Renewable Energy: Wind Power's Contribution to Electric Power Generation and Impact on Farms and Rural Communities
Published: 2004-09-03T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Wind-generated electricity--wind power--has the potential to provide electricity to homes and businesses without causing air pollution or depleting nonrenewable resources, unlike electricity generated by fossil fuels (coal, natural gas, and oil). Furthermore, because wind power has no fuel costs--wind power depends on the energy of the wind--its operating costs are lower than the costs for power produced from fossil fuels, although its capital costs are greater. Wind power relies on frequent, strong winds to turn the blades of power-generating turbines. In the United States, a wind turbine with generating capacity of 2 megawatts (MW), placed on a tower situated on a farm, ranch, or other rural land, can generate enough electricity in a year--about 6 million kilowatt hours (kWh)--to serve the needs of 500 to 600 average U.S. households. In addition to environmental benefits, wind power has the potential to contribute significantly to America's growing energy needs while providing economic benefits to farms and communities in rural America. In this connection, the Department of Energy's (DOE) "Wind Powering America" program has set a goal of producing 5 percent of the nation's electricity from wind by 2020. DOE estimates that achieving this goal would add $60 billion in capital investment in rural America, provide $1.2 billion in new income for farmers and rural landowners, and create 80,000 new jobs by that year. Congress asked us to report on (1) the amount of wind power generation in relation to all U.S. electricity generation and the prospects for wind power's growth, (2) the contribution of wind power generation to farmers' income and to the economic well-being of rural communities in the 10 states with the highest wind power generation capacity, (3) the advantages and disadvantages for farmers of owning a wind power project versus leasing their land to a commercial wind power developer, and (4) the efforts of USDA to promote the development of wind power on farms and in rural communities.
section_title: What GAO Found
paragraphs: Nationwide, wind power accounted for only about one-tenth of 1 percent of total electric power generation capacity in 2003, and an even smaller percentage of electric power actually generated. However, U.S. wind power generating capacity quadrupled between 1990 and 2003--to 6,374 MW--and DOE has projected continued growth for this renewable power source through 2025. On a percentage basis, wind power capacity has been growing at a much higher rate than other sources of electric power generation--an average annual growth rate of 28 percent during the period 1999 through 2003. In addition, according to DOE, the U.S. Midwest theoretically has enough wind power potential to meet a significant portion of the nation's electricity needs; however, this potential remains largely untapped. Wind power does not currently contribute significantly to total farm income in the 10 states with the highest installed wind power capacity, but some individual farmers and rural communities have benefited considerably from this energy source. In these 10 states, net farm income was about $14 billion in 2002, but total direct income to farmers from wind power ranged from only $10 million to $45 million, representing a fraction of 1 percent of net farm income. However, wind projects located on farms have increased some individual farmers' income by tens of thousands of dollars annually. Farmers generally find leasing their land for wind power projects to be easier than owning projects. Leasing is easier because, unlike farmers, energy companies have the financial resources and legal and technical expertise to address the costs, complexity, tax advantages, and risks of wind power development. However, ownership may be more profitable than leasing. USDA has not fully utilized all of the farm bill's renewable energy provisions to promote wind power development on farms and in rural communities. For the Renewable Energy Systems and Energy Efficiency Improvements Program (Renewable Energy Program)--the key program for supporting wind power and other renewable energy initiatives--USDA offered grants totaling $7.4 million for 35 wind power projects in eight states in fiscal year 2003, the program's first year, but it has not implemented the loan and loan-guarantee components of the program. Without the latter, USDA has not fully fulfilled farm bill provisions and limits the ability of the program to promote renewable energy sources.

section_title: Letter
paragraphs: Wind-generated electricity—wind power—has the potential to provide  electricity to homes and businesses without causing air pollution or  depleting nonrenewable resources, unlike electricity generated by fossil  fuels (coal, natural gas, and oil). Furthermore, because wind power has no  fuel costs—wind power depends on the energy of the wind—its operating  costs are lower than the costs for power produced from fossil fuels,  although its capital costs are greater. Wind power relies on frequent, strong  winds to turn the blades of power-generating turbines. In the United States,  a wind turbine with generating capacity of 2 megawatts (MW), placed on a  tower situated on a farm, ranch, or other rural land, can generate enough  electricity in a year—about 6 million kilowatt hours (kWh)—to serve the  needs of 500 to 600 average U.S. households. Figure 1 shows part of a wind  power project, also referred to as a wind farm, in Lake Benton, Minnesota. typical U.S. homes.
