Wind Advisory: Assessment of State level Competitiveness in Growing the

Wind Advisory: Assessment of State level Competitiveness in Growing the Wi Wind d EEnergy IIndustry d t Amanda Taylor Clemson University Committee: Dr. Barry Nocks (Chair) Dr Terry Farris Dr. Mr. Ed McCallum Aprill 10, 2012

Today s Presentation Review topic and research questions Results and Findings: Iowa Asset Inventory State Comparative Analysis Limitations it ti of assessment Future study opportunities Implications 2

Topic Review Source: Michael Porter, Harvard Business School, August 2011 South Carolina Competitiveness: Creating a State Economic Strategy 3

Research Questions What are the factors that influence wind energy industry development? What are the state level assets that support wind energy industry growth? Why has Iowa been successful at growing a wind energy industry? What mix of state assets results in a competitive advantage in growing wind energy? 4

Factors that Influence Wind Energy Development Wind Farm Wind Industry Cluster Business Institutional Siting Capacity Climate Assets Demand for Wind Energy Generation Manufacturing Regulatory / Permitting Stakeholder Engagement Wind Supply & Land Suitability Labor Taxes / Incentives Political Climate Transmission Research & Development 5

Iowa Wind Energy Asset tinventory Included: Case Study Overview Iowa Wind Energy Assets 6

Iowa Case Study Interviews Economic Development Transmission developer Stakeholder Engagement Economic Development Economic Development Manufacturing; Labor Education; R&D; Institutional R&D; Financing; Institutional Regulatory; Environmental Wind Developer; Wind Siting 7

Jefferson Community Wind Project Jefferson, Iowa Phase I In Operation 8

Jefferson Community Wind Project Jefferson, Iowa Phase II Assembly 9

Jefferson Community Wind Project Jefferson, Iowa Phase II Assembly 10

Jefferson Community Wind Project Jefferson, Iowa Phase II Assembly 11

Iowa Wind Farm along I 35 12

Iowa Wind Energy Assets 13

Factors that Influence Wind Energy Development Wind Farm Siting Wind Industry Cluster Capacity Business Climate Institutional Assets IOWA ASS SETS Demand for Wind Energy Generation Wind Supply & Land Suitability Transmission Manufacturing Labor Research & Development Regulatory / Permitting Taxes / Incentives Stakeholder Engagement Political Climate 14

Wind Farm Siting SETS A ASS IOWA Source: Iowa Department of Natural Resources 15

IOWA ASS SETS Wind Farm Siting Factors State Assets Iowa Asset Wind Development Demand Wind Supply / Land Suitability Transmission Policy Proximity to major population centers Purchase Power Agreement structure that allows flexibility State Renewable Portfolio Standard Green Purchasing Option for customer voluntary contributions Significant portion of the state has wind speeds sustaining and suitable for wind development (Class 3+). Limited or isolated land development constraints A robust list of existing and planned wind farm projects Regional ltransmission i planning through h an RTO or similar il Statewide interconnection policy to ease access to transmission State transmission siting authority with power of eminent domain OPPORTUNITY 16

Wind Industry Cluster Capacity SETS A ASS IOWA Source: Iowa Economic Development Authority 18

Wind Industry Cluster Capacity Cluster Factors State Assets Iowa Asset Manufacturing export base IOWA ASS SETS Manufacturing Labor Force Wind Technology Research and Development Existing location of wind turbine manufacturers and suppliers Concentration of employment in manufacturing Technical programs designed for wind technician education 4 year institution internship/partnership with private wind OPPORTUNITY industry Community education about job opportunities in wind OPPORTUNITY State funding for university/industry partnerships OPPORTUNITY Technology commercialization services at universities OPPORTUNITY Seed funding/venture funds to support wind energystart ups OPPORTUNITY 19

Business Climate IOWA ASS SETS Factors State Assets Iowa Asset State level siting authority for wind farm projects to Regulatory and ensure a consistent and reliable process throughout OPPORTUNITY Permitting the state State level voluntary consultation for environmental impacts and to assist developers with federal OPPORTUNITY regulatory compliance Favorable tax climate that does not hinder business investment OPPORTUNITY Taxes and Incentives Sales tax exemption for wind energy system equipment and machinery and equipment used in the manufacturing process of wind energy components Property tax abatements or special consideration for assessment of wind energy systems OPPORTUNITY 21

