SOUTHERN
L E G I S L AT I V E
CONFERENCE
© Copyright May 2017
by Anne Roberts Brody, Policy Analyst
I can’t change the direction of the wind, but I can adjust
my sails to always reach my destination. – Jimmy Dean
to states, while adding to the diversification of a state’s
energy portfolio.
he nation’s energy sector is undergoing substantial changes, as political and economic factors
converge to encourage diversification in generation. Aided by state and federal tax credits,
renewable energy generation technologies are experiencing unprecedented growth as production costs decline and
implementation increases.
This SLC Special Series Report, the first in a series exploring
the myriad impacts of wind energy expansion on SLC states,
examines the benefits of wind energy in the Southern region.
Forthcoming reports present case studies from three SLC
states, examine SLC states’ capacity for wind energy generation and utilization, analyze state incentives, and explore
the challenges of wind energy generation in the region.
T
As the renewable energy sector continues to grow, concerns
that such expansions could lead to widespread job losses in
traditional energy sectors, such as coal, have proliferated.
Southern states are rich in traditional energy resources;
thus, many state economies have long depended on these
resources. Because of the importance of these industries
to the region, both in terms of economic development
and employment opportunities, legislators often are faced
with balancing business interests with the need for environmental protection and conservation. Renewable energy
production often is viewed as a competitor of fossil fuels.
However, renewable energy sources such as wind can provide tremendous economic and environmental benefits
Overview
The wind industry had a banner year in 2016, with thousands
of new turbines installed across the country, supporting
a growing number of jobs. The United States had 82,183
megawatts (MW) of installed wind capacity by the end of
2016, surpassing hydropower for the first time.1 Nationally,
installed wind energy capacity grew by 8,203 MW over
the previous year and now generates about 5.5 percent
of the country’s electricity, enough to power 24 million
homes.2 Although coal and natural gas currently account for
approximately 66 percent of the country’s electric generation, the U.S. Department of Energy (DOE) estimates that, by
2030, wind will provide one-fifth of the nation’s electricity.
Southern Legislative Conference and SLC are trademarks registered in the U.S. Patent and Trademark Office.
The many benefits of wind energy include long-term
cost competitiveness, economic development, support
for rural, agrarian communities and reductions in
energy-related water use. The growth in the nation’s
wind industry has had ripple effects across the American economy. The DOE estimates that 101,738 workers
were employed at wind farms in the United States
in 2016, representing an employment increase of 32
percent, up from approximately 77,000 in 2015. Additionally, technological advancement, coupled with the
falling cost of natural gas, have yielded cost-competitive
deployment in optimal locations, making utility-scale
wind power a cost-effective source of low-emissions
power generation. Finally, the overwhelming majority of wind farms in the United States operate in rural
areas where landowners and local communities reap
financial benefits.
Glossary
Hub height: The hub height is the distance from the turbine
platform to the rotor of an installed wind turbine and indicates
how high a turbine stands above the ground.
Nacelle: a covering that houses all generating components of
a wind turbine, including the gearbox, low- and high-speed
shafts, generator, controller, and brake.
Rotor: a wind turbine component that, with the help of
the rotor blades, converts the energy of wind into rotating
mechanical movement.
Utility-scale: wind energy projects capable of generation
greater than 1 megawatt.
Wind farm: a group of wind turbines in the same location
used to produce electricity.
Cost Competitiveness
Through the aforementioned innovations in technology
and historically low natural gas prices, wind power generation has become an economically compelling means of
energy production. This shift is evidenced by the growing demand for wind energy from major corporations.
In recent years, companies such as Facebook, Amazon
Web Services, Procter & Gamble, General Motors and
Walmart have signed contracts to purchase increasing
amounts of wind energy. This trend suggests that wind
power no longer is a mere signifier of the private sector’s
commitment to sustainability. Rather, these corporations
increasingly are investing in wind power because it is
fiscally prudent.
Due to low natural gas prices, unprecedented fuel switching from coal to natural gas has been occurring in the
energy sector. Gas-fired generation is more flexible than
coal-fired generation, facilitating the integration of variable renewable generation sources, such as wind. This,
in turn, drives down the cost of integrating these alternative energy resources, further encouraging increased
implementation.
