A national laboratory of the U.S. Department of Energy

Office of Energy Efficiency & Renewable Energy

National Renewable Energy Laboratory 

Innovation for Our Energy Future 

Economic Development Impacts 

of Colorado’s First 1000 

Megawatts of Wind Energy 

S. Reategui and S. Tegen 

National Renewable Energy Laboratory 

Presented at WINDPOWER 2008 

Houston, Texas 

June 1–4, 2008 

Conference Paper 

NREL/CP-500-43505 

August 2008 

NREL is operated by Midwest Research Institute ● Battelle Contract No. DE-AC36-99-GO10337 
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Acknowledgements 

The authors would like to thank the wind power developers, local lawyers, county 

commissioners, and industry experts who participated in this project for taking the time to 

answer our questions and for reviewing our results. Although their names will remain 

confidential, we acknowledge that this report would not have been possible without their 

support. We are also grateful for the valuable suggestions and thorough review from 

Michael Milligan and Marshall Goldberg. 

1 
2 

Table of Contents 

Acknowledgements ............................................................................................................1

Executive Summary ...........................................................................................................3

Introduction ........................................................................................................................4

Methodology .......................................................................................................................5

Results .................................................................................................................................8

Manufacturing Potential .................................................................................................12

Concluding Remarks .......................................................................................................17

References .........................................................................................................................18

Appendices ........................................................................................................................20
Executive Summary 

A confluence of events has ignited a soaring growth in the number of wind power 

installations in Colorado in recent years. State and federal incentives, growing 

environmental concerns, and economic development opportunities are among the motives 

that spurred wind power installations from 291 megawatts (MW) of nameplate capacity 

in 2006 to 1,067 MW (nameplate capacity) in 2007. 

According to the Annual Rankings Report by the American Wind Energy Association 

(AWEA), Colorado is the second-fastest-growing wind energy producer in the United 

States (Texas is first). In terms of resource potential, Colorado currently ranks 11th out of 

all 50 states (AWEA, January 2008). A report of the Task Force on Renewable Resource 

Generation Development Areas has identified eight wind generation development areas 

in Colorado, with the combined potential to generate 96,000 MW or 96 gigawatts (GW) 

of capacity (Renewable Resource Generation Development Areas Task Force, 2007). 

Colorado Wind Power Statistics, January 2008 

Source: AWEA (as of 01/16/2008) 

COLORADO 

Power Capacity - Existing Projects (MW): 1,066.75 

U.S. Rank (by Existing Capacity): 6 

U.S Rank (by Potential Capacity): 11 

Due to the vast resource capacity and the sudden wind power development, it is pertinent 

to analyze the economic impact that 1,000 MW have already generated in Colorado. 

These impacts can be scaled to obtain a sense of the economic development opportunities 

associated with other new wind scenarios, including the 20% Wind Energy by 2030 

scenario (U.S. Department of Energy, 2008). Furthermore, this report can be used by 

interested parties in other states that currently lack a Renewable Portfolio Standard (RPS) 

as an example of the potential economic impacts if they were to adopt 1,000 MW of wind 

power development. Of course, each state has unique resource constraints, characteristics, 

and policies. Information such as property tax values, land leases, and manufacturing 

bases would have to be substituted depending on local information. 

According to this analysis, 1,000 MW of wind power development in the state of 

Colorado: 

• Generates electricity to power more than 248,000 homes (11.8% of Colorado 

housing units in 20061

) 

• Generated approximately 1,700 full-time-equivalent jobs during construction 

periods with a total payroll of more than $71.3 million (2008 dollars) 

 

1

 According to the U.S. Census Bureau 

3 
• Supports approximately 300 permanent jobs in rural Colorado areas with a total 

annual payroll of $14.7 million (2008 dollars) 

• Generated $226.4 million in economic activities from the construction period only 

(2008 dollars) 

• Generates $34.9 million in annual local economic activities (2008 dollars) 

• Generates $4.6 million in annual property taxes2

 (2008 dollars) 

• Generates more than $2.5 million annually in extra income for farmers and 

ranchers who lease their land to developers (2008 dollars). 

Introduction

Due to a growing U.S. population, an increased demand for energy, recent water 

shortages, migration trends from rural areas, and energy price uncertainty, it is imperative 

that each state takes the necessary steps toward a more secure energy future that can 

provide an affordable and dependable energy supply while meeting society’s economic 

development and environmental expectations. 