Institutional Assets IOWA ASS SETS Institutional Factors Stakeholder Engagement State Assets States that foster collaborative approaches to solving industry problems; participation in trade associations Early engagement of the public in the wind farm siting and transmission planning process State level t lgovernmental tland political l support of wind industry development Political Climate Governmental and political consistency and reliability to send a message to wind energy investors that the state can be trusted for long term support Iowa Asset 23

IOWA ASS SETS Iowa Asset Summary Assets: Wind resource and land suitable for wind development Wind energy manufacturing base and cluster capacity Public and political support, demonstrated through policy Opportunities for Improvement: R&D Capacity; Venture/seed funding Tax burden; incentives for manufacturers State transmission siting process 24

State Comparative Analysis Included: Evaluation Process Results and Findings 25

State Comparative Analysis Evaluation Process: Identify factor categories and evaluation criteria Score states Apply weights to distinguish relative importance of each category Evaluate final scores and identify trends Sensitivity testing of weights and classification scheme Categorize final scores to identify competitive advantages 27

Factors that Influence Wind Energy Development Wind Farm Siting Wind Industry Cluster Capacity Business Climate Institutional Assets Demand for Wind Energy Generation Manufacturing Regulatory / Permitting Stakeholder Engagement Wind Supply & Land Suitability Labor Taxes / Incentives Political Climate Transmission Research & Development 28

Factors that Influence Wind Energy Development Wind Farm Siting Wind Industry Cluster Capacity Business Climate Demand for Wind Energy Generation Manufacturing Regulatory / Permitting Wind Supply & Land Suitability Labor Taxes / Incentives Transmission Research & Development 29

Factor Categories and Sub Factors State Comparative Analysis Demand for Wind Energy Generation Wind Supply & Land dsuitability Wind Industry Cluster Capacity Business Climate Transmission Policy Population Proximity Wind Resource Manufacturing Regulatory / Permitting Regional Planning Power Market Structure Land Constraints Labor Income Tax / Incentives Interconnection Standards Wind Project Activity Research & Development Sales Tax / Incentives State Siting Authority Property Tax / Incentives 30

Evaluation Process Populate data and categorize states by score Factor Category: Supply of Land Suitable for Wind Development; Sub factor: Wind Resource Power Capacity of Wind Energy Percent of state land State Existing Projects (MW) Sub Score Potential: Installed Capacity (MW) Sub Score area suitable for wind development Sub Score SCORE Colorado 1,800 4 387,000 1 28.73% 1 2 Iowa 4,322 7 570,714 4 78.32% 7 6 Kansas 1,274 4 952,371 7 89.38% 10 7 Minnesota 2,733 7 489,271 1 44.83% 4 4 Montana 386 1 944,004 7 49.60% 4 4 Nebraska 337 1 917,999 7 91.64% 10 6 New Mexico 750 1 492,083 1 31.25% 1 1 North Dakota 1,445 4 770,196 4 84.25% 10 6 Oklahoma 2,007 7 516,822 4 57.10% 7 6 South Dakota 784 1 882,412 7 88.36% 10 6 Texas 10,377 10 1,901,530 10 55.54% 54% 7 9 Wyoming 1,412 4 552,073 4 43.58% 4 4 >5,000 10 >1 mill 10 >80% 10 Score 2,000 to 5,000 7 800,000000 to 1 mill 7 50% to 80% 7 Classification 1,000 to 2,000 4 500,000 to 800,000 4 40% to 50% 4 <1000 1 <500,000 1 <40% 1