Wind is a free but variable resource. The annual energy
production of a turbine is highly dependent on wind
resource characteristics at a given site and the technical
specifications of the turbine itself.3 The cost of a turbine
2 BLOWN AWAY: WIND ENERGY IN SOUTHERN STATES (PART 1)
increases rapidly in proportion to its height.4 This creates
a trade-off between tower cost and the value of added
energy production, further emphasizing the importance
of strategic site selection. However, wind turbine prices
have fallen between 20 percent and 40 percent since
2008, when prices peaked. The 2014 Wind Technologies
Market Report by DOE found that wind projects built in
2014 had an average installed cost of $1,710/kW, down
almost $600/kW from a peak in 2009 to 2010.5
Recent technological improvements have played an
important role in the declining cost of wind generation.
A 2015 report by the DOE found that through continued
innovation in technology, the deployment of incremental
wind power in the United States is both feasible and economically viable.6 Since 1998, hub heights have increased
by approximately 50 percent, to an average of 82.7 meters
(271.3 feet) for new turbine installations.7 Over the same
period of time, rotor diameters have increased more
than 100 percent, with some on newly installed turbines averaging approximately 99.4 meters (326.1 feet)
in 2014.8 These advancements increase the amount of
electricity a turbine can generate, allowing a turbine to
capture wind at higher speeds. Meanwhile, larger rotors
enable greater energy generation at lower wind speeds.
This trend toward heightened efficiency is projected to
continue increasing benefits and lower costs.9
Wind-Related Jobs by State in 2016
State
Wind-related jobs
Alabama
1,077
Arkansas
825
Florida
3,584
Georgia
483
Kentucky
Not Available
Louisiana
132
Mississippi
103
Missouri
North Carolina
1,035
594
Oklahoma
1,789
South Carolina
1,415
Tennessee
Texas
Virginia
West Virginia
142
24,374
1,260
460
Source: 2017 U.S. Energy and Jobs Report State Charts,
U.S. Department of Energy.
Lower turbine prices and installation costs, along with
enhanced turbine productivity, have led to competitive
wind power pricing.10 In turn, this competitive pricing has stimulated demand for wind energy, both from
traditional electric utilities and non-utility purchasers
such as corporations, municipalities and universities.
Wind energy’s “hedge” value also has made it increasingly cost-competitive. On average, and in real dollar
terms, buyers of wind energy, through power purchase
agreements (PPAs), will pay no more per megawatt hour
20 or 25 years from now than they do today, whereas
it can be difficult to lock in low fossil fuel prices over
long periods of time.11
Although fossil fuel prices, particularly natural gas,
remain low, by adding wind power to existing portfolios, buyers can effectively minimize the long-term
risk of increasing fossil fuel prices. Though currently
low, natural gas prices are historically volatile. For this
reason, the resource rarely is sold on a long-term, fixedprice basis. Instead, it frequently is sold with variable
pricing, and utilities must hedge fuel prices in order to
simulate stability.12 Conversely, because wind PPAs can
provide predictable pricing for up to 20 or 25 years,
they become an attractive option for industrial buyers,
for whom electricity ranks among the top operational
expenses. In selecting wind PPAs, companies can guarantee long-term, stable energy costs, removing one of
the many variables in operational expenses.
Economic Development
The implementation of wind power stimulates economic development and contributes to the creation
of jobs related to development, siting, manufacturing,
transportation and other industries. In fact, wind generation accounts for the third largest share of electric
power generation employment.13A 2015 report by the
DOE found that the nation’s wind industry supported
an average of 73,000 total jobs between 2010 and 2014,
and an estimated 560 domestic manufacturing facilities operating in 43 states.14 In 2016, that number grew
to 101,738 workers nationwide.15 Of that, an estimated
50,000 jobs were supported by onsite and direct supply
chain investments. According to the American Wind
Energy Association, an industry trade group, in 2016,
the nation’s wind energy supply chain included eight
utility-scale blade facilities, nine tower facilities and four
turbine nacelle manufacturing facilities spread across
14 states. Furthermore, approximately 95 percent of the
wind power capacity installed in 2016 used a turbine
manufacturer with at least one domestic manufacturing
facility, many of these in SLC member states.
To meet the growing demand for wind power installations, manufacturers have increased production, creating
new jobs and strengthening the domestic manufacturing
base. As of 2014, the South was home to approximately
227 companies and 300 facilities involved in the full
value chain of the wind energy industry.16 Opportunities
for job creation extend beyond manufacturing and can
include operations and logistics, data analysis, communications and safety and technical workforce training.