In addition to environmental benefits, wind power has the potential to  contribute significantly to America’s growing energy needs while providing  economic benefits to farms and communities in rural America. In this  connection, the Department of Energy’s (DOE) “Wind Powering America”  program has set a goal of producing 5 percent of the nation’s electricity  from wind by 2020. DOE estimates that achieving this goal would add $60  billion in capital investment in rural America, provide $1.2 billion in new  income for farmers and rural landowners, and create 80,000 new jobs by  that year.
About 90 percent of wind power generation now occurs in 10  predominately midwestern and western states—California, Colorado,  Iowa, Minnesota, New Mexico, Oklahoma, Oregon, Texas, Washington, and  Wyoming—that generally have extensive open spaces with frequent, strong  winds. Areas considered favorable for wind power generation have average  annual wind speeds of about 16 miles per hour or more.
The Farm Security and Rural Investment Act of 2002 (farm bill) authorized  $115 million through fiscal year 2007 for farm-based renewable energy  initiatives, part of which will go to wind power projects. The U.S.  Department of Agriculture (USDA) is responsible for implementing the  farm bill’s provisions in consultation with DOE. While many people could  benefit indirectly from the clean air and economic growth brought about by  wind power development, farmers and other rural landowners, such as  ranchers (hereafter referred to as farmers) can benefit directly. They can  receive lease payments from commercial developers for the turbines  placed on their land or own projects outright, selling electricity to a local  utility. Furthermore, even large wind turbines use only about a quarter-acre  of land each, including access roads, so farmers can continue to plant crops  and graze livestock up to the base of the turbines.
Wind power’s developers have relied on the federal production tax credit,  which provides a credit for electricity generated by renewable energy  sources such as wind turbines—about 1.8 cents per kWh during 2003.  Recipients of the tax credit receive it for up to 10 years from the project’s  initial operation. This credit has helped to offset the significantly higher  capital costs per unit of generating capacity needed to start up wind power  projects compared with projects for fossil fuel power generation,  according to government and industry experts. Experts also expect that  future improvements in wind power technology and forecasts for higher  fossil fuel prices will help wind power compete with other sources of  electric power generation without reliance on the tax credit.
You asked us to report on (1) the amount of wind power generation in  relation to all U.S. electricity generation and the prospects for wind power’s  growth, (2) the contribution of wind power generation to farmers’ income  and to the economic well-being of rural communities in the 10 states with  the highest wind power generation capacity, (3) the advantages and  disadvantages for farmers of owning a wind power project versus leasing  their land to a commercial wind power developer, and (4) the efforts of  USDA to promote the development of wind power on farms and in rural  communities.
To conduct this work, we interviewed officials or reviewed documentation  from DOE’s Energy Information Administration (EIA), Office of Energy  Efficiency and Renewable Energy, and National Renewable Energy  Laboratory (NREL); USDA’s Economic Research Service, Office of Energy  Policy and New Uses, Farm Service Agency, National Agricultural Statistics  Service, and Rural Business-Cooperative Service; the Environmental  Protection Agency (EPA); the Federal Energy Regulatory Commission;  commodity groups such as the National Corn Growers Association; the  Union of Concerned Scientists; the American Wind Energy Association  (AWEA); the Edison Electric Institute; the Electric Power Research  Institute; and Windustry (a rural-based, wind stakeholder organization). We  also visited nine wind power projects in five states with substantial  installed wind power generating capacity: California, Colorado, Iowa,  Minnesota, and Texas. At these locations, we generally met with  landowners, project investors and owners, state and local taxing  authorities, community leaders, and electric utility officials. To some  extent, our work was limited because we did not have access to some  proprietary cost and income data. We focused on utility-scale wind power  projects—projects that generate at least 1 MW of electric power annually  for sale to a local utility. Utility-scale projects account for most U.S. wind  power generation. In addition, we reviewed our own past work, relevant  publications of the Congressional Budget Office and the Congressional  Research Service, and applicable laws, regulations, and executive orders.  We conducted our review from February 2003 through August 2004 in  accordance with generally accepted government auditing standards. We  did not independently verify the data obtained from any of these sources.  However, as appropriate, we discussed with these sources the measures  they take to ensure the accuracy of these data. These measures seemed  reasonable. Appendix I provides additional information on our scope and  methodology. Appendix II provides further information on the sources used  in our work.
