Recently, Alan Anderson and I were thrilled to be invited to present to a class at the Washburn University Law School.  For those of you that don’t know, Washburn has developed a truly exceptional energy and oil & gas law program (something that I dearly wish I could have had in law school), thanks in large part to the efforts of Prof. David Pierce.  When Prof. Pierce’s invites us to do just about anything, we usually jump at the chance.

For this presentation, our goal was to provide a high-level but fairly comprehensive overview of the types of legal issues that arise during the main stages of a wind project’s design, construction and operation phases.  Interestingly, after we sat down to plan out the basic categories of information that we wanted to cover, we realized the rough outline of our presentation could be converted into an interesting one-page resource.  With a little coaxing, we were able to distill our notes down into the following chart:

Polsinelli - Wind Project Chart

When it came to preparing the presentation itself, however, we obviously had to provide quite a bit more detail on each of the three main phases of project development.  Our environmental law colleague, Adam Troutwine, proved to be invaluable (as he so often does) by providing an overview of the various state and federal permits that are required for a wind project.  A copy of our PowerPoint is available here:

Powerpoint

I know that I speak for Alan in once again thanking Washburn, Prof. Pierce, and the students for inviting us to speak., and we are very much looking forward to the opportunity to do it again soon.

As always, if you have any questions about any of the materials that we’ve linked to above, or any of the issues discussed therein, please don’t hesitate to reach out to me at lhagedorn@polsinelli.com or give me a call at (816)572-4756.

 

wind8

On May 28, 2015, Kansas Governor Sam Brownback signed legislation that will have a significant impact on the future of wind generation in the state.  The history of the political struggle underlying this legislation is a topic worthy of its own post, but suffice it to say that SB 91 represents a compromise between the wind industry and a faction of legislators that have attempted to reduce the state’s support of wind energy over the course of the last several legislative sessions.

On a political level, this deal largely revolved around the future of Kansas’ 20% by 2020 Renewable Portfolio Standard, which has been subjected to a number of attacks over the last few legislative sessions.  All of these previous efforts failed, but the political pressure to reduce or repeal the RPS appears to have been steadily ratcheting up for an increasingly motivated faction of the Kansas legislature.

Ultimately, however, the Kansas RPS battle has turned out to be much ado about nothing.  While the legislature was fighting over the ideology of the RPS, Kansas public utilities acquired huge amounts of low-cost renewable capacity.  By the start of 2015 legislative session, every one of the Kansas public utilities had acquired sufficient renewable capacity to satisfy their 2016 RPS requirements, as well as essentially satisfying their 2020 threshold.  Thus, while the RPS was a significant component of the political drama, in reality its fate does not have as much of an impact on current and future wind projects in Kansas as other portions of the legislative package that accompanied the RPS legislation.

Of particular concern for future wind developers in Kansas, one of SB 91’s key components is to introduce a cap on the statutory property tax exemption for future wind projects.  Historically, wind generation assets in Kansas have benefitted from a property tax exemption for the entire life of the project (K.S.A. 79-201).  This exemption, originally enacted in 1999 (pre-dating Kansas’ first wind farm), was originally enacted to provide an incentive to encourage wind development in the state, and there can be no dispute that it has been very effective in that regard.

Under SB 91, existing projects have been grandfathered-in under the old lifetime exemption language, and therefore will continue to receive the full tax exemption (barring any future legislative efforts).  However, any new wind projects will only receive a property tax exemption for the first ten years of the project’s life.  Beginning in year 11, the project will be subject to taxation at its full value.  Specifically, the capped exemption will apply to any projects that 1) have not filed an application for exemption with the Kansas Department of Revenue by December 31, 2016, or 2) have not received a conditional use permit from the applicable county by December 31, 2016.

In addition the property tax exemption cap, there is one final component of the SB 91 package that impacts both current and future wind projects, a reclassification of the tax rate that applies to wind generation assets.  While wind generation assets have not historically been subject to property tax in Kansas, other components of the project (for example, transmission equipment) have been taxed at as “public utility” assets at a 33% tax rate, as opposed to the standard 25% commercial rate.  For true public utilities, the burden of paying this higher 33% tax rate is mitigated by the fact that those costs are ultimately passed on to ratepayers during the utility’s next rate case.  Wind projects are not traditional utilities, and do not recover costs through rate cases.  Thus, the burden of a 33% tax rate can substantially impact the economics of a particular project.  Now that SB 91 will subject future wind project to property taxation, it was important to wind advocates that this tax rate discrepancy be remedied.

With this in mind, as part of the package of legislative amendments in SB 91, an exemption has been added to definition of “public utilities” subject to the 33% tax rate, for any entity that:

  1. generates, markets or sells electricity only at wholesale;
  2. has no retail customers; and
  3. generates energy from an electric generation facility that is actually and regularly used to predominantly produce and generate electricity utilizing renewable energy resources or technologies.

Importantly, this exemption will apply to both current and future projects, so any wind project assets that are subject to taxation will be taxed at a 25% rather than a 33% rate.  For existing projects, this lower tax rate will apply to non-generation assets, such as transmission equipment.  For new projects that will be subject to the 10-year exemption window, the lower rate will apply to all project assets.

Ultimately, wind developers’ views of the changes ushered in by SB 91 probably depends upon whether they have wind projects currently operating or in-development in the state, or alternatively are hoping to construct projects in the future.  Broadly speaking, for existing wind projects, the changes to the RPS and property tax exemptions should not have a significant impact, and the lower tax rates for non-generation assets should be net positive.  For new projects, and for the state’s efforts to continue attracting new projects, the increased tax burden from the property tax exemption cap will have an unavoidable impact on a potential project’s economics.  Only time will tell whether this new burden is severe enough to jeopardize Kansas’ reputation as a wind-friendly state.