In taking some of the steps toward a secure energy future, Colorado has enacted state 

incentives and a Renewable Portfolio Standard (RPS), which foment the production of 

renewable sources. Currently, wind power is the fastest-growing renewable resource. In 

fact, large utility-scale wind projects are thought to ameliorate some of the national 

concerns previously mentioned because they not only bolster new jobs in the nation, but 

they also do so in rural communities where there is a need for job retention and 

diversification amid an economic slump intensified by high levels of rural migration. 

Wind power projects also generate tax revenues that are used to improve schools and 

other public services, which in turn improve the quality of life in rural areas. Local 

landowners also receive extra income in the form of land lease payments from wind 

turbines located on their land. 

This report attempts to supply the reader with information on the economic benefits that 

1,000 MW brings to the state of Colorado. The focus is on jobs3

, land lease payments, tax 

revenue, payroll, and business activities that are spurred as a result of constructing and 

operating 1,000 MW of wind power in Colorado. 

The report begins with a description of the methodology and the data used in calculating 

the economic impacts of 1,000 MW of wind power in Colorado. Next, it discusses and 

interprets results of the analysis. The report does not compare wind to other resources or 

 

2

 Because tax payments vary every year, the annual property tax calculation is based on the average annual 

payment over a 20-year period. See the Property Tax Revenue Impact section. 

3

 This report did not analyze net jobs; it examined gross jobs supported by new wind development. In some 

cases, workers may have worked in another industry and switched to the wind industry, or they may have 

had a job in a wind-related industry. As long as the previous industry replaces that person, if a worker 

switches jobs it is still a new job supported by the wind industry. There is only a “net” loss if the previous 

industry doesn’t replace that person. 

4 
industries, nor does it present net jobs or net economic data. It simply addresses the jobs 

and economic activity supported by the first 1,000 MW of utility-scale wind in Colorado. 

This report does not cover costs or benefits to electricity consumers. Instead, it is based 

on the impact specific wind projects have had on the state’s economy. 

Methodology 

The Jobs and Economic Development Impact (JEDI) Model

The Jobs and Economic Development Impact (JEDI) model, developed by Marshall 

Goldberg for the National Renewable Energy Laboratory, calculates the number of jobs 

and the amount of money spent on salaries and economic activities generated in a specific 

location from the construction and operation of a wind power plant. The JEDI Wind 

Energy Model can be downloaded at http://www.nrel.gov/analysis/jedi. 

The model relies on region-specific data pertaining to existing industries and interindustry relations at the local level, where the output of one industry serves as input for 

another. Data are supplied by Minnesota Implan Group Inc. and are state-specific 

multipliers. Multipliers are economic indicators of the number of times a dollar circulates 

in an economy (Silverstein, 2006). For instance, one dollar is transferred from the hands 

of a wind power developer to the construction company when a construction contract is 

signed; the construction company uses part of that dollar to pay construction workers. 

Finally, construction workers use their payroll checks to purchase local goods and 

services such as food at local restaurants, clothing, haircuts, etc. Therefore, money spent 

initially by the developer ripples through the economy in a series of transactions, creating 

a “ripple effect.” 

In addition to the multipliers, the model uses construction cost data, operating cost data, 

and data pertaining to the percentage of goods and services acquired in the state. Jobs, 

payroll value, and economic activities are calculated using this information. These results 

are divided into two periods: construction (considered to last 1 year) and operation 

(recurring annual impacts for the life of the project) and are placed within the framework 

of the direct, indirect, and induced impacts. 

Direct Impacts: 

The direct impacts are the on-site and off-site effects pertaining to the construction and 

operation of the wind power plant. These impacts include the number of jobs (e.g., 

engineers, construction workers, managers, lawyers, etc.), their corresponding payroll 

salaries, and economic activities (generated from purchasing materials and equipment for 

the road construction, wind turbine foundation, electrical collection, installation, and 

turbine manufacturing) supported by the initial spending of the wind farm. 

Indirect Impacts: 

The initial spending on the construction and operation of the wind farm creates a second 

layer of impacts. For instance, when the construction company purchases input materials, 

it uses the outputs of other companies. These other companies in turn pay their workers 

and purchase goods and services from other industries. An example of an indirect impact 

5 
is the job of a steel company employee who works on the materials needed by the wind 

plant construction worker. Wind power projects indirectly support these types of jobs, 

their corresponding salaries, and economic activities, providing the indirect impacts of 

the wind power project. 

