Business forum: Wind power in Minnesota is racing critical mass
Rip Rapson
Published August 31, 2003 FORU31
As state leaders met in Mankato this month to discuss the state of agriculture and rural communities, the Upper Midwest reached an important milestone. We installed our 1,000th megawatt of wind power. The two events are more connected than it might appear.
Yes, first we should celebrate the fact that 1,000 megawatts is enough power to meet the residential energy needs of the entire Twin Cities, without the pollution and dangers of coal or nuclear power.
Even as this generating milestone quietly passed, the country suffered its worst-ever electrical blackout -- an event that dramatically underscores the importance of investing in new generating plants and transmission lines.
But let's not overlook some other impressive facts about Minnesota wind power. For example, it will produce about 3,100 jobs, $4 million annually in royalty payments to farmers, and $3.6 million in tax payments to local governments to help fund roads, schools, and health care in rural areas.
And the more wind power we produce, the less money we send off to buy coal from Wyoming and natural gas from Canada and the Gulf Coast. Keeping those hundreds of millions of dollars in our economy means more jobs here, more capital available for growth, and more prosperity.
One thousand megawatts is also an investment milestone: $1 billion worth of equipment and services invested in the rural Midwest. This a tipping point, as wind power graduates from cottage industry to big business, from environmental enhancement to hard-core economic development engine. Implications ripple through the Midwestern economy:
• Farmers: Farmers and rural communities are already sold on the benefits of wind power. Initially, farmers were pleasantly surprised to have developers knocking on their door, offering $2,000 or more per year to host a wind turbine on a quarter-acre of cropland. It seemed like money from the air -- literally.
As the industry matures, farmers are more interested in owning the turbines, too. Just as with farmer-owned co-ops for ethanol production, farmers see the benefit in capturing more of the "value added" from this new wind crop. The Harvest Land Cooperative in Morgan, Minn., for example, is developing a business plan to invest in wind power.
• Banks and other financiers: Large wind farms require a lot of capital and financing -- potentially big business for the financial community. Bigger financial institutions, like Wells Fargo and Citibank, can compete with international lenders for these multimillion-dollar projects. Smaller, locally owned projects in the $1 million to $50 million range can be served by community banks and local investment funds. By investing locally, they can stimulate lasting prosperity in their communities.
• Component manufacturers: While manufacturing has declined in the Midwest, we still have thousands of small manufacturing firms, making parts for autos, trucks, and tractors, appliances and all kinds of machinery. Wind turbine production is, at its core, no different from the production of trucks and tractors -- all of which require hundreds of mechanical, hydraulic and electrical components.
A viable manufacturing base depends on market growth. That's already well underway. Over the past five years, the international wind industry has grown at an annual rate of 35.7 percent. The market for new wind turbines is expected to grow to $24 billion in the next decade. The problem is that two-thirds of that market will be in Europe, which has adopted policies and incentives to speed the development of renewable energy.
For some Midwestern political leaders, that problem is beginning to look like an opportunity. The governors of Wisconsin, Illinois, and Iowa have set goals of getting 10 percent of their states' power from renewable energy.
In Minnesota, recent legislation governing the Prairie Island nuclear plant holds the potential to stimulate $3.5 billion of investments in wind power in Minnesota by 2015 and provides funding for farmer-owned wind projects.
Necessary, but not sufficient
For wind power to draw international capital to Minnesota and other Midwestern states, and support scores of companies that provide component parts and support services, we need more reliable market development. That demands state and federal renewable energy standards, public funding for small and innovative projects, and policies that allow wind fair access to the transmission grid.
Wind power in the Midwest can be a vital piece of our state's rural development agenda. We have the right blend of good winds, resourceful rural communities, and a skilled manufacturing base to seize this fleeting opportunity. I trust we also have thoughtful political leadership to show us the way to begin.
Now is the moment.
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