If you would like any information about Kansas wind projects or renewable policies, please don’t hesitate to contact the Polsinelli Energy group at:

Luke Hagedorn, 816.572.4756, lhagedorn@polsinelli.com

I wanted to drop in to quickly announce that the June edition of North American WindPower includes a cover article drafted by yours truly, Alan Claus Anderson and Britton Gibson of the Polsinelli Energy Group.  The article, entitled “On the Front Lines: Advocates Prevail in State RPS Fight,” provides an overview of the recent legislative battles that have occurred in Kansas in relation to the state Renewable Portfolio Standard.

As part of the combined legislative efforts of the wind industry, the Wind Coalition, the Climate and Energy Project, the Kansas Energy Information Network, and many other groups, Polsinelli and Scott White of KEIN prepared a report that detailed the economic benefits of wind generation for the state of Kansas.  We presented that report before several Kansas House and Senate Committees, as well as at a series of Business Leader Forums hosted by the Climate and Energy Project across the state to help educate business owners and community leaders about the numerous economic benefits of wind energy.

Ultimately, I’m happy to report that the efforts to repeal the Kansas RPS were unsuccessful.  However, there are numerous other states all across the United States that are facing very similar legislative challenges to RPS policies.  We believe that the lessons we have learned in Kansas can translate well into defending RPS policies in other states, and hopefully this article can serve as a template of sorts for organizing a successful defense of these important policy initiatives.

If you have any questions about the national or state-level attacks being raised against RPS policies, or about the economic benefits of the wind industry for a particular state or region, please feel free to write a comment, email me at lhagedorn@polsinelli.com, or call me at (913)234-7416.

It’s been a busy few months here at RELI, with major projects taking up a substantial amount of my time.  Hopefully, I’ll be able to provide some details on that work in the next few days, but for the time being I wanted to pass along an article that I wrote for the March edition of the Missouri Municipal League‘s publication The Review.  Enjoy!

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There can be no doubt about it.  Electric vehicles are on the way.  In his 2011 State ofUnionaddress, President Obama put forth a firm challenge for theU.S.automotive industry when he called for theUnited Statesto “become the first country to have a million electric vehicles on the road by 2015.” 

Though President Obama’s goal of 1 million electric vehicles (“EVs”) by 2015 is probably overly optimistic, there are signs that the EV market in theUnitedStateis gaining momentum.  In the span of one year, the market for EVs tripled from approximately 17,500 EVs sold in 2011, to approximately 53,000 new EVs in 2012.  This growth is particularly impressive when you consider that even the most mainstream EV offerings such as the Chevrolet Volt, Nissan Leaf, and Toyota Prius Plug-in Hybrid have often only been available in limited quantities in major markets.  Additionally, it is unlikely that the market penetration of EVs will continue to grow at a slow, incremental pace.  Instead, it is likely that the number of EVs on the nation’s highways will increase dramatically as consumers become more exposed to EV technology and manufacturers release a broader selection of makes and models of EVs that appeal to a wider range of consumers.

Being the “Show-Me” State, it is perhaps unsurprising that many Missouricommunities have delayed planning the local infrastructure and procedural processes that will be necessary to support wide-spread EV adoption.  Fortunately, in 2011 the U.S. Department of Energy awarded a grant to the MetropolitanEnergyCenterin Kansas City, MOto produce a regional plan that can be implemented by municipalities in Kansasand Missourito prepare public resources and secure the economic and environmental benefits of EVs.  This plan, which will be accessible at www.electrifyheartland.org, compiles expert analysis from EV industry participants, local communities, public utilities, and subject matter experts such as Black & Veatch and the law firm of Polsinelli Shughart to provide guidance to communities that are seeking to lay the foundation for widespread EV adoption. 

Among the numerous findings detailed in the plan,Missouricommunities should perhaps benefit the most from the discussion of the unique planning and regulatory efforts that will likely be required to accommodate EV adoption.  While at face value EV usage may not appear to require much attention, local governments should strongly consider taking the following steps before EVs start appearing on city streets: 

  • First, an estimate should be prepared of exactly how many EVs might be purchased in the community in order to get a sense of the scope and timing of the planning efforts that should be undertaken. 
  • Second, the municipality should examine its existing building codes to determine what standards should be applied to the installation of EV charging stations in residential and non-residential settings. 
  • Third, the municipality should examine its current electrical permitting and inspection process to determine how it will ensure that EV charging stations installations are conducted in a safe and reliable manner without unduly burdening either the installers or the permitting office.
  • Finally, the municipality should examine its existing parking and signage ordinances to determine how it will treat parking spots with electrical vehicle charging stations.

Projections for Missouri EV Adoption

When talking about long-term national goals, it can be easy to lose perspective on local impacts.  If theUnited Stateswere to reach its goal of 1 million EVs on the road, how many EVs could be expected in the average community inMissouri? 

Based upon motor vehicle registration data gathered by the U.S. Federal Highway Administration,Missourihad a total of just over 5 million vehicles registered in the state in 2011, or roughly 8 vehicles for every 10 people in the state.  As Figure 1 below illustrates, assuming that the 1,000,000 nation-wide EVs are distributed proportionally with population among the states, Missouri could expect a total of just over 20,500 EVs, or about one EV for every 300 people in the state. For a community of 10,000 people, this equals roughly 34 EVs, or roughly 340 EVs for a community of 100,000.

