat. § 193(B).
44 68 Okla. Stat. § 2352(2)(d). It should be noted that this appropriation became insufficient to
meet the obligations of the Reimbursement Fund in 2002, and payments from the fund have
been in arrears since that time. Conversations with staff in the OTC Ad Valorem division
and county treasurers indicate, payments to counties with wind energy projects qualifying for
reimbursement have been delayed by approximately one year, with payments for tax year 2013
made in late 2014.
45 Pub.L. 95-617, 16 U.S.C. § 824a-3 (2015).
46 62 Okla. Stat. § 193(A).
47 See 68 Okla. Stat. § 2803.
48 See American Wind Energy Association, “Wind Energy and the Environment,” on file with
author.
49 With all other factors held constant, projects with relatively even terrain permit spacing of
turbines at operationally-optimum spacing without having to avoid canyons, draws, and other
areas of low wind resources. Similarly, larger turbines create larger “wake zones” downwind
meaning turbines must be placed farther apart to avoid interfering with each other’s optimal
performance. Areas with fairly steady winds out of a given direction (which, for most of
Oklahoma, is north and south) mean turbines can be placed closer together without potentially
entering each other’s wake zones.
50 D. Doye and R. Sahs, “Oklahoma Cropland Rental Rates: 2012-2013, Oklahoma Cooperative
Extension Service Current Report CR-230 (2013), available at http://pods.dasnr.okstate.edu/
docushare/dsweb/Get/Document-5994/CR-230web12-13.pdf (last accessed May 6, 2015), and
D. Doye and R. Sahs, “Oklahoma Cropland Rental Rates: 2012-2013, Oklahoma Cooperative
Extension Service Current Report CR-216 (2013), available at http://pods.dasnr.okstate.edu/
docushare/dsweb/Get/Document-8705/CR-216web12-13.pdf (last accessed May 6, 2015).
51 Figure 25 encompasses not only the KODE Novus 1 project, but also part of the Noble Great
Plains Windpark in Texas.
52 Technical data compiled from conversations with Oklahoma project developers.
53 See, e.g. A. Farboud, Crunkhorn, R. & Trinidade, A. 2013, “’Wind turbine syndrome’: fact or
fiction?,” Journal of Larynology and Otology, vol. 127, no. 3, pp. 222-226; Chapman, S. 2012,
“Wind turbine syndrome: a classic “communicated” disease,” Australasian Science, vol. 33, no. 8,
pp. 36-37.
54 Oklahoma Senate Bill 808 §(2)(A) (2015).
55 Oklahoma Corporation Commission Cause PUD 201100087, direct testimony of Jesse B.
Langston on behalf of Oklahoma Gas and Electric Company ( July 28, 2011).
56 Oklahoma Corporation Commission Cause PUD 201300188, direct testimony of Jon R.
Maclean on behalf of Public Service Company of Oklahoma (October 24, 2013).
57 Correspondence with Dan Sullivan, Chief Executive Officer, Grand River Dam Authority,
October 24, 2014.
58 U.S. Department of Energy Office of Energy Efficiency and Renewable Energy, “2013
Wind Technologies Market Report” (2013), 47-51, available at http://energy.gov/eere/wind/
downloads/2013-wind-technologies-market-report (last accessed April 29, 2015).
66
Wind Technologies Market Report” (2013), 58-59, available at http://energy.gov/eere/wind/
60 See, generally, Southwest Power Pool, “Generator Interconnection Procedures (GIP) including
Generator Interconnection Agreement,” available at http://sppoasis.spp.org/documents/swpp/
transmission/studies/Attachment%20V%20GIP_GIA%20Effective%202-1_2015.pdf (last
accessed April 29, 2015).
61 See Clean Line Energy Partners, “Plains & Eastern Clean Line: Frequently Asked Questions”
(2015), available at http://www.plainsandeasterncleanline.com/sites/plains_eastern/media/
docs/20141212_Webiste_FAQs.PDF (last accessed April 29, 2015).
62 U.S. Department of Energy Office of Energy Efficiency and Renewable Energy, “2013 Wind
Technologies Market Report” (2013), available at http://energy.gov/eere/wind/downloads/2013wind-technologies-market-report (last accessed April 29, 2015).
Wind Technologies Market Report” (2013), ix, available at http://energy.gov/eere/wind/
64 Although public service corporations are centrally assessed, their tax obligations are also defined
by the school districts in which their assets lie.
65 These three methods are summarized in the International Association of Assessing Officers
(“IAAO”) publication “IAAO Standard on Valuation of Personal Property,” on file with the
author.
66 See, generally, U.S. Department of Energy Office of Energy Efficiency and Renewable Energy,
“2013 Wind Technologies Market Report” (2013), pp. 47 et seq., available at http://energy.gov/
eere/wind/downloads/2013-wind-technologies-market-report (last accessed April 29, 2015).
67 Oklahoma Tax Commission – Ad Valorem Tax Division, “Oklahoma Business Personal Property
Valuation Schedule,” available at http://www.tax.ok.gov/advform/2015BusPPValSchedFinal.pdf
68 See, e.g., 68 Okla. Stat. § 2902(B)(1)(d). Cash valuation (cost approach) is also required by the
OTC regulations at Okla. Admin. Code § 710:10-7-17.
69 Oklahoma Tax Commission – Ad Valorem Tax Division, “Oklahoma Business
Personal Property Valuation Schedule,” 140, 146, available at http://www.tax.ok.gov/
advform/2015BusPPValSchedFinal.pdf (last accessed April 29, 2015).
70 Oklahoma Tax Commission – Ad Valorem Tax Division, “Oklahoma Business
Personal Property Valuation Schedule,” 140, 146, available at http://www.tax.ok.gov/
advform/2015BusPPValSchedFinal.pdf (last accessed April 29, 2015).
71 Interview with Doug Brydon, Deputy Director, Oklahoma Tax Commission Ad Valorem
Division, March 19, 2015.
72 S. Ferrell, “Oklahoma Wind Energy Leasing Handbook,” Oklahoma Cooperative Extension
Service Publication E-1033 (2012), 20.
73 2014-2015 OTC county average millage rates on file with author.
74 When measuring objects using aerial or satellite imagery, the utmost accuracy is assured by using
imagery that has been “orthorectified” meaning the imagery has been adjusted to account for the
fact that it is a two-dimensional, flat representation of a three-dimensional spherical surface. Not
all Google Earth Pro imagery is orthorectified, but given the majority of the imagery used for
the purposes of this project was satellite imagery and the areas being measured were very small,
consultation with GIS experts suggested the errors in measurement would be acceptably small.
67
WE MEAN BUSINESS
PO Box 53217, Oklahoma City, Oklahoma 73152-3217 | 405.235.3669 | www.okstatechamber.com

Wind Energy Industry Impacts in Oklahoma

Transcription

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