subsections: section_title: Background
subsections: section_title: Description of Wind Power
paragraphs: Wind power is one of several renewable energy options. Other renewable  sources include sunlight (photovoltaics), heat from the sun (solar thermal),  naturally occurring underground steam and heat (geothermal), plant and  animal waste (biomass), and water (hydropower). Unlike fossil fuels,  renewable energy sources are continuously replenished.
Wind turbines can be used by themselves or be connected to a utility power  grid. Stand-alone turbines can be used for pumping water—for example, to  irrigate fields. However, homeowners and farmers in windy areas can also  use stand-alone turbines to generate electricity for their own personal or  on-farm use. For utility-scale sources of wind power, a number of turbines  are usually built close together to form a wind farm. Currently, more than  50 electric power utilities use wind farms to produce part of the electricity  supplied to their customers.
In general, wind turbines are divided into two major categories: horizontal  axis turbines, which resemble a windmill, and vertical axis turbines, which  resemble an eggbeater. Figure 2 depicts each type of turbine.
The horizontal axis turbine is the most commonly used, constituting nearly  all utility-scale turbines in the United States. To generate electricity, this  type of turbine captures the wind’s energy with two or three propellerlike  blades that are mounted on a rotor. These rotors sit atop towers, taking  advantage of the stronger and less turbulent wind at 100 feet (30 meters) or  more above ground. The turbine blades generally are constructed of  fiberglass, may be up to 20 meters in length, and may weigh several  thousand pounds each. A horizontal axis turbine typically has a mechanism  to keep the rotor headed into the wind, while a vertical axis turbine can  accept wind from any direction.
section_title: Federal Role in Promoting the Use of Wind Power
paragraphs: The federal government represents the largest institutional user of energy  in the world, and thus it is potentially a large market for wind and other  renewable energy sources. Specifically, through its purchasing decisions,  the federal government has the opportunity to affirm its energy and  environmental policies and goals, including its goals for promoting the use  of renewable sources such as wind power. In this regard, Executive Order  13123, issued in 1999, requires federal agencies to increase their use of  renewable energy to a percentage determined by the Secretary of Energy.  In 2000, the Secretary directed that federal agencies obtain the equivalent  of 2.5 percent of their electricity from renewable sources by 2005. As of  March 2003, federal agencies were using about 663 million kWh of  renewable energy, or about 48 percent of the goal established by the  Secretary. For example, according to Department of Defense officials, 15  military bases, including Edwards Air Force Base in California, Shriever Air  Force Base in Colorado, and Ellsworth Air Force Base in South Dakota, use  wind power to varying degrees. In addition, one of these bases, Dyess Air  Force Base in Texas, bought 78 million kWh of wind power-produced  energy in 2003, meeting the base’s entire electricity needs for that year. In  addition, other federal agencies, including DOE, EPA, and USDA, are using  wind power for part of their energy needs. For example, USDA’s Animal  and Plant Health Inspection Service purchases 25 percent of the electricity  used at its National Wildlife Research Center in Colorado from wind- generated sources.