Of course, the real challenge for municipal governments lies not in the vehicles themselves, but with the infrastructure necessary to charge the vehicles, known as Electric Vehicle Supply Equipment (“EVSE”) or simply as “charging stations.” 

It is probably safe to assume that every person who purchases an EV will also purchase a charging station for their home, so they will be able to charge their vehicles overnight.  Additional charging stations will likely be installed by local businesses, by potential third-party suppliers of electricity, and by the municipalities themselves.  Taking these additional charging stations into account, it can be estimated that roughly 1.5 charging stations will need to be permitted, installed and inspected for every EV located within a community.  Figure 2 below extrapolates this estimate across the state to show the projected number of charging stations that will be required.

Updating Building Codes to Address Charging Stations

Once local planners have a sense of how many EVs can be expected in their jurisdiction, the question raised is what changes should be made in the local ordinances and policies to accommodate this influx of new vehicles and charging stations.  Because there is no state-wide authority for building codes inMissouri, it will be necessary for local communities to review their building codes to ensure that EV charging stations will be safely integrated into new and existing structures.  As with any revisions of building codes, the main goal of the process is to incorporate as much flexibility as possible while still maintaining the highest level of safety for installers and citizens.

Specifically, there are a number of revisions that communities can make to their building codes that will significantly improve the processing time and effectiveness of their planning efforts for EV charging stations, a few of which are described below:

  • To ensure safe and up-to-date practices are utilized during installations, adopt the most current version of the National Electrical Code (“NEC”), or at least Article 625 of the NEC which includes best practices for wiring methods, equipment construction, control and protection, and equipment locations for EV charging stations.
  • Require all new, reconstruction and renovation building projects to ensure that the electrical room and all conduits leading to the electrical room in new multi-unit, commercial or industrial developments are appropriately sized to accommodate future electrical equipment necessary for charging stations, as well as the voltage and amperage capabilities of the accompanying infrastructure.
  • Require that all newly permitted construction or renovation projects install sufficient conduits, junction boxes, wall space, electrical panels and circuitry capacity in locations that could potentially serve EVSE sites in the future, such as garages and parking facilities.

Update Electric Permitting Ordinances to Address Charging Station Installations

For most municipalities acrossMissouri, the primary logistical hurdle for EV adoption is how to design a permitting and inspection process for EV charging stations that will allow for safe and reliable installations without unduly burdening their administrative staff.  Currently, when faced with an electrical permit for the installation of an EV charging station, most municipalities default position is to either follow the pre-established procedure for miscellaneous electrical permits, or fail to permit the installations at all.  Both scenarios present unsatisfactory results and fail to consider the particular complexities of installing an EV charger.  This puts the public confidence in EVs and EVSE at risk unnecessarily.

When designing these inspection programs, one of the easiest ways to minimize the administrative burden while efficiently allocating resources is to recognize the fact that communities will face a wide spectrum of potential scenarios for charging station permits, and there is no single permitting process that would be appropriate for all occasions.  For example, significantly less regulatory scrutiny will be needed for installation of a small charging system in a residence than would be required for a large commercial entity that wants to install numerous charging stations for use by customers and employees. As discussed more thoroughly below, in order to accommodate these different needs and allocate resources appropriately, many communities across the country are adopting a multi-tiered process that applies different levels of scrutiny to projects based upon the project’s complexity. 

Single-Family Residential Installations

By far the easiest EV charging alternative for most consumers is to utilize an existing 120-volt outlet located in the garage.  Obviously, in these cases an electrical upgrade is not required, so no permit is needed.  In cases where a dedicated 120V or 240V receptacle and circuit is desired for a charging station, a minor electrical permit likely needs to be issued, though it can easily be handled under the city’s existing permitting requirements. 

However, in cases where the resident’s existing electrical panel cannot safely meet the increased electricity needs, then an additional permit will be required in order to either upgrade the electrical panel or install a new panel and meter.  In order to gather all of the information needed to properly assess the safety of the installation, many municipalities across the country are adopting a stand-alone permitting form for these installations.  Often, these permits are based in large part upon a form permit application that has been prepared by the U.S. Department of Energy’s Alternative Fuels and Advanced Vehicles Data Center, available at http://www.afdc.energy.gov/pdfs/EV_charging_template.pdf.

Beyond adopting a specialized stand-alone permit, there are other steps that a community can take to streamline the permitting process.  For example, if the non-minor permit application has been submitted by a certified electrician that has received training in the installation of EV charging stations from an nationally-recognized training program, the local government can have some comfort that the installation is safe and therefore can adopt less stringent inspection processes, such as inspecting one out of ten installations or foregoing inspections altogether.  Where the installation was conducted by an electrician that has not been trained in EVSE, then many local governments have made it a priority to inspect the projects as soon as possible.  For example, many municipalities across the country have committed to conducting inspections within 24 hours of the installation of the charging station equipment.

Large Single-Family Residential, Multi-Family Residential and Commercial Installations

While small single-family residence installations likely present relatively few safety risks, charger installations in larger settings can be significantly more complex and thus require more significant oversight from local permitting bodies.  As an example, compare the installation of a new 120V / 1.8 kilowatt outlet in a residential garage to the installation of ten quick-charge stations outside of a movie theatre or grocery store, each of which are capable of handling 240V and up to 20 kilowatts of electricity.  For these more complex projects, communities should consider requiring applicants to fill-out a specialized permit and provide significantly more scrutiny to these types of installations.

