Renewable energy investment in Ohio’s fledgling wind farm sector is being crippled by the state’s out-of-date taxation model as developers race to secure federal stimulus dollars. With surrounding states offering significantly greater competitive advantages, Ohio stands to lose out on seven planned wind energy developments estimated to generate nearly 1,000 immediate construction and operations jobs, $9.3 million in annual lease payments to farmers and $7.3 million annually in tax revenue for hard-hit rural school districts and communities.
Currently the tax burden in Ohio is $40,000 per megawatt of capacity, up to 10 times that of neighboring states.
"Ohio cannot afford to do nothing and let the winds of change pass us by when the industry is ready to decide this summer which projects to build in 2010," said Brad Lystra, manager, economic development partnerships for the American Wind Energy Association. "Renewable energy is critical to the state’s 21st- century economy, and Ohio has good transmission systems and climate for wind power development.
"But Ohio’s unfavorable tax structure is severely hampering the state’s strategy to excel in alternative energy solutions," Lystra said. "The wind development companies are going to choose to build in states that offer the most attractive business environments. Ohioans clearly want wind energy in their future. In a recent statewide poll, 84 percent of the people said wind energy development was very important."
Two pending bills – Ohio Senate Bill 232 and House Bill 464 – will create a fair tax for wind and solar power development that is in line with surrounding states, Lystra said. Senate Bill 232 in particular provides a straightforward, transparent solution that will tax developers at a fixed $7,000 per megawatt of capacity, instead of the current system that taxes the developments under the tangible personal property tax.
Seven wind power generating projects are in the pipeline through the Ohio Power Siting Board for development in 2010 to be operational by 2012. Three projects – Buckeye Wind (Champaign County) and two Hardin County projects – have been approved by the Board. Three others are pending final certification – Blue Creek (Van Wert/Paulding counties), Black Fork (Richland/Crawford counties) and Timber Road I (Paulding County) – and an additional Paulding County project, Timber Road II, is about to be submitted to the Board.
In addition to encouraging future development, SB 232 and HB 464 will provide the immediate business environment for the seven Ohio shovel-ready wind developments to deliver an estimated:
* Nearly 1,000 immediate construction and operations jobs, with guaranteed preference for Ohioans
* Dramatic increase in economic benefits to Ohio’s 170 wind supply chain businesses as a direct result of in-state wind project development
* $5.4 million in annual tax payments to local schools and another $1.89 million to local governments in some of Ohio’s hardest-hit counties
* $9.3 million in annual and lease payments for farmers
* $189 million in annual construction, operations and maintenance salaries
* 1,165 MW to help power Ohio homes and businesses
Ohio’s manufacturing industry, among the nation’s leaders in jobs lost the past few years, also is counting on the renewable energy business to rebuild. Ohio ranks fifth nationally in manufacturing components for the wind industry and would derive significant economic benefit from wind development in the state. Ohio currently has wind turbines primarily as demonstration projects, with a capacity to produce only 7 MW of power annually. None are taxed.
Indiana, by contrast, has 1,036 MW of capacity powering homes and businesses, with more than 1,000 built in just the past two years. Illinois has 1,547 MW of capacity and Pennsylvania, 748 MW. The U.S. Department of Energy estimates Ohio has the potential to generate 66,000 MW annually just from the western and northwestern parts of the state, with additional capacity from off-shore Lake Erie locations. Texas leads the U.S., generating 9,410 MW of power through wind energy each year.
"Because of Ohio’s historic strength as a manufacturing state, the state is already supplying parts and building wind and solar power generation components to the benefit of our neighbors in Indiana, Michigan, Pennsylvania and West Virginia, in addition to other states," Lystra said. "Just as Ohio manufacturers in this new energy industry are getting their footing in these tough economic times, wind farm development here will spur the growing Ohio wind and solar supply chain even more, and may well catapult Ohio to a leading position nationwide in wind industry manufacturing and jobs."
John Hohn, vice president of Economic Development for the Hardin County Chamber & Business Alliance, recognizes the bright economic future for Hardin County driven by jobs and revenue from wind farms and says Ohio must act now.
"This is the leg-up our local community needs to begin recovery from this recession," Hohn said. "We would be foolhardy to keep our higher taxes and wind up taxing nothing. We have to make changes to stay on track with the competition – our neighboring states, the entire country, and the world. Wind power developers are in Ohio, they want to be in Ohio and we can keep them and attract them here, but we have to act immediately."
Wind and Solar Jobs for Ohio is a coalition of businesses and organizations that support the adoption of a competitive tax structure for wind and solar projects in Ohio. The Coalition seeks to demonstrate that an adjustment to Ohio’s personal property tax would encourage billions of dollars worth of investments in renewable energy.