Induced Impacts: 

The initial spending on the construction and operating activities along with the indirect 

business activities support jobs and provide payroll to employees. Employees then spend 

their paychecks on local goods and services, such as at restaurants and clothing stores. 

This is local spending induced from employees working directly or indirectly on the wind 

power project who were able to receive and spend their paychecks. Their consumption 

supports local jobs and local economic activities above and beyond what they would have 

purchased without the extra income from the jobs related to the wind installation. 

Employee spending on local goods and services is considered an induced effect. 

Direct Impacts Indirect Impacts Induced Impacts 

On-site and off-site 

wind farm workers 

Equipment and service 

providers for direct 

workers 

Spending by direct 

and indirect workers 

on local goods and 

services (e.g., workers who lay 

the foundation or erect 

the tower) 

(e.g., a steel 

company employee 

who works on the 

materials needed by 

the construction 

worker) 

(e.g., a construction 

worker spends part of 

his or her paycheck on 

local restaurants 

and gas) 

Figure 1: Ripple Effect as portrayed by the Jobs and Economic Development Impacts 

(JEDI) Model

Although the JEDI model default data include construction cost figures, operating cost 

figures, and percentages of goods and services acquired in the state, project-specific data 

were gathered to attain more localized impact results. 

Research Data 

We obtained a list of Colorado’s wind power projects from the American Wind Energy 

Association (AWEA) and the Global Energy Concepts (GEC) databases. The project lists 

contained information regarding wind project location, completion status, year online, 

6 
size, turbine manufacturer, owner, number of turbines, and turbine size. Data were 

collected for nine wind projects, but only Colorado’s six largest projects adding up to 

nearly 1,000 MW of wind (998 MW to be exact) were the focus of this study. 

Preliminary background research for each of the projects consisted of collecting media 

information and corporate press releases. This provided an indication of the construction 

cost and the economic impacts some of these projects generate in Colorado. Developers 

and others later verified the information from the media. 

Extensive interviews were conducted with developers, lawyers, county commissioners, 

stakeholders, and other industry experts. Data gathered from interviews included 

construction cost, operation and maintenance cost, percentage of goods and services 

acquired in-state, job generation during the construction period, job generation during the 

operating period, land lease payments, tax information, payroll parameters, and cost 

breakdown of different categories based on project cost percentages. 

It is important to note, however, that because JEDI model inputs consist of detailed 

information considered proprietary, the amount and quality of the information obtained 

varied from project to project. Thus in some instances, we used anecdotal information, 

data extrapolation, and literature reviews. 

The JEDI model was used to calculate economic impacts of each of Colorado’s six 

largest wind power projects. Appropriate adjustments to the model (cost information, 

local share values, and job creation numbers) were made to mirror verified data obtained 

from interviews. Individual economic impacts were then aggregated to reflect combined 

impacts from 1,000 MW. 

7 
Project Size Year online

1 Colorado Green 162MW (2003) 

2 Twin Buttes 75MW (2007) 

3 Ridgecrest-Peetz 29.7MW (2001) 

4 Spring Canyon 60MW (2006) 

5 Peetz Table Wind Energy Center 400MW (2007) 

6 Cedar Creek 300MW (2007) 

7 Ponnequin 36MW (1999) 

Figure 2: Colorado Wind Project Locations 

Results 

The study results show significant economic impacts from 1,000 MW of wind energy 

development. We show the impacts on employment, property tax, landowner revenue, 

and local economic activities during the construction and operational periods. 

8 
Direct Impacts Indirect Impacts Induced Impacts

P

• More than $2.5 million/year 

ayment to Landowners: 

L

• $4.6 million/year 

ocal Property Tax Revenue: 

C

• 912 construction jobs 

onstruction Phase: 

• $133.6 million to local economies 

O

 181 long-term jobs 

perational Phase: 

•

• $19.3 million/year to local economies 

Construction Phase: 

• 382 jobs 

• $43.3 million to local economies 

Operational Phase: 

• 46 local jobs 

• $5.9 million/year to local 

economies 

Construction Phase: 

• 425 jobs 

• $49.4 million to local economies 

Operational Phase: 

• 83 local jobs 

• $9.7 million/year to local economies 

Figure 3: Economic Ripple Effect from 1,000 MW of Wind Energy Development in Colorado 

Employment Impacts 

Most of the direct jobs related to the construction and operation of wind power plants 

require skilled professionals in the fields of engineering, construction, management, and 

manufacturing. These are well-paid positions that boost economic development in rural 

communities where new employment opportunities are welcome due to economic 

downturns. 