EV Signage and Parking Marking Plans

Though we seldom stop and think about their impact, street signs can serve three important functions to facilitate the adoption of EVs in a community. First and most obviously, they can direct EV drivers to the nearest public charging stations.  Second, they serve to educate non-EV drivers about the availability of charging stations, and thus promote confidence that, should they decide to purchase an EV, there will always be a charging station readily-available.  Finally, they can publicize premium reserved parking spots, should the government choose to utilize the parking locations as an incentive for EV drivers.

Given the potential importance of signage to the public’s perception of EVs, it is perhaps not suprising that a significant amount of debate has occurred at the national level regarding the adoption of a uniform standard for EV charging station signs.  Currently, roadway signage is regulated by the U.S. Department of Transportation, Federal Highway Administration (“FHWA”).  Specifically, approved signage requirements are contained within the Manual of Uniform Traffic Control Devices (“MUTCD”).

In its current form, the MUTCD does not contain any requirements for EVSE signage.  However, there is a process by which state transportation agencies may submit a request for so-called “experimental” signage.  If approved, the experimental signs may be used within the state subject to certain requirements and restrictions.  By way of example, in 2011, the Departments of Transportation for the States of Washington andOregonsubmitted a request for the FHWA to consider an EV Charging General Service symbol, displayed as Figure 3 below. The FHWA granted those states an interim approval to use the signs to designate charging station locations.

In order to promote consistency,Missouricommunities should seriously consider adopting this FHWA-approved signage, and encourage the Missouri Department of Transportation to submit a request and obtain approval from the FHWA to utilize the symbols in the State.  These symbols have already been thoroughly evaluated by the FHWA and were found to be highly visible and comprehensible by a large segment of the population.  Additionally, adopting a symbol that is being utilized in other jurisdictions across the country increases the effectiveness of the symbols by promoting uniformity and recognizability.

While the FHWA approval process is being pursued, local communities can also begin to present this signage as an option for local businesses to utilize on private property, similar to what many businesses use currently for “Pregnant Mother” parking spaces.  Of course, such signage would be unofficial and entirely without the force of law, but its adoption would signal that the business recognizes and supports the needs of its EV-driving clientele.

Incentives or Penalties for EV Charging Station Parking

 

Finally, once the stations are installed and the signs are put up, public and private parking facility owners will need to determine whether, and to what extent, such signs will be enforced. 

InMissouri, the enforcement of street signs on public property is currently a prerogative of local governments, and thus each community will need to determine the level of enforcement that is appropriate for its populace.  However, when setting these enforcement policies, it is important that communities carefully weigh several competing interests.  First, during the early years of EV adoption, parking spots with EV charging stations may be vacant for large periods of time.  It is possible that a negative sentiment could develop if these spots are located in high-traffic areas and parking by non-EVs is prohibited and strictly enforced.   On the other hand, the availability of these charging locations is critically important for fostering range confidence for EV drivers.

To successfully balance these concerns, local communities might consider promoting the placement of EVSE in locations that are convenient and accessible, but not necessarily in the most desired or prominent parking locations.  Additionally, if the community is considering adopting punitive actions for non-EVs parked in an EV spot, the community might consider foregoing enforcement of those penalties until the level of EV adoption in the community is strong enough to ensure that the spots are filled a significant amount of the time.

Proper Planning Will Lead to a Smooth Transition to EVs

There can be no doubt about it, EVs are on the way.  By taking a few relatively minor steps to prepare for this influx of new vehicles and the infrastructure needed to support those vehicles, local communities will be able to minimize logistical and administrative burdens and ensure that local residents across the state are able to enjoy their new vehicles safely.

Energy policy issues are notoriously complex.  Seemingly small changes in a state’s energy policy can lead to wide-ranging and often unintended political, economic, and environmental consequences.  In an effort to facilitate thoughtful policy discussions about these issues in the state of Kansas, several attorneys from the Polsinelli Shughart energy practice group, Alan Claus Anderson, Britton Gibson and myself, have partnered with Dr. Scott W. White of the Kansas Energy Information Network to draft a report that relies on empirical evidence gathered from the nineteen wind farms currently in operation or under construction in the state of Kansas to estimate the true economic impact of these projects.  The text below is part of a larger report, which is also available at http://www.polsinelli.com//files//upload/StudyKansasWind.pdf.  We have already discussed the history of Kansas’ unique wind resource in Part 1, and provided a brief history of Kansas wind generation in Part 2.

Today, we will cover the significant potential for future project development in the state, due in large part to the expansion of Kansas’ transmission grid and exciting advancements in wind generation technology.

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Future Project Development

Despite the significant growth the Kansas wind industry has experienced over the past few years, the vast majority of the state’s wind resource remains untapped. This growth potential is attributable to many factors, including the fact that the wind resource in Kansas is still significantly underutilized, with a large number of potential projects sites ready to be developed.  While some of these sites simply await a buyer, some of them merely require access to sufficient transmission to move the electricity, while others require incremental improvements in wind generation technology.

1.         Expansion of the Transmission Grid

Wind energy projects are viable only if they have access to a transmission grid that can transport the power to customers.  Historically, this has been an important factor for wind project developers looking for suitable project locations in Kansas, because the bulk of the state’s best wind resource is located in areas with limited access to transmission lines.  This issue is currently being addressed by a number of public and private entities.