The deployment of wind power also can stimulate
indirect job creation and economic development. As an
example, the town of Pryor, Oklahoma, has experienced
these benefits first-hand. In 2012, Google announced a
second data center at Pryor’s MidAmerica Industrial
Park.17 Mr. Andrew Silvestri, head of public policy and
BLOWN AWAY: WIND ENERGY IN SOUTHERN STATES (PART 1) 3
Active Wind-Related Manufacturing Facilities and
Installed Wind Power Capacity by State at End of 2016
Source: U.S. Wind Industry 2016 Annual Market Update, American Wind Energy Association.
external affairs for Google in Oklahoma, said the company built its Pryor data center in part because of the
availability of wind energy.18 This data center represents
a $2 billion investment in the community, including
more than $1.5 million in science and technology grants;
free public Wi-Fi; workforce development grants; and
technology resources for nonprofits. Google employs
approximately 400 people at this facility, 70 percent of
whom are hired from the local area.19 This strategic decision, fueled in part by access to affordable wind energy,
has been a tremendous boon to the local economy.
Support for Rural Communities
For rural communities with strong and consistent wind
resources, wind power can provide a vital economic
boost. This is particularly true for rural, agricultural
communities. Though wind developers own the turbine
itself, they rarely own the land on which it is located.
Instead, they often enter into long-term leases to site
4 BLOWN AWAY: WIND ENERGY IN SOUTHERN STATES (PART 1)
the turbine on the landowner’s property. Farmers and
ranchers can tap into this market by leasing land to wind
developers. Large wind turbines typically use between
half an acre and two acres of land, including access roads,
allowing farmers to continue planting crops and graze
livestock up to the base of the turbines.20 Payments for
land leases typically range from $2,000 to $5,000 per
turbine, per year. For some, this can mean the difference
between keeping or losing the family farm.
The American Wind Energy Association estimates that,
in 2016, domestic wind farm companies paid approximately $245 million to farming families and other
rural landowners.21 In 2015, more than $156 million
was paid to landowners in counties with below average incomes.22 Collectively, landowners in seven states,
including the SLC member states Texas and Oklahoma,
currently receive an excess of $10 million in annual
lease payments.23
U.S. Wind Energy Industry Employment at End of 2016
Source: U.S. Wind Industry 2016 Annual Market Update, American Wind Energy Association.
The structure of land-lease agreements can take several
forms, including a fixed annual payment; one-time, upfront payment; revenue sharing; or some combination
of the three. Revenue sharing can offer the highest rate
of compensation, but also the highest risk, particularly
if a project is unsuccessful. Fixed annual payments often
are lower than revenue sharing agreements, offer less
risk to landowners and a more predictable source of
income. A one-time, up-front payment also may be
attractive, but this option can complicate the terms
of sale if the property is sold during an active lease
agreement. When considering a land-lease agreement,
property owners may choose to consult with legal
counsel. Further, farmers and ranchers should consider
the terms of the lease in relation to the potential impact
on farm operations.
In 2014, a University of Michigan survey of farmers
in the state sought to understand the impact of wind
turbines on landowners in wind farm communities
by comparing their experiences to landowners in
non-wind farm communities. While this survey was
conducted outside the Southern region, the results
nevertheless provide relevant insight. When compared to neighbors who did not host wind farms or
turbines, the survey found that those community
members with turbines on their property invested
twice as much capital in their farms; purchased more
farmland over a five-year period; were more likely
to believe their land would be farmed in the future;
and reported it was neither easier nor more difficult
to farm around turbines.24
Beyond the benefits to landowners, wind farms also
contribute to rural communities through tax revenues.
In most states, taxes assessed on energy production
equipment are collected by local, rather than state,
governments. These funds may then be utilized to
improve public services or to reduce the local property
tax burden on all landowners. In a recent study, the
BLOWN AWAY: WIND ENERGY IN SOUTHERN STATES (PART 1) 5
Oklahoma Chamber of Commerce found that owners
of existing and planned wind farms will pay an aggregate of $948.5 million in ad valorem taxes through
2043.25 A 2012 study by the University of Nebraska
quantified the empirical impacts in counties hosting wind power projects that were installed between
2000 and 2008. This study found an average increase
in county-level per capita income of $11,000/MW of
installed capacity and an average increase in countylevel employment of approximately 0.5 jobs/MW.26
In this way, wind energy production may boost the
economic prosperity of both rural communities and
farming families.