This analysis showed that most positions related to the construction and operation of 

wind power plants in Colorado currently offer salaries ranging from $29,000 to $90,000. 

These are competitive payroll earnings, especially in areas such as Bent County (home to 

one of the wind power projects in this study), where more than 20% of the population is 

considered to live below poverty levels4

. 

Construction Jobs 

A typical wind farm construction period lasts between 6 to 12 months. During that 

period, a number of construction workers, engineers, administrative employees, and 

managers move to town, boosting local economic activities. Locally employed workers 

may work directly on the new wind project, depending on the skill set in the area. 

According to our interviews with developers, certain contracts require that a percentage 

of workers be hired from the area where the wind power project is developed. For the six 

wind farms analyzed, 75% to 85% of construction workers were Colorado residents. 

Certain positions related to electrical collection system and management require labor 

 

4

 According to the U.S. Census Bureau (2004 data). State and County Quickfacts: Bent County, CO 

9 
outsourcing from other states such as California and Wyoming, or even from other 

countries, such as Denmark. 

This research suggests that 1,000 MW of wind power development 

supports approximately 1,700 full-time-equivalent jobs in Colorado rural 

areas with a total payroll of more than $70 million during the construction 

phase of new wind projects. 

Operation and Maintenance Jobs 

When the wind farm goes online, it needs permanent employees to operate and maintain 

the facility during its 20- to 30-year expected life. These permanent positions are also 

well-paid positions, the majority of which are filled by Coloradoans or by people who 

relocate to Colorado. 

In counties such as Bent, where the population is estimated at 5,551 inhabitants5

 (2006) 

and population declined by 7.5% between 2000 to 20066

, the number of permanent jobs 

generated by the wind industry sector contributes significantly to combat depopulation 

trends. 

This research shows that 1,000 MW of wind energy capacity in the state of 

Colorado supports approximately 300 permanent jobs in Colorado rural 

areas with a total annual payroll of more than $14 million. 

Although most operation and maintenance jobs are 100% local, at least one developer 

alleged to outsource some of the wind project’s routine maintenance operations from outof-state by bringing in a technician to Colorado twice a year. 

Property Tax Revenue Impacts 

Wind energy projects also increase the property tax revenue base in local counties, which 

in turn is used to improve local schools, parks, recreational facilities, community 

programs, fire departments, and other public services in rural communities. 

So far, Colorado’s six largest projects have generated approximately 

$23.8 million in property taxes (2008 dollar value) from the time these 

projects came online. In 2008 alone, these projects generated 

approximately $9.6 million in property tax revenue. 

In Colorado, property taxes vary dramatically from year to year, and the highest burden 

of taxation is borne during the first years of project operation (especially for projects that 

went online prior to 2006, which are not subject to the new taxation procedure). Using 

the average annual tax payments over the life of the wind farm project (assumed to be 20 

years) offers a more accurate picture of the potential annual impacts in Colorado. 

 

5

 U.S. Census Bureau 

6

 U.S. Census Bureau 

10 
This research shows that across Colorado, the average annual tax 

payment over a 20-year expected project life period is $4,800 per MW per 

year (in current 2008 dollar value)7

. Colorado’s six largest projects alone 

generate $4.6 million in average annual property taxes (in 2008 dollars)8. 

In certain counties, an increased tax base may not always increase the funds allocated to 

public services such as the local school district. If that is the case, then the tax generated 

from the wind power project may lower the local mil levy, which can result in substantial 

savings for taxpayers in the district where the wind farm is located. 

Landowner Revenue Impacts 

Land leases provide a stable source of income for farmers and ranchers who lease their 

land to wind developers. Most of the land leases in Colorado are negotiated as a 

percentage of revenue (royalty) based on power purchase agreements (PPAs). There are 

different types of payment schemes, but according to this research, most of the land lease 

payments in Colorado are paid at 2.5% - 3.5% of revenue, which escalates annually, 

potentially reaching up to 6% by the 25th year the project is in operation. 

Although wind power projects occupy several acres of land, the actual footprint of the 

wind turbine is small, allowing farmers to continue to grow their crops or graze their 

cattle even though turbines are on the land. Furthermore, there are other economic 

opportunities for landowners in the form of road access payments (land easements), and 

land lease revenues for O&M buildings and substations. These could be one-time 

payments or annual payments that could represent $2,000 per year or as much as $200 

per acre per year. 

