Local Property Tax Abatement Benefits of $6 Million; $650 Million Deal
E.ON Climate and Renewables has agreed to sell 80 percent of its ownership in the Elwood, Indiana wind farm to Enbridge, Inc., a Canadian energy delivery firm, according to the Madison County ALERT.
E.ON, situated in Dusseldorf, Germany, is the world’s largest electric utility, with revenues exceeding $165 billion last year.
Nearly four years ago, E.ON began acquiring property rights in northern Madison County, eastern Tipton County, and southern Grant County in anticipation for the construction of its 8,500-acre mega windfarm near Elwood.
With 126 turbines, the farm became live in late 2012.
Enbridge will pay E.ON $650 million for an 80 percent ownership interest in the Elwood farm and another in Texas, according to the agreement.
Elwood Wildcat produces 202 megawatts of power, whereas the Magic Valley wind farm near Harligen, Texas produces 203 megawatts.
E.ON requested local property tax abatements from Madison, Tipton, and Grant counties in 2011, claiming that the project would not be sustainable without them.
Andy Melka, E.ON’s assistant development manager, was quoted in the Kokomo Tribune as saying “For the project to move forward, the tax relief is required.
In Madison and Tipton counties, approval of E.ON’s tax relief proposals sparked heated discussion.
In neither county, E.ON received unanimous support.
The most common use of property tax money is to fund local schools.
In Madison County, E.ON successfully lobbied for and won a $6 million tax relief in a 4-3 vote before the Madison County Council.
Then-Council President Larry Crenshaw (R) joined the Democrat council minority to approve the maximum abatement amount, according to THB at the time.
When Councilman David McCartney (R) asked for the vote to be postponed so that the council could conduct additional investigation, Crenshaw accused McCartney of being a liar “He hadn’t completed his homework.
According to THB, then-Council Vice-President Mike Phipps (R) stated that when considering abatement, three criteria should be considered: employment creation or retention, the amount of income tax rise the project will bring, and the increase in taxable assessed property value.
According to him, the project failed in two of the three areas.
“Someone else will come if E.ON does not, Phipps remarked at the time.
“This is an excellent location for wind energy.
I’m not going to speculate on what they might do if they don’t obtain the abatement; I simply believe that if they don’t come, someone else will.
“It’s a $6 million abatement, with three permanent jobs and a municipal income tax revenue boost of less than $15,000, according to Phipps.
“
You can’t explain the maximum reduction they asked for.
E.ON stated in a statement announcing the sale on Friday that “The two wind farms are situated in areas where wind conditions are favorable.
E.ON Climate CEO Eckhard Rummler stated: “There is a strong market demand for assets created and operated by E.ON, thanks to our strong project portfolio and skills.
Numbers-based summary:
- E.ON sells its 80 percent stake in the Elwood wind farm.
- Madison County receives a $6.1 million tax abatement.
- The total sale price for 80% of the Elwood and Texas properties was $650 million.
- Construction costs for E.ON Elwood are estimated to be between $175 and $200 million.
- E.ON’s global revenues in 2013 totaled $169 billion.
- In Madison and Tipton counties, permanent employment have been created3.
In Indiana, how many wind turbines are there?
Since 2006, wind energy has been a part of Indiana’s fuel mix, providing manufacturing investment opportunities and a diverse power portfolio.
Wind energy is the process of generating power from wind or air flows in the earth’s atmosphere. Wind turbines take kinetic energy from the wind and convert it into electricity.
HOW DOES WIND GENERATE ELECTRICITY?
When wind passes through a wind turbine, the blades collect the kinetic energy of the wind and rotate, converting it to mechanical energy. This revolution accelerates the rotation by a factor of 100 by turning an internal shaft attached to a gearbox. Diversion facilities are generators that create energy in Indiana.
Did You Know?
- Indiana is home to the fourth largest wind farm in the United States, with over 2,300 MW of capacity.
- With 1,264 wind turbines, Indiana is ranked 12th in the United States.