The Kansas“V-Plan,” the northern portion of the Southwest Power Pool’s (“SPP”) “Y-Plan,” is particularly noteworthy.  The “V-Plan” consists of high-voltage transmission that connects eastern and western Kansas with the dual purpose of improving electric reliability and carrying more electricity from various sources, including wind, and thus further establishing a competitive energy market in the state.  Two companies, ITC Great Plains and Prairie Wind Transmission, LLC, a joint venture between Westar Energy and Electric Transmission America, are participating in the construction of this 180-mile transmission line which is expected to be completed in 2014.  The “Y-Plan” will help support the addition of 2,500 MW of new wind generation in Kansas, Oklahoma, and the Texas panhandle.[i]

In addition to the “V-Plan,” ITC is also developing a 210-mile high-voltage transmission line between Spearville, Kansas and Axtell, Nebraska.  Construction of this line, known as the “KETA Project” began in 2009 and is expected to be completed by the end of 2012.[ii] Once completed, the KETA Project, which was encouraged by the Kansas Electric Transmission Authority (“KETA”), will support renewable generation development by providing more potential interconnection locations and transmission capacity for renewable energy generators.[iii]

Finally, Clean Line Energy, a private company based in Houston, Texas, is in the process of developing a significant transmission project across the state known as the “Grain Belt Express Clean Line.”  Once constructed, this privately-owned project will provide a 700-mile, 600 kV extra high voltage direct current (“HVDC”) transmission line starting in Kansas and running east through Missouri, enabling Kansas wind to be exported to serve utility customers in Missouri, Illinois, Indiana, and points farther east.  Clean Line anticipates that this project will enable approximately $7 billion of new, renewable energy projects to be built.[iv]  Clean Line Energy has set 2018 as the goal for commercial operation of this new transmission line.[v]

As the Figure below illustrates, these new transmission lines are located in the heart of Kansas’ most productive wind areas and provide valuable paths to market for future wind projects in those areas.

Generally speaking, wind speeds increase as turbine heights (referred to as “hub heights”) increase. Since wind speed is the single most important factor in creating electricity out of the wind, tapping into high winds is key to a successful wind project. For this reason, the most noticeable wind turbine technology improvements have focused on taller hub heights and larger rotor diameters. The combination of these improvements have led to significant increases in efficiency, which have resulted in wind farms with higher capacity factors or similar capacity factors in areas with lesser winds or lower elevations.

Wind speeds have historically been measured at 50 meters for wind farm development. However, utility-scale wind turbine hub heights have been significantly higher than 50 meters for many years (as an example, the Gray County wind farm, built in 2001, has a hub height of 65 meters).

On average, Kansas possesses a robust wind resource at a height of 50 meters.  However, as the Figure below illustrates, at a height of 80 meters, roughly half the state experiences average wind speeds between 8 and 9 meters per second,[vi] which is well above the 7 to 8 meters per second commonly found at a height of 50 meters.

Given that wind speed increases with an increase in altitude, there has been a trend across the wind industry to erect turbines with taller hub heights.  As seen in the Figure below, over the last decade, hub heights across the country have steadily increased from an average of approximately 60 meters in 2001 to 81 meters in 2011.[vii]

As technology continues to improve, and construction costs for these towers decrease, it is probable that 100 meter hub heights will become common for wind projects in Kansas.  This trend towards taller hub heights is evidenced by the fact that, in 2011, 128 turbines were installed in the United States with hub heights of 100 meters, a sharp increase over the 17 turbines of that size installed in 2010.[viii]  The following Figure provides some context to the significant technological advances that have occurred over the last decade.[ix]

As the average hub heights for Kansas projects increase from the current average of 80 meters, access to high-quality wind resources will increase and more locations in Kansas will be economically viable.  As shown in Figure 8, the wind speeds available at 100 meters are predominantly in the range of 8.5 to 9.5 meters per second.

Ultimately, the combination of an expanding transmission infrastructure and technological advancements will significantly expand the areas of the state that can support viable wind development.

If you have any questions or comments about the Kansas wind industry, please feel free to leave a comment below or contact me directly at lhagedorn@polsinelli.com or (913)234-7416.


[i] Edison Electric Institute, ITC Holdings, Corp. Company Overview, available at http://www.eei.org/ourissues/electricitytransmission/documents/transprojrenew_e-m.pdf.

[ii] ITC Great Plains Kansas Spearville-Axtell project profile, http://www.itc-holdings.com/images/itc-greatplains/projects/ITCGP_Profile_KETA_Gen_52311.pdf

[iii] Edison Electric Institute, ITC Holdings, Corp. Company Overview, available at http://www.eei.org/ourissues/electricitytransmission/documents/transprojrenew_e-m.pdf.

[iv] Clean Line Energy Partners Website, Grain Belt Express Clean Line Project Description, available at http://www.grainbeltexpresscleanline.com/site/page/project_description.

[v] Clean Line Energy Partners Website, Grain Belt Express Clean Line Schedule, available at http://www.grainbeltexpresscleanline.com/site/page/schedule.

[vi] Kansas Wind map at 80-m Height, Wind Powering America, U.S. Department of Energy, September 2008, available at http://www.windpoweringamerica.gov/pdfs/wind_maps/ks_80m.pdf.

[vii] U.S. Department of Energy, 2011 Wind Technologies Market Report, August 2012, available at http://www1.eere.energy.gov/wind/pdfs/2011_wind_technologies_market_report.pdf.

[viii] Id.

[ix] Lantz, E.; Wiser, R.; Hand, M. (2012). IEA Wind Task 26: The Past and Future Cost of Wind Energy, Work Package 2, available at http://www.nrel.gov/docs/fy12osti/53510.pdf.