This research suggests that across Colorado, land lease revenue is on 

average $2,400 per MW per year, which is between $1,800-$4,800 per 

turbine. Colorado’s six largest projects (totaling 1,000 MW) generate 

more than $2.5 million annually in extra income for farmers and ranchers 

who lease their land to developers. 

Some projects in Colorado are sited on land owned by the government. In these cases, 

land lease revenue is used to improve public services. A report by the U.S. Government 

Accountability Office found that Colorado received $40,763 in 2003 from the lease of 

942 acres of land, where 23 of the 44 turbines belonging to the Ponnequin wind power 

plant are located. 

Economic Activities Impacts 

As previously mentioned, the construction and operation of a wind power plant is the 

catalyst for several economic activities in Colorado. From the houses that are rented in 

town to host the influx of construction workers, to the suppliers and transportation 

 

7

 $5,676 in nominal dollars 

8

 $5.3 million in nominal dollars 

11 
companies that provide services to the wind farm, wind power development generates a 

benefit to the state economy.9 

This research found that 1,000 MW of wind power developed in Colorado 

generated approximately $225 million in economic activities ($133.6 

million in direct economic activities) during the construction phase and 

approximately $35 million in annual recurring local economic activities 

(of which $19.3 million relate to direct economic activities). 

Other Impacts 

New wind power installations offer other benefits, such as use tax generation, sales tax 

generation, transmission line impacts, water savings, price stability, and environmental 

benefits. Despite their importance, this report does not focus on these additional 

outcomes. 

Manufacturing Potential 

Although Colorado did not benefit from wind-related manufacturing jobs until recently, it 

is pertinent to analyze the potential economic impacts associated with local wind 

component manufacturing, especially now that Colorado is experiencing growth in this 

sector. 

Based on the number of megawatts installed, manufacturing company General Electric 

has the greatest market share in Colorado (73.5%), followed by Mitsubishi (20.7%), NEG 

Micon (5%), and Vestas (0.9%). However, none of these companies manufactured 

turbines in Colorado until March 2008, when Vestas opened a blade facility in Windsor. 

Therefore, any jobs related to turbine manufacturing represent economic leakages for the 

first 1,000 MW in Colorado. In all cases, the economic benefit from manufacturing went 

to foreign countries such as India, China, Denmark, Germany and Brazil, or states other 

than Colorado. This may not be the case in the future because blades are currently being 

manufactured in the state. Vestas has announced it will expand its manufacturing 

facilities in Colorado in the coming years.10

 

9

 This report did not analyze net jobs; it examined gross jobs supported by new wind development. In some 

cases, workers may have worked in another industry and switched to the wind industry, or they may have 

had a job in a wind-related industry. As long as the previous industry replaces that person, if a worker 

switches jobs it is still a new job supported by the wind industry. There is only a “net” loss if the previous 

industry doesn’t replace that person. 

10 Vestas announcement, 2008 

12 
0

200

400

600

800

1,000

1,200

MW of Wind Power Installed

1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Wind Power Installations in Colorado 

Mitsubishi

GE Wind

Vestas

NEG Micon

2222 61 61

223 229 229

291

1,067

Figure 4. Colorado Wind Power Installation 

Source: AWEA (as of 01/16/2008) 

According to a Renewable Energy Policy Project (REPP) study, approximately 70% of 

potential job creation is attributed to manufacturing jobs, 17% is attributed to the 

installation of the turbines, and 13% is attributed to operation and maintenance jobs

(Sterzinger and Svrcek, 2004). 

Under this scenario, because there were no manufacturing facilities in Colorado until the 

beginning of 2008, that would represent a leakage of 70% in potential job generation. In 

addition, since this research suggests that 75% of the installation jobs are local (a leakage 

of 25%), it can be implied that Colorado realizes approximately 25% of the potential job 

creation from wind power development (see figures below). 

13 
Figure 5: Potential manufacturing, installation, and O&M jobs as a percentage of total job 

generation (according to REPP studies) 

70%

5%

12%

13%

Leakage in Manufacturing jobs

Leakage in Installation jobs

Installation Jobs

O & M Jobs

Figure 6: Real job creation (in yellow and green) in Colorado, as a percentage of potential 

job creation from a wind power plant 

In March 2008, Vestas (a Denmark-based turbine manufacturing company) opened a 

blade facility in Windsor, Colorado due in part to the state’s commitment to renewable 

energy and its transportation infrastructure. This is one example of how wind power is 

expanding businesses and attracting companies to relocate to Colorado. 

