South Dakota has enormous potential for wind energy development. In 2013, 26 percent of all electricity produced here came from wind — only Iowa produces a larger share of electricity from wind.
Wind has practical benefits for the state. In 2014, estimates show wind paid out $2.4 million in lease payments to landowners. The Argus Leader reports that “each megawatt of installed wind power led to an additional $11,000 in personal income and .5 jobs per county.” While optimistic, it highlights the benefits of wind.
Wind received a federal tax credit for 23 years but yearly renewal is always uncertain. The tax credit expired in 2000, 2002, 2004 and 2014 but was renewed retroactively. Often Congress left renewal on the table until the last minute. This results in a “boom-bust” cycle. In 2013, uncertainty in the credit’s renewal accompanied a 92 percent decline in wind projects. In 2014, Congress didn’t extend the credit until December 2014, but made it retroactive to Jan. 1, 2014. In 2015, credit renewal is uncertain.
In South Dakota, prior tax schemes were complicated. Under a new scheme this year, the Legislature simplified it to two rates —one for existing projects ($.00065 pkh) and one for new projects ($.00045 pkh). The new scheme is steadier and supposedly cheaper for wind (particularly new projects). The Rapid City Journal reports that previously wind paid about $5 million more in South Dakota than elsewhere.
South Dakota’s electric market yields a low price, but wind projects seek high returns on generated electricity. Some states require utilities to purchase wind at set rates. South Dakota’s program is voluntary, so there are no guaranteed returns. For good or ill, governments drive wind development. South Dakota’s minimal involvement will not turn us into a leader in wind energy. Access to pricier markets in the east will help, accomplished hopefully by means of the Rock Island Clean Line — a gigantic transmission line under development in Iowa.
These issues haven’t stopped courageous developers, however. The Lincoln County Dakota Power Community Wind (DPCW) project seeks to add 500 turbines to create the largest wind farm in South Dakota. The project could increase state wind-generating capacity by 50 percent.
CDPCW put up a single tower to assess wind, but the citizen group “WE-CARE” blocked permits for further placement. Complaints ranged from noise and strobe lighting, reduced property values, and discouraging young family move-ins. Proponents claim setbacks resolve these concerns, but some are not convinced.
Other questions bear on wind’s development. The legal rights of wind resources are not well defined. Mineral rights under the land can be sold separate from the land itself, but it is not clear whether wind can be similarly separated. Job growth is also tenuous. Primarily temporary, it takes far fewer to maintain a billion-dollar wind project than a billion-dollar shopping mall.
David Ganje is a Rapid City attorney who practices in the area of natural resources, environmental and commercial law in South Dakota and North Dakota.