 

Energy policy issues are notoriously complex.  Seemingly small changes in a state’s energy policy can lead to wide-ranging and often unintended political, economic, and environmental consequences.  In an effort to facilitate thoughtful policy discussions about these issues in the state of Kansas, several attorneys from the Polsinelli Shughart energy practice group, Alan Claus Anderson, Britton Gibson and myself, have partnered with Dr. Scott W. White of the Kansas Energy Information Network to draft a report that relies on empirical evidence gathered from the nineteen wind farms currently in operation or under construction in the state of Kansas to estimate the true economic impact of these projects.  The text below is part of this larger report, which is available at http://www.polsinelli.com//files//upload/StudyKansasWind.pdf

In Part 1 of this series, we discussed Kansas’ unique wind resource.  Today, we will provide a brief history of Kansas wind energy generation.  Additional sections of this report will follow in subsequent posts.

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A Brief History of Kansas Wind Energy

The substantial growth inKansas’ wind energy capacity in 2012 has been the culmination of more than a decade of hard work byKansas’ citizens, utilities and electrical cooperatives, local, county and state officials, and third-party participants. 

Although Kansas has long been known for the winds sweeping across its prairielands, it was not until 1999 that Westar Energy (then Western Resources) took the first steps into utility-scale wind power with the installation of two 600 kW Vestas wind turbines near the Jeffrey Energy Center in Pottawatomie County, north of St. Marys, Kansas.  In 2001, Westar’s Jeffrey Energy Center project was followed by the state’s first large scale wind farm, the Gray County Wind Project built near the town of Montezuma by NextEra Energy Resources (then FPL Energy). Containing 170 Vestas 600 kW turbines with a total installed capacity of 112 MW, the Gray County Wind Project is still operating today.

Since those early successes, at least one project has come online in Kansas every year since 2008, (see Table 1), and the period from 2011-2012 has seen a boom that will nearly double the state’s installed wind capacity (see Table 2).

Though there were a number of early wind projects inKansas, Table 1 above illustrates that there was a significant increase in project development beginning in 2008 and 2009.  A lot of this growth is the result of steady improvements in wind generation technology and increasing access to new areas of the state due to the expansion of transmission infrastructure (as will be discussed in a future post).  This is also the period when theKansasstate legislature adopted the state’s Renewable Portfolio Standard (“RPS”), a policy implemented to diversify the state’s electricity generation mix by adding more renewable generation.

Prior to 2009, demand for wind energy in Kansaswas driven by voluntary measures. Some utilities, like Empire District Electric (“Empire”), began purchasing wind energy due, in part, to high natural gas prices and a high percentage of natural gas baseload generation, which wind-powered generation could offset. Empire believed that the addition of wind power to their system was a way to “decrease exposure to natural gas, provide a hedge against any future global warming legislation” and to help them provide their customers “lower, more stable prices.”  Empire noted that the energy purchased from wind farms allowed them to decrease the amount and percentage of electricity generated by natural gas, and thus decrease their exposure to fuel price volatility. Similarly, the Kansas City Board of Public utilities saw wind power as “a hedge against high market purchase prices” and estimated their 20-year power purchase agreement for wind power would save the utility $3 million during the first decade.  Ultimately, some utilities decided to participate in the voluntary RPS that then-Governor Kathleen Sebelius had proposed, while others foresaw the potential for a future, mandatory, RPS.

Since 2009, demand for renewable energy in Kansasby public utilities has been driven by the RPS, as passed by the Kansas Legislature in May 2009 through Senate Substitute bill for H. 2369 and incorporated by Kansas Statutes Annotated (K.S.A.) 66-1256 through 66-1262. Under the RPS, every regulated public utility in the state is required to own or purchase renewable generation, such that the nameplate capacity of the renewable generation owned or purchased by the utility satisfies the following minimum threshold percentages of the utility’s average three-year annual peak retail sales:  

  • 10 percent for 2011 through 2015
  • 15 percent for 2016 through 2019
  • 20 percent for 2020 and beyond

Importantly, for renewable capacity generated in Kansas, utilities are awarded an additional 10 percent credit toward their requirements, thus incentivizing utilities to keep the renewable projects, and the economic benefits that they create, within the state. Additionally, a key provision of the RPS language was a one percent cap on the rate impact of compliance.[v]  Under this guideline, the Kansas Corporation Commission (“KCC”) is permitted to exempt any utility that can demonstrate that compliance with the RPS would cause retail rates to increase by one percent or more.  This effectively ensures that, to the extent that there is a cost associated with developing renewable generation opportunities as compared to traditional fuel sources, the rate impact for retail customers will be minimal.

Since 2010, the KCC has prepared and submitted an annual report to the Legislature that details each utility’s progress toward fulfilling its RPS requirements, including forecasts for its renewable energy generation over the next 20 years. The most recent data for each of the six affected utilities are summarized in the following Table 3.

As the chart above illustrates, all Kansas utilities currently have enough renewable generation in their portfolios to satisfy the RPS through 2015, with most possessing far more renewable generation than is required.  Additionally, most Kansas utilities currently have more than enough renewable generation in their portfolios to satisfy the 15 percent threshold that will take effect from 2016 through 2019, with only a small amount of additional renewable generation required for Westar and Midwest.

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If you have any questions or comments about the Kansas wind industry, please feel free to leave a comment below or contact me directly at lhagedorn@polsinelli.com or (913)234-7416.

Energy policy issues are notoriously complex.  Seemingly small changes in a state’s energy policy can lead to wide-ranging and often unintended political, economic, and environmental consequences.  In an effort to facilitate thoughtful policy discussions about these issues in the state of Kansas, several attorneys from the Polsinelli Shughart energy practice group, Alan Claus Anderson, Britton Gibson and myself, have partnered with Dr. Scott W. White of the Kansas Energy Information Network to draft a report that relies on empirical evidence gathered from the nineteen wind farms currently in operation or under construction in the state of Kansas to estimate the true economic impact of these projects.  The text below is part of a larger report, which is also available at http://www.polsinelli.com//files//upload/StudyKansasWind.pdf.  Additional sections of this report will follow in subsequent posts.