14 
The Vestas facility in Windsor is expected to produce 1,800 blades per year (when the 

plant is entirely operational in the summer of 2009), which will create approximately 700 

jobs for Coloradoans (Peif, 2008) with salaries ranging from $45,000-$60,000 (Rebchook 

and Fillion, 2007). Having a local manufacturing company also benefits in-state 

businesses that provide goods and services to the manufacturing facility, thus boosting 

economic activities. 

Figure 7. Groundbreaking of the new Vestas facility in Windsor 

The following graphs compare the impacts of two hypothetical scenarios in which a 100-

MW wind farm is built using local blades vs. a scenario in which the blades are from out 

of state. 

Colorado

Number of direct, indirect and induced jobs during construction

0

50

100

150

200

250

Direct Indirect Induced

Number of jobs

Out of state

manufacturing

In-state

manufacturing

Figure 8: Job creation from 100 MW of wind power in Colorado: In-state blade 

manufacturing vs. out-of-state blade manufacturing 

15 
Colorado

Payroll salaries (direct, indirect and induced) during construction

0

2

4

6

8

10

12

14

Direct Indirect Induced

Salary (in millions)

Out of state

manufacturing

In-state

manufacturing 

Figure 9: Payroll creation from 100 MW of wind power in Colorado: In-state blade 

manufacturing vs. out-of-state blade manufacturing 

Colorado

Total (direct, indirect and induced) economic output during Construction

0

5

10

15

20

25

30

35

40

45

50

Direct Indirect Induced

Dollars (in millions)

Out of state

manufacturing

In-state

manufacturing

Figure 10: Economic activities from 100 MW of wind power in Colorado: In-state 

manufacturing vs. out-of-state manufacturing 

Based on the graphs above, it is obvious that states with manufacturing facilities will 

experience the largest increase in job numbers compared to those states without 

manufacturing facilities. 

16 
Concluding Remarks 

This analysis showed that 1,000 MW of wind energy benefits Colorado — and 

particularly rural communities in the state — by supporting jobs, generating tax revenue, 

generating land lease revenue, and stimulating economic activities. 

The new Vestas blade facility is one example of how wind power has contributed to a 

healthier and more diversified business climate in the state as it has marked the beginning 

of an emerging manufacturing industry in Colorado. Two other manufacturing companies 

plan to open factories in Colorado in the near future. Dragon Wind, a Texas-based 

manufacturing company, seeks to open a steel tower facility in Lamar (Raabe, 2008), and 

Woodward Governor is planning to produce turbine inverters in Fort Collins or Loveland 

(Beahm, 2008). These two facilities will add 200 manufacturing jobs to Colorado 

(Beahm, 2008). 

Recognizing the value of local ownership as a driver for economic development is 

paramount for the enactment of sound state and federal policies that can expand the wind 

industry sector. The wind industry is now facing obstacles related to the uncertainty about 

the Production Tax Credit (PTC), rising commodity prices, the weakness of the dollar, 

transmission access and capacity, and shortage of turbine supply. Overcoming some of 

these obstacles is critical for enhancing Colorado’s energy portfolio. The results from 

Colorado’s 1,000 MW of wind energy attest to Colorado’s potential in meeting society’s 

economic development expectations while providing a more secure energy future. 

17 
References 

American Wind Energy Association (2008). Annual Rankings Report. April, 2008. 

American Wind Energy Association (2008). U.S. Wind Energy Projects – Colorado

(As of January 16, 2008). Retrieved January 21, 2008. 

http://wwww.awealorg/projects.Projects.aspx?s=Colorado

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18 
19 

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U.S. Census Bureau. (2008). State and County Quickfacts: Weld County, CO. (As of 

January 2, 2008) Retrieved January 24. 2008. 

http://quickfacts.census.gov/qfd/states/08/08123.html

U.S. Department of Energy. (2008). 20% Wind Energy by 2030: Increasing Wind’s 

Contribution to the U.S. Electricity Supply. May 2008. DOE/GO-102008-2567. 

Wiser, Ryan and Mark Bolinger. (2006). Annual Report on U.S. Wind Power 

Installation, Cost, and Performance Trends: 2006. U.S. Department of Energy. 

