The construction of wind farms in Oklahoma could slow dramatically following the passing of HB 2298.
A large farm was constructed over the last two years by Nextera Energy in northern Stephens County and southern Grady County, which benefited from subsidies provided by the state government. HB 2298 ends those subsidies July 1 for new farms.
Farms that have already started construction or have been completed will continue to receive their subsidy for remainder of their 10-year contract.
Chairman of the State of Oklahoma Incentive Evaluation Committee and Duncan Area Economic Development Foundation Lyle Roggow said the commission agreed it was time to end the subsidies, but suggested they end in 2018.
“We think they did it a year early because of the budget issue the state is facing,” he said. “This still makes good on the promises the state made to pay any existing projects.”
Construction of new wind farms will most likely slow down now, according to Roggow.
“For a time frame it could slow everything down,” he said. “Until you can get wind to where it competes with natural gas or fire on a price efficiency level construction of new farms will probably slow. When the technology reaches a certain plane, we will see development again, but without the incentives it (wind farms) don’t generate enough dollars to make up the cost.”
The Windfall Coalition, a group that advocated heavily for the passage of HB 2298 and is supported by Continental Resources CEO Harold Hamm released a statement claiming more needs to be done beyond the bill.
“Oklahoma is now the third-largest producer of wind energy, but payouts to this now-mature industry have diverted hundreds of millions of state tax dollars that could have been spent on teacher pay, education, first responders and other core government services,” Executive Director Cliff Branan said.
Branan went on to say a production tax similar to what is levied on the oil and natural gas industry should be placed on the wind industry.
Nextera Energy Communications Manager Bryan Garner said the bill’s passing hasn’t changed his company’s business plan.
“NextEra Energy has been doing business in Oklahoma since 2003,” he said. “We have 13 operational wind farms in Oklahoma and we have invested nearly $4 billion in the state. We are continuing to develop and build wind farms in Oklahoma. We continue to develop low-cost and efficient renewable energy projects and the market for wind energy is strong.”
Garner said a typical wind farms creates 200 or more construction jobs and six to 10 operational jobs.
“Over its operational life, a wind farm also provides tens of millions of dollars in landowner payments and tax benefits to local governments as well as an uplift in economic activity for local businesses,” he said.
Roggow said the goal of the subsidy was to get Oklahoma to a production level of 15 percent renewable electricity for the state. That goal was surpassed though, according to Roggow who said Oklahoma currently has between 21 and 22 percent renewable electricity.
“We were able to meet our goal, so the incentive worked,” he said.
Not all renewable energy sectors are affected by the subsidies ending. Roggow said the solar industry will continue to receive some state incentives.