- With 16 projects in operation, wind generated 6% of Indiana’s electricity in 2019.
- Over 1,100 MW of new wind projects are in the planning stages or are already operational.
WHAT TYPE OF WIND FACILITIES EXIST?
Wind energy can be divided into three categories:
- Utility-scale wind turbines range in size from 100 kilowatts to several megawatts, with electricity transported across the grid via MISO or PJM before being provided to end users by electric utilities.
- Single tiny wind turbines under 100 kilowatts are used to directly power a home, farm, or small company and are not connected to the grid in distributed or “small” wind.
- Wind turbines are placed in huge bodies of water, usually on the continental shelf, for offshore wind. Offshore wind turbines are larger and produce more energy than onshore wind turbines.
In Indiana, where are the bulk of wind turbines located?
In Benton County, Indiana, the Fowler Ridge Wind Farm (FRWF) is located. It is one of the world’s largest onshore wind farms, covering 50,000 acres.
The construction of Fowler Ridge took place in four stages. The first three phases of the Indiana wind farm are jointly owned and operated by BP Alternative Energy North America and Dominion Resources, each with a 50% share in the project. The fourth phase, Amazon Wind Farm Fowler Ridge, is owned and operated by Pattern Energy Group.
The FRWF has a capacity of 750MW, which is enough to cover the electricity needs of 200,000 ordinary US houses. The wind farm may be seen from both sides of I-65 (IS-65).
In Windfall Indiana, how many windmills are there?
In addition to funding, the project included the construction of almost 25 kilometres of reinforced concrete roadways.
The project, according to Tipton County Auditor Gregg Townsend, has been a financial bonanza to the county, and without it, the county and its communities would look very different.
“This project has benefited us handsomely,” he remarked. “It’s been quite beneficial to us.” It’s helped us stay in a decent financial situation. Budgets would be much tighter if such revenue was not available.
Even though the wind farm has been active for 8 years, many residents still hold it in contempt. The project has 125 turbines in Tipton and Madison counties, with a total capacity of 202 megawatts.
In a 2018 letter, Windfall homeowner Fred McCorkle stated that the wind farm continues to obstruct his rural way of life and that this will never change.
“The noises, the continual action, the flashing red lights at night never get old,” he wrote.
Jane Harper, a former county commissioner who assisted in the project’s approval, said she now regretted ever bringing a wind farm to Tipton County, which she described as a “‘windfall’ to a few, but a misery to many.”
In a 2017 op-ed post, she wrote, “I live with people who are badly affected by industrial wind turbines and bitterly regret having signed the documents authorizing the wind farm’s development.”
In Badger Grove, Indiana, how many windmills are there?
The complex, which has 414 turbines and six working stages, is visible from both sides of Interstate 65 in western Indiana.
How long does it take for a wind turbine to pay for itself?
Environmental lifespan assessments of 2-megawatt wind turbines proposed for a big wind farm in the US Pacific Northwest were conducted by US academics. They conclude in the International Journal of Sustainable Manufacturing that a wind turbine with a 20-year working life will provide a net benefit within five to eight months of being put online in terms of cumulative energy payback, or the time it takes to produce the amount of energy required for production and installation.
What is the maximum number of households that a windmill can power?
The average American home uses 893 kilowatt-hours (kWh) of power each month, according to the US Energy Information Administration. The average capacity of wind turbines that began commercial operations in 2020 is 2.75 megawatts, according to the US Wind Turbine Database (MW). That average turbine would generate over 843,000 kWh per month, enough for more than 940 average U.S. homes, based on a 42 percent capacity factor (i.e., the average among recently built wind turbines in the United States, according to the 2021 edition of the US Department of Energy’s Land-Based Wind Market Report). To put it another way, the average wind turbine that went online in 2020 provides enough electricity to power a typical U.S. home for a month in just 46 minutes.
Where in the United States is the largest wind farm?