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In order to understand the current status of the wind industry in Kansas and its impact on the state economy, it is necessary to first understand why Kansas is uniquely positioned to reap its extraordinary wind resource.

A. KANSAS’ ABUNDANT WIND RESOURCE

Kansas enjoys one of the best wind resources in the world, ranking between first and third among the states in terms of total wind capacity. To quantify this resource, wind speed measurements are taken at several heights that reflect typical wind tower hub heights: 50 meters, 80 meters, and 100 meters. As Figure 1 below illustrates, at 50 meters most of western Kansas has access to “Class 4” winds, with wind speeds ranging from 7.5 to 8.1 meters per second, with a number of additional locations reaching “Class 5” status, with wind speeds ranging from 8.1 to 8.6 meters per second.

Figure 1: Kansas Annual Wind Speeds at 50 meters

To understand how Kansas’ access to wind compares to other states across the country, it is necessary to consult Figure 2 below, which illustrates the wind speeds at a height of 50 meters for the entire United States.

Figure 2: U.S. Wind Resource Map at 50 Meters (U.S. Department of Energy, National Renewable Energy Laboratory)

As Figure 2 shows, Kansas is well positioned in America’s “Wind Belt.” This geographic advantage means that Kansas has access to a robust renewable energy source that few other states share. Kansas and its neighboring Plains states have access to one of the best wind resources in the United States. As Figure 3 below shows, the electrical transmission grid in the U.S. is broken into three distinct electrical interconnections: ERCOT, which serves most of Texas, the Western Interconnect, which serves all states west of the Colorado-Kansas state-line, and the Eastern Interconnect. With new transmission projects in the works to alleviate bottlenecks in the grid (as will be discussed in a Part 3 of this series), Kansas is in a prime position to export power from its excellent wind resource.

 

Figure 3: The United States Transmission Grid.

 

Prior to 2012, Kansas ranked ninth among states in terms of operational wind energy.  Building on this success, Kansas has led the nation in new wind energy construction in 2012, with an anticipated operational wind energy capacity of approximately 2,714 MW by the end of 2012.

 

If you have any questions or comments about the Kansas wind industry, please feel free to leave a comment below or contact me directly at lhagedorn@polsinelli.com or (913)234-7416.

As an avid follower of energy projects in the Midwest, I’m proud to be attending the 2012 Kansas Energy Conference in beautiful Manhattan, Kansas.  Have no fear if you aren’t able to attend, however, because I’ll be uploading lots of pictures and commentary from the exhibitors and presentations over the next few days.

For those of you that will be in attendance, please stop by the Polsinelli table and say hello.  I’ll be buzzing about the new collaboration between Polsinelli’s Energy Law Practice Group and the Kansas Energy Information Network.

Finally, as an added bonus for you, my loyal readers, here is a special preview of one of the many excellent handouts that we will be distributing at our table.  This is just a small example of the wonderful content that will be available, so stop by and take a look.

If you have any questions or comments about the Kansas Energy Conference or Kansas energy projects in general, please leave a comment or contact me directly at lhagedorn@polsinelli.com.

For all of you who are interested in renewable energy projects in the State of Kansas, I’m pleased to bring you some good news this Monday morning.  The Energy Law Practice Group of Polsinelli Shughart PC (a law firm that I am proud to be a part of) is announcing an ongoing collaboration with the Kansas Energy Information Network (KEIN), a phenomenal informational resource for energy projects in Kansas.  This collaboration is the result of significant work by Alan Claus Anderson and J. Britton Gibson of Polsinelli Shughart and Scott W. White of KEIN and Scott White Consulting.

What does this mean for you?  It means that KEIN will continue to provide the excellent content that has been its staple since 2001, but will also have access to additional resources and analysis from one of the nation’s leading energy law firms.  We are all extremely excited about the potential benefits of this collaboration for everyone involved.

Additional information from the Polsinelli press release is provided below.  If you have any questions or comments, please leave a comment, email me at lhagedorn@polsinelli.com, or seek me out at the Kansas Energy Conference being held this Tuesday and Wednesday in Manhattan, Kansas.

Polsinelli Shughart Energy Practice Group Partners with Kansas Energy Information Network

Press Releases – September 21, 2012

The Energy Practice Group of Polsinelli Shughart PC is proud to announce that it has teamed with the Kansas Energy Information Network (KEIN) to continue making useful energy information widely-available and easy to access. This collaboration will continue to provide an invaluable one-stop resource for the general public and energy professionals seeking information and analysis about energy projects in Kansas.

“We continue to be very active in energy projects and issues in Kansas and we’re excited to be able to work with Scott and the Kansas Energy Information Network on not only collecting information but providing analysis that can be used by people and companies interested in Kansas energy issues” said Alan Anderson, vice chair of the Energy Practice at Polsinelli Shughart.

Founded in 2001 by Scott White, the Kansas Energy Information Network (KEIN) has become the first stop for those who seek energy information related to Kansas and the surrounding region on the internet. The primary purpose of KEIN is to promote energy efficiency, renewable energy and a better understanding of energy issues by making reliable information available to the public.