The federal government is also the nation’s largest landholder, controlling  nearly 700 million acres of land. Much of this land is in the western United  States and includes some areas of the country with the highest wind  potential. Thus, according to federal and industry officials, areas on these  federal lands could be leased to wind power or other renewable energy  developers, with the federal government collecting substantial land rental  payments. For example, the Department of the Interior’s Bureau of Land  Management (Bureau) has rented some of the land that it manages in  California and Wyoming for wind projects. Overall, these projects include  more than 1,300 turbines with a total production capacity of nearly 900 MW,  and the associated rental payments provide more than $800,000 in income  to the Bureau annually. The administration’s National Energy Policy also  recognizes this potential. For example, the policy recommends that the  Secretaries of the Interior and of Energy re-evaluate access limitations to  federal lands in order to increase renewable energy production, such as  biomass, wind, geothermal, and solar, on these lands. Although the  establishment of renewable energy production on federal lands would  result in some environmental impacts, some federal and industry officials  note these impacts would be far less than the mining, drilling, and hauling  associated with fossil fuel extraction.
In addition, through various programs, the federal government has helped  to promote the use of wind power by municipal electric utilities; rural  electric cooperatives; state, local, and tribal governments; businesses; and  consumers. For example, DOE, in conjunction with wind stakeholders  across the country, launched the Wind Powering America program in 1999  to increase the use of wind energy in the United States in order to promote  rural economic development, protect the environment, and increase the  nation’s energy security. The program’s original goals included (1)  providing 5 percent of the nation’s electricity from wind by 2020, with near- term goals of 5,000 MW by 2005 and 10,000 MW by 2010; (2) increasing the  number of states with at least 20 MW of installed wind capacity to 16 by  2005 and 24 states by 2010; and (3) increasing the federal government’s  use of wind power to 5 percent of its annual consumption of electricity by  2010. The program’s work is organized under four themes: state-based  activities, rural economic development, greening federal electricity  consumption, and utility partnerships. Among other things, the program  encourages partnerships between government and industry; educates,  equips, and supports state wind working groups; and develops innovative  pilot projects, such as identifying rural ownership options for small wind  systems.
In another case, EPA promotes the use of wind power and other renewable  sources of electricity—collectively known as green power—through its  Green Power Partnership Program. Specifically, EPA provides technical  assistance and public recognition to companies and organizations that  make a commitment to using green power for a portion of their electricity  needs. More than 200 companies, including a number of major  corporations, participate in this program. In addition, the Department of  Housing and Urban Development’s community development block grants  have been used to assist municipal-owned utilities to purchase wind  turbines. For example, in Iowa, three cities received community  development block grant funds in either fiscal year 2002 or fiscal year 2003  to erect wind turbines for energy generation; these grants totaled about $1  million. Furthermore, as discussed later in this report, USDA has several  programs that can be used to provide financial assistance for renewable  energy projects on farms or other rural lands.
section_title: Wind Power Is a Small but Growing Part of the Nation’s Electric Power Generation Capacity
paragraphs: Although wind power accounted for about one-tenth of 1 percent of total  U.S. electric power generation capacity in 2002, it had quadrupled in  generating capacity between 1990 and 2003, and has been growing at a  much higher rate than other sources of electric power generation.  Nevertheless, wind power’s potential remains largely untapped. A number  of factors, including limited transmission capacity and the higher capital  start-up costs of wind power compared with fossil fuels in some markets,  hamper wind power’s expansion, although other factors, such as federal  and state financial incentives, have helped spur expansion. According to  DOE estimates, the nation’s wind power generation capacity will continue  to grow through 2025, but higher levels of production depend on the  continued availability of federal and state financial incentives, particularly  the federal production tax credit, expected price increases for fossil fuels,  and continued research and development leading to further improvements  in wind turbine technology.
subsections: section_title: Wind Power Accounts for Less Than 1 Percent of Total U.S. Capacity, but Has Quadrupled Since 1990
paragraphs: As of December 2003, wind power capacity accounted for about one-tenth  of 1 percent of total U.S. generating capacity—about 6,370 MW—up from  1,525 MW in 1990. This growth exceeds the goal established by DOE’s Wind  Powering America program for wind energy generation of at least 5,000  MW nationwide by 2005. This rate also makes wind power the fastest  growing source of electric power generation, on a percentage basis, in the  United States in recent years. For example, from 1999 through 2003, the  average annual growth rate of wind power was 28 percent, and in 2003  alone, enough new wind turbines were erected to provide electricity to  400,000 to 500,000 U.S. homes. Figure 3 shows the growth in U.S. wind  power generating capacity from 1981 through 2003.