The Roscoe Wind Farm (RWF) is the world’s largest onshore wind farm. It lies 45 miles south-west of Abilene, Texas, in the United States. It is one of the world’s largest wind farms, owned by RWE.
RWF’s installed capacity of 781.5MW surpasses that of the previously largest Horse Hollow Wind Energy Center (735.5MW), which is located southwest of Abilene in Taylor and Nolan counties.
The plant, which was built by E.ON Climate and Renewables (EC&R) of Germany, is spread across 100,000 acres of land largely utilized for cotton production in Mitchell, Nolan, and Scurry counties. Farmers who grow dryland cotton have leased the land.
In White County, Indiana, how many windmills are there?
White County had more than 350 turbines providing over 600 MW of energy as of summer 2019, enough to power about 200,000 homes. The wind farm also saves more than 1.4 billion gallons of water each year that would have been required for cooling at a typical power plant, as well as carbon emissions that would have been created elsewhere in the county. The turbines themselves were built in neighboring Benton County using White County roads in the most recent phase.
In Indiana, how tall are the wind turbines?
The “hubs” of most of Indiana’s early utility-scale turbines are placed 80 meters (about 262 feet) above the ground. Figure 1 depicts the average wind speed at 80 meters for the entire state of Indiana.
What is the average price of a wind turbine?
If there is no cost or environmental benefit to putting wind on a system with plenty of hydro, one might wonder why we are doing it. The explanation is that many jurisdictions (Washington and California, for example) have established legislation that exclude current hydropower from the legal definition of renewable energy. Many readers may be surprised to learn that existing hydro meets the requirement of being naturally replenished. Existing hydro is replenished in the same way as new hydro would be.
The BPA grid currently has 3000 MW of wind energy potential (when the wind is blowing). Assuming the above-mentioned windmill pricing, this means that BPA consumers have already spent at least $5 billion on wind-energy production with no apparent return. By 2012, this potential wind capacity is likely to increase, costing BPA customers another $5 billion with no evident gain.
The basic line is that we have permitted policies to pass that are both financially and environmentally damaging. Wind developers would have lost their legally mandated status if these laws had not been in place, and there would be no windmills on grids with plenty of hydro.
Electricity generated by the wind is not free. The cost of fuel for any power plant is only a portion of the total cost to a consumer. The fact that the cost of the fuel is zero does not imply that the cost of the power generated is also zero.
This is comparable to how hydroelectricity is generated. Although the cost of water is zero, the cost of hydro-generated power is not. It comprises charges for operations and maintenance as well as the cost of constructing the hydroelectric dam.
The cost of fuel for a nuclear plant is not zero, although it is a minor part of the total cost of generation. It is unquestionably less than the cost of fuel in a natural gas plant, where the cost of fuel accounts for almost 80% of the generation cost.
Wind generating appears to be worth the fuel cost savings for power companies who utilize oil as a fuel.
Oil, on the other hand, is not widely used due to its high cost.
To summarize, there appears to be no economic basis for installing windmills unless there are no low-cost alternatives. This is especially true when windmills are installed on a grid with plenty of hydro, because there are no corresponding fuel savings.
Inputs:
- Installing a 2-MW wind turbine costs around $3.5 million.
- The cost of operating and maintaining a wind farm is around 20-25 percent of the total cost.
- Wind turbines have a maximum life expectancy of 20 years.
- The cost of gasoline is approximately $4 per thousand cubic feet.
- Oil is currently priced at $80 per barrel.
- 1 kWh of electricity requires around 7.7 cubic feet of natural gas (dividing the generation in Table 7.2a by the fuel consumption in Table 7.3a in these tables published by the U.S. Energy Information Administration ).
- One kWh of electricity requires 0.00175 barrels of oil (using the same tables as above).
Assumptions:
- A wind farm’s capacity factor is approximately 30%. (land based).
- For Hawaii, a greater capacity factor of 45 percent is estimated.
- A wind turbine has a 15-year average lifespan.
- The wind farm’s interest charges are overlooked.
- Transmission line costs are overlooked.