Environmental Benefits
Perhaps the most widely cited benefits of wind energy
are environmental. When combined with other forms
of electric generation, wind energy reduces energy sector
water consumption, greenhouse gas emissions, sulfur
dioxide and nitrogen oxide emissions.
The reduction in water use can be particularly important for rural and farming communities that depend
on significant use of freshwater to raise livestock or
grow crops. Unlike fossil fuel power plants, wind energy
production does not require water for cooling. The
American Wind Energy Association estimates that, in
2016, wind energy helped avoid the consumption of
approximately 87 billion gallons of water.27 As water
resources become increasingly scarce, this characteristic
becomes progressively beneficial.
Like other renewable resources, wind energy is a clean
source of fuel. The DOE estimates that wind energy
may reduce cumulative greenhouse gas emissions by
14 percent, translating to a savings of $400 billion in
avoided global damage by 2050.28 Further, a 2015 study
by the DOE found that, in 2013, wind energy contributed
to emissions reductions in greenhouse gasses (115 billion
metric tons), sulfur dioxide (157,000 metric tons) and
nitrogen oxide (97,000 metric tons).29 Continued integration of wind power, as part of a diverse energy portfolio,
can encourage further reductions, resulting in cleaner
air and reduced water consumption.
6 BLOWN AWAY: WIND ENERGY IN SOUTHERN STATES (PART 1)
Conclusion
Wind has become an increasingly compelling means of
energy generation, given its stimulation of job creation,
support of rural communities, and ability to reduce
the power sector's water consumption and greenhouse
gas emissions. These are compelling variables for state
and local governments, along with the private sector,
in the calculus for preparing a 21st century workforce;
budgeting for potential cost-savings in utility rates; and
off-setting expenditures in other areas due to the farreaching impact that the development of wind resources
can have on communities and the environment.
As technological advancements drive down the cost of
wind energy generation, this renewable resource likely
will become an increasingly advantageous driver of fiscal decisions, allowing companies to lock in long-term,
stable energy pricing. Wind energy can support reductions of water consumption and harmful emissions.
In addition, as states, utilities and companies seek to
diversify their generation portfolios, wind energy will
play an increasingly important role.
The deployment of wind power also stimulates economic development and contributes to the creation
of jobs related to development, siting, manufacturing,
transportation, construction, transmission and other
industries — even in states that do not have optimal wind
resources. Further, the availability of low-cost wind
energy, whether on-site or through PPAs, can attract
companies to rural communities, spurring indirect job
creation. In states with strong wind resources, individual
landowners may benefit from land-lease agreements that
can provide additional income and promote investments
in family farms, ranches and other facilities.
While this SLC Special Series Report reviewed the many
benefits of wind energy, subsequent reports will examine SLC states’ capacity for wind energy generation and
utilization, analyze state incentives, and explore the
challenges of wind energy generation in the region. Part
II of this Special Series Report will study the impact of
wind energy generation in Texas, Oklahoma and Virginia, specifically the installed capacity, transmission,
economic impact and available state incentives.
Endnotes
1) Monies, Paul. “Oklahoma Moves up to Third Place in State Rankings for Wind Power.” NewsOK.com. February 10, 2017.
http://newsok.com/article/5537538 (accessed February 13, 2017).
2)Ibid.
3) Zayas, Jose et al. Enabling Wind Power Nationwide (U.S. Department of Energy. May 18, 2015).
https://www.energy.gov/sites/prod/files/2015/05/f22/Enabling%20Wind%20Power%20Nationwide_18MAY2015_FINAL.pdf.
4)Ibid.
5) Wiser, Ryan, and Mark Bolinger. 2014 Wind Technologies Market Report (U.S. Department of Energy. August 2015).
https://www.energy.gov/sites/prod/files/2015/08/f25/2014-Wind-Technologies-Market-Report-8.7.pdf.
6) Wind Vision: A New Era for Wind Power in the United States (U.S. Department of Energy. March 12, 2015).
7) Mooney, Chris. “The U.S. Wind Energy Boom Couldn’t Be Coming at a Better Time.” Washington Post. August 10, 2015.
https://www.washingtonpost.com/news/energy-environment/wp/2015/08/10/the-boom-in-wind-energy-couldnt-be-coming-at-abetter-time/ (accessed January 19, 2017).
8)Ibid.
9) Wind Vision: A New Era for Wind Power in the United States.
10)Wiser, Ryan, and Mark Bolinger. 2014 Wind Technologies Market Report.