Energy Efficiency and Renewable Energy/Lawrence Berkeley National Laboratory. 
Appendices 

Appendix A: Model Assumptions 

We used the following assumptions to calculate the report’s results: 

• The capacity factor for each of the wind projects is assumed to be 35% for the 

purpose of tax calculation (see Appendix B) and land lease payments. This 

percentage is consistent with information provided by developers and literature 

review (Wiser and Bolinger, 2006). 

• Mill levies used pertain to 2007 and are based on the county where the wind farm 

is located. Even though mill levies will vary every year to reflect budget 

necessities, they are assumed to remain constant over time for the purpose of this 

analysis: 

 

County Mill Levy Used 

Bent 70 

Logan 70 

Prowers 65 

Weld 60 

Figure 11: Mill levies used for tax calculations

• The life of a wind farm is assumed to be 20 years for the purpose of calculating 

average annual tax payments. 

• The Net Present Value (NPV) of property tax revenue generated over a 20-year 

period was calculated assuming a discount rate of 3%. 

• These calculations also assume that entities financing the wind power projects are 

located out of state, and therefore Colorado does not benefit from these economic 

activities. 

Appendix B: Tax Calculations 

Bill HB 1275 changed the way wind farms are taxed in Colorado. Prior to this bill, wind 

farms were taxed based on project cost (cost approach). After passing this bill, wind 

farms operating on or after January 1, 2006 are taxed based on energy sales (income 

approach). 

Cost Approach: According to the Colorado Department of Local Affairs, Division of 

Property Taxation, “wind farms in operation prior to January 1, 2006 are valued under the 

cost approach utilizing a replacement cost threshold based on the cost to construct a 

comparable non-renewable resource facility” (Colorado Department of Local Affairs, 

Division of Property Taxation, 2007). The replacement cost threshold is described below:

20 
2007 Assessment Cost Threshold

Facility Size per kW Factor Used 

Up to 100,000 $627/kW 

100,000-250,000 $533/kW 

Figure 12: 2007 Assessment Cost Threshold 

The example below illustrates the tax revenue generated from a hypothetical 100-MW 

wind power plant that came online prior to January 1, 2006. For this hypothetical 

scenario, it is assumed that the capacity factor of the wind farm is 35%, the energy price 

is $45/MWh, and the county mill levy is 65. 

Figure 13: Assumptions used in calculating property tax revenue generated from a 100-

MW wind farm in Colorado under the cost approach 

Property tax revenue generated can be calculated as: 

Figure 14: Tax revenue generated from a 100-MW wind power plant under the cost 

approach 

21 
Because dollars in future years do not have the same values as dollars today, the Net 

Present Value (NPV) of the tax revenue stream is then calculated. This study used a 

discount rate of 3%. 

Income approach: According to the Colorado Department of Local Affairs, the cost 

approach was “neither uniform nor just and equal because of wide variations in the 

production from wind turbines because of the uncertainty of wind available for energy 

reduction and because the cost of constructing a wind energy facility is significantly more 

expensive than any other utility production facility” (Colorado Department of Local 

Affairs, Division of Property Taxation, 2007). Therefore, Bill 1275 was enacted in June 

2007 to allow a new form of taxation for wind farms that went online after January 1, 

2006. 

According to this new income approach method, the gross revenue from a wind project is 

calculated using the capacity factor of the wind farm, the energy price as determined by 

the PPA, and the size of the wind facility. Then, a projected 20-year tax revenue stream is 

calculated. A “trial and error multiplier” factor is then determined so that when it is 

applied to the projected gross revenue, the result will equal or at least be very close to the 

20-year estimate under the cost approach. 

Figure 15: Tax revenue generated from a 100-MW wind power plant under the income 

approach 

The “trial and error multiplier” factor is then applied to the actual gross revenue reported 

by the wind farm on its annual statement; this is how property tax revenue is calculated. 

22 
F1147-E(09/2007) 

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4. TITLE AND SUBTITLE

Economic Development Impacts of Colorado’s First 1000 

Megawatts of Wind Energy 

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DE-AC36-99-GO10337 

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S. Reategui and S. Tegen 

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This report analyzes the economic impacts that the installation of 1000 MW of wind power have had in the state of 

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potential economic impacts if they were to adopt 1000 MW of wind power development. 

15. SUBJECT TERMS

wind; wind energy; economic development; JEDI Model; Jobs and Economic Development Impacts Model; economic 

model; wind versus coal 

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