As of the end of 2003, about 90 percent of wind power generation occurred  in 10 predominantly midwestern and western states—California, Colorado,  Iowa, Minnesota, New Mexico, Oklahoma, Oregon, Texas, Washington, and  Wyoming. Two of these states—California and Texas—accounted for about  one-half of the nation’s 6,374 MW of installed wind generation capacity, as  of the end of 2003. Figure 4 shows installed wind power generating  capacity in these 10 states and other states with at least 0.1 MW of installed  capacity, as of December 2003.
The nation’s wind potential—particularly in areas with frequent, strong  winds needed to generate electricity from wind power—remains largely  untapped. According to a DOE study, the Midwest, including the Great  Plains, theoretically has more than enough potential wind energy to fulfill  the entire nation’s electricity needs. Specifically, just three wind-rich  states—North Dakota, Texas, and Kansas—could accomplish this. Figure 5  shows areas of the United States with the highest wind potential.
section_title: A Number of Factors Act to Either Constrain or Promote Wind Power’s Growth
paragraphs: As a comparison of figures 4 and 5 shows, states with the greatest installed  wind power capacity are not necessarily the states with the greatest wind  potential. In addition, figure 6 shows this discrepancy for the leading states  in each category.
This discrepancy occurs, in part, because of factors that constrain growth,  such as access to transmission lines, as well as factors that encourage  development, such as state incentives. The following factors constrain the  growth of wind power:  The cost of wind power production in relationship to fossil fuels.
According to AWEA, the cost of electricity from utility-scale wind power  projects was as high as 30 cents per kWh in the 1980s, far greater than  the cost of electricity from alternative technologies using fossil fuels to  generate power. Various state and federal incentives helped overcome  wind power's cost disadvantage in many locations, as did dramatic cost  reductions due to improvements in wind turbine technology. At present,  DOE estimates the cost of generating electricity from wind power  ranges from 3 to 6 cents per kWh. Cost reductions also occurred in  fossil-fuel power generation technologies, but recent increases in  natural gas fuel costs may result in further market penetration by wind  power. For example, if natural gas prices continue to be substantially  higher than average levels in the 1990s, wind power is likely to be  competitive in parts of the country with good wind resources and  transmission access. However, wind power will continue to be too  expensive to compete with fossil-fuel generation in parts of the country  with poor wind resources. Although cost reductions due to  technological improvements affect all segments of the electric industry,  they tend to be particularly important for newer power generation  technologies such as wind power in comparison to fossil-fuel generation  technologies. Furthermore, continued federal and state actions that  promote renewable energy power generation or raise the cost of  emissions from fossil-fuel technologies could also play a significant role  in improving the competitiveness of wind power.
Connection to the power transmission grid. In general, frequent, strong  winds tend to be found in sparsely populated areas, which may be far  from transmission lines or lines with adequate capacity to bring power  to consumers. For example, renewable energy generators in the wind- rich areas of the Upper Midwest, such as North Dakota, may want to  transmit electricity to heavily populated areas in other states. However,  as with any remotely located power source, a renewable energy  generator can incur transmission pricing mechanisms that charge  according to the distance covered or according to the number of utility  territories crossed. In addition, transmission capacity is limited in many  areas of the nation for all electric power sources. According to AWEA  and industry sources, transmission congestion policies generally  allocate limited capacity on a “first-come, first-served” basis and  discriminate against recent market entrants. Moreover, interconnection  policies are often controlled by utilities that make it difficult for new  entrants, such as wind power projects, to have timely interconnection at  reasonable rates. The Federal Energy Regulatory Commission, which is  responsible for approving rates for the transmission of electricity—and  overseeing the sale of electricity—in competitive wholesale markets, is  currently developing market standards for new entrants, such as wind  and other renewable sources, to connect to the transmission grid. DOE  is also conducting research to develop efficient, lower-speed wind  turbines for deployment in less windy areas of the nation; such turbines  would enhance the ability of industry to bring cost-effective wind power  closer to population centers and avoid already congested long-distance  transmission lines.
