FARGO-Wind energy development in North Dakota and Minnesota is getting a boost from tax credits that are set to wind down and decreasing costs that make it cheaper than coal and competitive with gas.
Xcel Energy just announced it intends to build four new wind farms, with a combined capacity of 750 megawatts, a recent example of the scramble to start projects this year to take full advantage of federal tax credits set to expire.
One of the planned Xcel wind farms, Foxtail Wind, would have a capacity to generate 150 megawatts. If approved by regulators, the project will be located west of Ellendale in Dickey County near a new transmission line in development that will connect to the Twin Cities.
The other three wind farms are slated for Lincoln County, Minnesota, east of Brookings, S.D. The new wind farms, expected to go into service by 2020, should qualify for full tax credits, savings Xcel executives say will be passed along to customers.
"We're very pleased with where the prices are at," said Mark Nisbet, Xcel's principal manager in North Dakota, referring to wind energy development costs. "This is a great deal for us, the state of North Dakota and our customers."
Counting the Foxtail project, there are more than 1,000 megawatts of wind projects under construction or in development in North Dakota, according to figures compiled by the Public Service Commission.
This is the last year wind energy projects qualify for full tax credits, which are being phased out over the next four or five years, and companies are rushing to take advantage, said Jerry Lein, an engineer with the Public Service Commission who tracks wind projects.
"They're all struggling right now to get their 100 percent," he said.
With the tax credits, the wholesale price of generating wind power has fallen to between 2 cents and 3 cents per kilowatt hour, Lein said. "You can't build a new coal plant for that," he added.
Because wind is intermittent, it sometimes is paired with power plants that run on natural gas.
"Wind and gas are kind of becoming the mix now," Lein said.
The price of natural gas has been significantly reduced because of hydraulic fracturing, or "fracking," a controversial method of obtaining oil and gas from shale formations, including the Bakken Formation.
Wind development in North Dakota started to take off a decade ago and has been aided by declining costs and Minnesota's ambitious renewable energy standard, which obligates Xcel to derive 31.5 percent of its sales from renewable energy sources by 2020. Other utilities must generate 25 percent of their electricity from renewable sources by 2025.
As of last year, 17 percent of Xcel's power came from wind, Nisbet said. The utility is the nation's largest wind provider, according to the American Wind Energy Association, or AWEA, an industry group.
North Dakota now has about 2,140 megawatts of wind capacity. Neighboring Minnesota has wind capacity of 3,435 megawatts, and South Dakota has wind capacity of 977 megawatts, according to figures from AWEA.
In North Dakota, almost 20 percent of electricity was generated from wind, as of July. That's twice the 10-percent renewable energy goal set by the state. In Minnesota, more than 17 percent of electricity generation was from wind, and in South Dakota, almost 27 percent, according to AWEA.
Minnesota, North Dakota and South Dakota are among 11 states that get at least 10 percent of their electricity generation from wind, according to the U.S. Energy Information Agency. As of July, 5.6 percent of the nation's electricity was generated by wind, according to government figures.