11)Bolinger, Mark. “Revisiting the Long-Term Hedge Value of Wind Power in an Era of Low Natural Gas Prices.” 2013.
12)Ibid.
13)U.S. Energy and Employment Report (United States Department of Energy. January 2017).
14)Zayas, Jose et al. Enabling Wind Power Nationwide.
15)U.S. Energy and Employment Report.
16)“Southeast Wind Energy Fact Sheet.” (The Southeastern Wind Coalition. December 2014).
http://www.sewind.org/images/fact_sheets/SEWC%20SE%20Regional%20Wind%20Energy%20Fact%20Sheet%20-%20Dec%202014.pdf.
17)“Google Growing Its Oklahoma Data Center - Article Photos - Photo Gallery.” NewsOK.
http://newsok.com/article/5519404 (accessed February 9, 2017).
18)Ellis, Randy, and Paul Monies. “Tax Incentives for Oklahoma Wind Farms Are Getting Scrutiny.” NewsOK. April 24, 2016.
http://newsok.com/article/5493853 (accessed January 23, 2017).
19)“Google Growing Its Oklahoma Data Center - Article Photos - Photo Gallery.”
20)“Farming the Wind: Wind Power and Agriculture.” Union of Concerned Scientists. http://www.ucsusa.org/clean_energy/
smart-energy-solutions/increase-renewables/farming-the-wind-wind-power.html (accessed February 9, 2017).
21)U.S. Wind Industry 2016 Annual Market Update. American Wind Energy Association. April 13, 2017.
22)U.S. Wind Industry 2015 Annual Market Update. American Wind Energy Association. April 12, 2016.
23)U.S. Wind Industry 2016 Annual Market Update. AWEA.
24)Mills, Sarah. Farming the Wind: The Impact of Wind Energy on Farming (University of Michigan Gerald R. Ford
School of Public Policy. n.d.). http://closup.umich.edu/files/farming-the-wind-012115.pdf.
25)Ellis, Randy, and Paul Monies. “Tax Incentives for Oklahoma s Are Getting Scrutiny.”
26)Brown, J.P; Pender, J.; Wiser, R.; Lantz, E.; and B. Hoen. “Ex Post Analysis of Economic Impacts from Wind Power
Development in U.S. Counties.” Energy Economics (34:6), 2012; pp. 1743–1754. Accessed February 10, 2017:
http://digitalcommons.unl.edu/usdaarsfacpub/1144/.
27)U.S. Wind Industry 2016 Annual Market Update. American Wind Energy Association. April 13, 2017.
28)Wind Vision: A New Era for Wind Power in the United States.
29)Zayas, Jose et al. Enabling Wind Power Nationwide.
BLOWN AWAY: WIND ENERGY IN SOUTHERN STATES (PART 1) 7
REGIONAL VIEW NATIONAL REACH
T
his report was prepared by Anne Roberts Brody,
policy analyst and committee liaison of the
Energy & Environment Committee of the
Southern Legislative Conference (SLC), chaired
by Representative Lynn Smith of Georgia. This report
reflects the body of policy research made available to
appointed and elected officials by the Southern Office of
The Council of State Governments (CSG).
Opened in 1959, the Southern Office of CSG fosters intergovernmental cooperation among its 15 member states,
predominantly through the programs and services provided
by its Southern Legislative Conference. Legislative leadership, members and staff utilize the SLC to identify and
analyze government policy solutions for the most prevalent
and unique issues facing Southern states. Meanwhile, SLC
member outreach in state capitols and coordination of
domestic and international delegations, leadership development and staff exchange programs, meetings, and fly-ins
support state policymakers and legislative staff in their
work to build a stronger region.
Established in 1947, the SLC is a member-driven organization
and the largest of four regional conferences of CSG,
comprising the states of Alabama, Arkansas, Florida,
Georgia, Kentucky, Louisiana, Mississippi, Missouri,
North Carolina, Oklahoma, South Carolina, Tennessee,
Texas, Virginia and West Virginia. The Annual Meeting of the Southern Legislative Conference, convened as
the focal point and apex of its activities, is the premier
public policy forum for Southern state legislators and
the largest regional gathering of legislative members and
staff. The Annual Meeting and a broad array of similarly
well-established and successful SLC programs — focusing
on both existing and emerging state government challenges — provide policymakers diverse opportunities to
ask questions of policy experts and share their knowledge
with colleagues.