Intermittency of wind power. Renewable energy sources such as wind  power have unique technical characteristics that can constrain their use  in an existing transmission system that was built to accommodate large  central-station power plants located near population centers. This  system relies on precisely predicting and controlling power plant output  to avoid blackouts and other disruptions. As a result, with this system,  the value of electricity is determined in part by the time of day at which  the electricity is delivered to the grid and also by the probability that it  will be available when needed. In general, fossil fuel and nuclear power  generation plants can be run without interruption and are consistently  available when called upon, except when idled by equipment problems  or for maintenance. However, wind power is an intermittent source in  that wind speed and availability can vary from day to day, and thus the  amount of electricity produced varies. On average, wind power turbines  operate the equivalent of less than 40 percent of the peak hours in a year  due to the intermittency of wind. While penalties may apply whenever  energy deliveries vary from scheduled amounts, the possibility of  penalties is of particular concern for intermittent sources. As a result,  utilities that derive part of their electricity generation from wind power  may have to develop or purchase costly reserve capacity in case wind  power is not available on demand. However, some federal and wind  industry officials downplayed the importance of this factor, noting that  if wind power constitutes less than 20 percent of a utility’s generating  capacity, the remaining capacity may be sufficient to meet demand  during periods of low winds. Furthermore, according to DOE, recent  studies show that in cases where wind power constitutes up to 10  percent to 20 percent of a utility’s generating capacity, the additional  operating cost of integrating wind power is only up to 0.5 cents per kWh.  Specifically, this amount represents the ancillary cost due to the  variability of wind.
Barriers to marketplace entry. As emerging technologies, renewable  energy sources such as wind power face market entry barriers. For  example, developing new renewable facilities requires high up-front  costs to build the necessary infrastructure, such as construction costs to  connect power lines to the transmission grid. According to DOE, the  average cost of building new power lines to connect wind turbines to  the transmission grid could be $100,000 or more per mile, depending on  such factors as the size of the wind project, terrain, and the transmission  line rating. In addition, manufacturers produce renewable energy  components on assembly lines, where mass production can reduce  costs. As long as relatively few units are produced, prices will remain  high. Economies of scale would likely lead to cost reductions for wind  and other renewable technologies. Furthermore, small renewable  energy projects have high transaction and other costs at various stages  of the development cycle. For example, lending institutions charge more  to evaluate the creditworthiness of many small projects than one large  one. These institutions also are generally unfamiliar with new  technologies and are more likely to perceive them as riskier, causing the  institutions to lend money at higher interest rates. Higher financing  costs are especially significant for the competitive position of renewable  energy sources such as wind power because these sources generally  require higher initial investments per unit of electricity produced than  fossil fuel plants, even though renewable sources have lower operating  costs.
Impacts on visual landscape, bird deaths, and noise issues. Although  wind power turbines do not emit pollutants, they do present some  environmental issues. According to AWEA and industry sources, wind  power project developers must gauge a local community’s receptivity to  the placement of wind turbines in scenic areas that may have high wind  potential, such as ridge lines, mountain passes, or off-shore coastal  areas, or else risk expensive litigation. Regarding birds that die when  they collide with turbine blades, these sources said that developers  should study the numbers and species of birds (and bats) present at  various times of the year at potential site locations. In general, if the  locations are commonly used by endangered or threatened avian  species or are in bird migration pathways, they may be unsuitable for  wind power development. New construction techniques and  technologies may help to reduce bird deaths, such as switching from  latticework towers that entice birds to perch to smooth-sided cylindrical  towers that do not offer perches. In addition, the longer blades on  newer, larger turbines turn more slowly—about 21 to 23 revolutions per  minute in optimum wind conditions—than earlier turbines with shorter  blades, making these longer blades more visible to birds in daylight.  Concerning noise, new turbine designs and engineering as well as the  use of appropriate setbacks from residences have helped to decrease  the importance of this issue. For example, aerodynamic noise has been  reduced by adjusting the thickness of the turbine blades’ trailing edges  and by orienting blades upwind of the turbine tower.
