Two large wind farm projects in Nebraska will proceed as planned now that Congress has extended a production tax credit for the wind industry.
The Nebraska and Omaha public power districts gave conditional approval last month to their respective wind projects and waited anxiously for Congress to renew the tax credit while it edged toward the so-called fiscal cliff.
The credit, which expired Monday, was extended for one year late Tuesday night as part of a controversial tax relief bill. It gives developers of large-scale wind farms an income tax credit of 2.2 cents per kilowatt-hour for the first 10 years of electricity production.
"There's no question that the production tax credit extension is the difference between wind projects on the drawing board going forward or not," said John Hansen, president of the Nebraska Farmers Union, a strong supporter of wind energy in the state.
Without the extension, the American Wind Energy Association claimed that as many as 37,000 jobs were at risk. Hundreds of jobs were lost even before the expiration of the tax credit.
Katana Summit closed plants in Columbus and in the state of Washington in early November, laying off nearly 300 workers, of which about 200 were in Nebraska. CEO Kevin Strudthoff blamed uncertainty about tax credits.
Now that Congress has acted, OPPD plans to buy 200 megawatts from the proposed Prairie Breeze Wind Energy Center near Elgin in northeast Nebraska.
"It terms of the project it's good news," said Mike Jones, spokesman for the Omaha-based utility.
He said OPPD still needs approval from the Nebraska Power Review Board to proceed with the long-term power purchase agreement.
If everything goes as planned, OPPD would start receiving electricity by Jan. 1, 2014, from 120 wind turbines to be built on 25,500 acres in Antelope, Boone and Madison counties. That's enough to power about 60,000 homes annually.
Invenergy, the Chicago-based developer, said the Prairie Breeze project represents a $350 million capital investment and could create 300 construction jobs.
NPPD also is eyeing Prairie Breeze to provide up to 75 megawatts of renewable energy. It also is looking at a potential wind farm near Steele City in Jefferson County, which has not been built yet.
"We are in final negotiations regarding a power purchase agreement," said Dave Rich, the utility's sustainable energy manager.
Adding more generation capacity to Prairie Breeze would be a challenge, he said, because OPPD wants to take the entire energy output of the wind farm.
A lot depends on how far along Invenergy is with the development of Prairie Breeze, Rich said. If the company already has regulatory approval for 200 megawatts, and wants to add more wind turbines, it would have to start the study process over, he said.
Rich noted that the board's authorization to sign a long-term power purchase agreement for up to 75 megawatts of wind energy is not specific to Prairie Breeze and Steele City. He said NPPD could look at other potential sites in the state.
Extending the production tax credit for another year will give developers the incentive to build more wind farms in the Midwest, Rich said.
However, he said, the Nebraska Legislature needs to offer additional state-based incentives if it wants Nebraska to become an exporter of wind energy.
Hansen said the state should do more to help capture rural economic development benefits for Nebraska and not just rely on the federal production tax credit.
"Losing Katana Summit should serve as a wake-up call to Nebraska," Hansen said. "We lost a great wind energy manufacturing company and we didn't lift a finger as a state to help it survive or thrive. As a state we could do better."