“Polsinelli Shughart is one of the premier law firms for energy issues in the Midwest, and Kansas in particular. They have extensive knowledge and experience relating to Kansas energy issues, and their on-going involvement in the development of traditional and renewable energy resources in the state will undoubtedly continue to contribute to the success of these industries. It pleases us that Polsinelli is collaborating with KEIN and again demonstrating their commitment to the growth and strength of Kansas’ energy industries,” said Scott White, founder and executive director of KEIN.

“For years, we have followed and used the great information included on the Kansas Energy Information Network site. Scott has a great understanding of the issues and developments affecting energy projects in Kansas. We are very pleased to partner with him to build upon his solid work to continue making KEIN the preeminent source for information about Kansas energy projects,” said Britton Gibson, a shareholder in the Polsinelli Energy Practice Group.

Polsinelli Shughart’s Energy law practice is one of the leading energy practices in the Midwest and has widespread national experience representing energy companies, developers, lenders and investors in connection with the acquisition, development, finance and operation of a variety of energy facilities – including oil, gas and electric facilities and wind, solar, geothermal, biomass and biofuel renewable energy projects. The Polsinelli Energy group includes attorneys with a broad range of interdisciplinary experience and depth of knowledge. Polsinelli’s energy attorneys’ vast experience in real estate, environmental, construction, land use, finance, regulatory, business, and litigation issues is an invaluable resource for meeting energy clients’ objectives.

RELATED CONTACTS

Alan Anderson, T. 913.234.7464, aanderson@polsinelli.com

Scott W. White, T. 785.424.0090, Scott@KansasEnergy.org

About Polsinelli Shughart 

With more than 600 attorneys, Polsinelli Shughart (www.polsinelli.com) is a national law firm and recognized leader in the areas of health care, financial services, real estate, life sciences, energy and business litigation. Serving corporate, institutional and individual clients, the firm builds enduring relationships by creating value through our legal services – with passion, ingenuity and a sense of urgency. The firm has offices in Chicago; Dallas; Denver; Kansas City; Los Angeles; New York; Phoenix; St. Louis; Washington, D.C.; and Wilmington, DE. In California, Polsinelli Shughart LLP.

Literally and figuratively, Kansas and Missouri stand at the crossroads of the United State’s quest for an “all-of-the-above” energy policy. Located in the heartland of the United States, these states enjoy abundant access to traditional and renewable energy resources. Just as importantly, the central location of Kansas and Missouri place these states in a critical segment of the national infrastructure that is needed to transport those resources to population centers across the country. With proper planning, these critical investments create an excellent opportunity to create jobs and bolster the economies of communities throughout the region.

Generation and Production

Renewables

With the second best wind resource in the United States, the State of Kansas has made great strides in developing a robust wind industry over the last few years. In 2011 in particular, Kansas boasts eight major wind projects under construction, is set to nearly double its installed capacity in the span of a single year and leads the country in wind project construction.

In Missouri, the most recent successes involve solar energy. Based in large part on a solar carve-out in the state Renewable Energy Standard and a $2.00 per kilowatt rebate for net-metered solar installations, both of which were introduced as part of an overwhelmingly approved 2008 voter ballot initiative, Missouri has enjoyed a recent surge in small to mid-sized solar projects over the last year.

Oil & Gas

As with renewables, the Midwest region is ideally located to reap tremendous benefits from its access to traditional fuel resources. In particular, due to its prime location on the Mississippian Lime Play, Kansas has enjoyed a surge in oil and gas developments across the state. From March to July of 2012 alone, the Kansas Corporation Commission approved roughly 3,000 Notice of Intent to Drill filings.

Transmission & Pipeline Infrastructure

Regardless of whether it is moving north, south, east or west across the country, a significant amount of the electricity, oil, natural gas, or coal produced in the United States will pass through Kansas or Missouri at some point. As a result, it is vital that both Kansas and Missouri adopt well-reasoned policies to ensure that the states can enjoy the economic benefits that come with this infrastructure, and to avoid any bottlenecking of these valuable resources.

Transmission

It is no surprise that the renewable energy being generated in remote locations across the Midwest is only useful if it can be transported to consumers. Fortunately, there are a number of companies currently constructing transmission lines that create a modern, robust electricity grid across the region. These projects include Clean Line Energy’s 700-mile Grain Belt Express Clean Line, Kansas City Power & Light’s and the Omaha Public Power District’s proposed 190-mile Missouri to Nebraska line, ITC Great Plain’s 225-mile KETA Project, and the 122-mile “V-Plan” line being built by ITC Great Plains and Prairie Wind Transmission, a joint venture of Westar Energy and Electric Transmission America.

Pipelines

Just as with the electricity transmission lines, the influx of new oil and natural gas projects across the Midwest have dramatically increased demand for a strong pipeline infrastructure. Both Kansas and Missouri have made great strides in this regard recently. For example, Missouri hosts portions twelve interstate natural gas pipelines, including the largest state-to-state pipeline in the region, the Southern Star Central Gas Pipeline Company’s line. Other notable interstate pipelines include those developed by ANR Pipeline Co., Centerpoint Energy Gas Transmission Co., Mississippi River Transmission Corp., Panhandle Eastern Pipeline Co., and Texas Eastern Transmission Corp.

An Energy Policy for the Future

Whether you look at renewable resources or traditional fuel resources, it is clear that Kansas and Missouri are ideally located to play a national role as both a producer and courier for our nation’s future energy supply. All that is required is a well-reasoned set of policies that ensure that these industries can develop at their full potential, and that local communities that host these developments receive appropriate economic rewards. Standing at this crossroads in our nation’s energy policy, the key question is which paths these states will choose to best secure their place as a key player in the United State’s energy future.