Several factors help promote wind power’s growth. First, according to  federal and industry officials, direct public sector support programs have  been important to increasing the demand for wind power in the United  States because of wind power’s competitive disadvantages in most  domestic markets. For example, the federal production tax credit,  established by the Energy Policy Act of 1992, as amended, is available to  tax-paying owners of wind or “closed loop” biomass energy generation  systems. The act provides a credit of 1.5 cents per kWh for the first 10  years from initial plant operation, indexed for inflation, for electricity  generated by renewable energy sources such as wind turbines; it was 1.8  cents per kWh during 2003. According to our analysis, using this incentive,  a moderate-sized wind farm with 30 MW of generating capacity could  receive up to $1.6 million a year in tax credits. In addition, in some cases  this tax credit may be combined with the 5-year depreciation schedule  allowed for renewable energy systems under the Economic Recovery Tax  Act of 1981, as amended. In conjunction with the tax credit, this  accelerated depreciation allows an even greater tax break for renewable  projects facing high initial capital costs. The authority for new facilities to  qualify for the production tax credit expired at the end of calendar year  2003; as of August 2004, legislation was pending in Congress that would  reauthorize this tax credit.
At the state level, the states with the most installed wind power capacity  generally have implemented strong policies providing regulatory, financial,  or tax incentives to wind power development. For example, 17 states have  implemented renewable portfolio standards. Under these standards,  utilities must derive a certain percentage of their overall electric generation  (on a sales basis) from renewable energy sources, such as wind power.  California and Texas—2 of the 17 states that have instituted these  standards—also are the leading states with installed wind power capacity.  California requires that 20 percent of the state’s electric generation be  derived from renewable sources by 2017. In Texas, the requirement is 2.7  percent by 2009. Figure 7 shows the states that have enacted these  standards, including the target amount of generation from renewable  sources and the associated dates for achievement.
Multiple states have taken other, similar actions to support renewable  energy sources, including wind power. Specifically, according to the  Database of State Incentives for Renewable Energy compiled by the  Interstate Renewable Energy Council in August 2004:  Thirty-two states and the District of Columbia have implemented net  metering laws, which allow customers with their own power generating  units, such as small wind turbines, to sell power that is excess to their  needs back to the power grid, enabling the flow of electricity to and  from the customer through a single meter.
Twenty states offer property tax exemptions or special assessments for  renewable energy sources, and 6 states allow localities to offer this  exemption.
Fifteen states allow sales tax exemptions for renewable energy sources.
Twenty states offer personal or corporate income tax incentives for  renewable energy sources.
Many states have grant (20), loan (18), and rebate (12) programs to  promote renewable energy sources. Utilities or private sources offer  these types of financial incentives in many of these states as well.
Fifteen states have public benefit funds for renewable energy sources.  In these states, a surcharge is assessed to all customers on utility bills.  The money generated goes into a public benefit fund to, among other  things, support renewable energy research and development and  education programs.
Some states promote wind power creatively. For example, California has  formed a collaborative—known as the California Wind Energy  Collaborative—to promote wind power’s growth in the state. The  collaborative includes officials from federal and state government  agencies, wind energy developers, electricity suppliers, environmental  groups, and the academic community. Its primary purpose is to coordinate  statewide activities related to wind power and to recommend policies to  support its growth. The collaborative has developed a number of  recommendations, such as (1) simplifying the permitting process for  establishing a wind project in California and (2) focusing research and  development on, among other things, improving turbine performance and  reliability, addressing transmission grid and interconnection challenges,  and enhancing wind forecasting. The California State Energy Commission  funds the collaborative, providing about $350,000 annually for its activities.