Evaluation Process Apply weights to identify state tt score for each factor category Weight Score Weighted Score 9 6.52 58.71 State: Iowa Factor Category: Supply of Land Suitable for Wind Development Score: 6.52 Sub factors and Evaluation Criteria Sub factor Total Weight Score (out of 10) Weighted Score Wind Resource 10 6 60.00 Power Capacity of Existing Projects (MW) Wind Energy Potential: ti Installed Capacity (MW) Percent of state land area suitable for wind development Land Constraints 7 7 49.00 Percent of state windy land excluded due to constraints Percent of state in public ownership Wind Project Activity 4 7 28.00 Wind Projects in queue (MW) Percent of state electricity power derived dfrom wind TOTALS 21 137.00 AVERAGE SCORE 6.52

Evaluation Process Evaluate final scores; identify trends Demand for Wind Energy Generation State Comparison Evaluation Model Results Supply of Land Suitable for Wind Development Wind Industry Cluster Capacity Business Climate Transmission Policy Total Points TOTAL % Weight: 100 90 80 70 60 400 100.0% 0% Texas 6.2 8.0 7.4 4.1 6.1 258.0 64.5% Iowa 5.7 6.5 6.6 5.6 6.1 244.6 61.2% Kansas 4.5 7.2 4.9 5.6 7.0 230.4 57.6% South Dakota 3.5 7.0 4.4 6.3 7.0 219.6 54.9% North Dakota 4.2 5.7 4.0 8.0 6.0 217.6 54.4% Colorado 6.1 2.3 8.0 4.7 5.9 213.6 53.4% Oklahoma 6.4 5.5 4.5 4.9 5.1 213.4 53.4% Minnesota 4.5 4.1 7.3 5.0 6.1 211.7 52.9% Nebraska 4.8 6.4 3.7 5.4 6.1 209.6 52.4% New Mexico 6.8 2.3 3.1 5.6 5.9 189.0 47.2% Wyoming 5.9 2.7 2.1 7.1 5.9 185.9 46.5% Montana 4.3 3.4 2.6 6.5 5.9 175.2 43.8% 34

Evaluation Process Categorize final scores to identify competitive advantages Competitive Advantage: State demonstrates competitiveness in multiple factor categories relative to states in study region Opportunity for Advancement: State demonstrates competitiveness in some categories relative to states in study region Barriers to Competitiveness: State lacks competitiveness in some categories, specifically those with higher weighting, relative to state in study region Low or No Competitiveness: State lacks competitiveness in most categories relative to states in study region 35

State Competitiveness Results: Overall Model Results Total Points Grade State 400.0 100.0% Texas 258.0 64.5% Iowa 244.6 61.2% Kansas 230.4 57.6% South Dakota 219.6 54.9% North Dakota 217.6 54.4% Colorado 213.6 53.4% Oklahoma 213.4 53.4% Minnesota 211.7 52.9% Nebraska 209.6 52.4% New Mexico 189.0 47.2% Wyoming 185.9 46.5% Montana 175.2 43.8% 36

State Competitiveness Findings Competitive Advantage: Texas Iowa Kansas Siting advantages, established policy support, and cluster capacity Opportunity for Advancement: North Dakota South Dakota Siting advantages to a lesser degree than TX, IA, KS transmission barriers may exist Barriers to Competitiveness: Nebraska Oklahoma Colorado & Minnesota Low or No Competitiveness: New Mexico Montana Wyoming Additional policy support required to improve competitiveness Established policy support but less siting advantages Attractive business climate, but lack of siting advantages and policy support 37

Limitations of Assessment Did not interview a utility or Iowa Utilities Board Limited knowledge of power market dynamics Subjectivity of policy evaluation in model Data reliability (availability, relevance, and age) 38

Future Study Interview additional players in Iowa, including manufacturers (supply chain), utilities, and Iowa Utilities Board Detailed asset inventory for each state in analysis 50 state assessment More detailed comparison model, utilizing transmission infrastructure and load data Further analysis of state policy and how it impacts wind energyinvestment Process replication for other industries / other states 39

Implications States with natural wind farm siting advantages are not automatically the most competitive. States have the ability to grow a wind energy industry through long term consistent support, demonstrated through policy. State strategies to support wind energy do not necessarilyrequire require new public resources; it is a collaborative process, involving government, private industry, research institutions, and organizations Iowa should keep at it! 40

Thank you 41