A second factor helping to further wind power’s expansion is  environmental benefits. Wind power is considered a green technology  because it has only minor impacts on the environment. In contrast, fossil  fuel power plants are a significant source of air pollution. In general, these  plants produce harmful emissions, such as carbon dioxide, nitrogen oxides,  sulfur dioxide, mercury, and particulate matter, which can pose human  health and environmental risks, such as acid rain and global warming. In  some cases, these emissions may increase as electricity generated by fossil  fuels increases to meet growing demand. For example, EIA forecasts that  if this generation increases by 42 percent from 2000 through 2020—from  3.5 trillion kWh in 2000 to almost 5 trillion kWh in 2020—annual emissions  of carbon dioxide and mercury from these plants will rise nationwide by  about 800 million tons (or 35 percent more) and 4 tons (or 9 percent more),  respectively. To some extent, these anticipated increases could be offset  by an increasing reliance on nonpolluting, renewable sources such as wind  power. For example, according to DOE, by 2020, the growth of wind power  could eliminate millions of tons of atmospheric carbon that would  otherwise be released by fossil fuel power plants, thereby reducing  greenhouse gas emissions.
Fossil fuel power plants are also the nation’s second largest user of water  resources after agriculture. Specifically, power plants use about 48.2  trillion gallons of fresh water from rivers, lakes, and other sources each  year, primarily to produce steam to turn turbines and for cooling, according  to the U.S. Geological Survey. This amount represents nearly 40 percent of  the nation’s total water usage. Power plants’ water requirements will likely  rise as demand for electricity grows over the next 2 decades. Although  state and local authorities protect certain water uses, such as for drinking  water, when approving the construction of new power plants, these plants  nevertheless can affect aquatic ecosystems. For example, drawing water  into a plant can kill fish, and discharging water with elevated temperatures  back to its source can damage aquatic organisms or habitats. Wind power,  as an alternative energy source, does not use water to generate electricity.
In addition, increasing environmental consciousness has created “green  consumerism”—a segment of consumers who are willing to pay more for  products, including wind-generated electricity, whose production,  application, and disposal are less harmful to the environment. Thus,  utilities may offer customers the option of paying a higher rate for  electricity produced from renewable sources such as wind power in lieu of  electricity produced from fossil resources, arrangements often referred to  as green pricing programs. For example, in the program sponsored by Xcel  Power in Colorado, known as Windsource®, customers pay a premium of  $2.50 per 100 kWh for wind-generated electricity. According to some  sources, customer interest in this program was an important factor in the  installation of more than 230 MW of wind power capacity in the state. In  Texas, Austin Energy has a green pricing program, known as  GreenChoice®, for wind power, which accounts for about 4 percent of its  annual electricity sales. Although participating customers generally pay a  premium for this wind-generated electricity, demand is such that this utility  is currently negotiating to add an additional 91 MW of wind power capacity.  As an added inducement, this utility offers its wind power customers the  choice of locking in a rate for a period of 10 years, while regular customers  are subject to possible rate increases if the costs for fossil fuels increase.
A third factor is energy security. This could help promote wind power and  other renewable energy sources in order to reduce the nation’s dependence  on foreign fossil resources, including oil and natural gas. For example, the  United States currently imports about 65 percent of the oil and 15 percent  of the natural gas it uses. Natural gas, in particular, is increasingly used to  produce electricity, and according to DOE, the anticipated growth in  demand for this fossil fuel will lead to an increasing reliance on imports.  According to DOE, this dependence harms the U.S. trade balance and  exposes our economy to potential supply disruptions. In light of these  concerns, federal legislative and regulatory initiatives have encouraged a  diversified energy portfolio. For example, the Public Utilities Regulatory  Policies Act of 1978, as amended, was enacted in part to encourage the  development of alternative energy resources. More recently, the  administration’s National Energy Policy, issued in May 2001, states that  sound energy policy should encourage a diverse portfolio of domestic  energy supplies and that renewable energy can be a reliable source of  energy at a stable price because it does not depend on the availability of  fossil fuels. Furthermore, while the nation’s transmission grid and central  power plants remain vulnerable to terrorist attack, renewable sources,  such as wind power, are geographically more dispersed and contain no  volatile or radioactive fuel stocks.
Fourth, government and industry experts expect that improvements in  wind power technology and forecasts for higher fossil fuel prices will  continue to help wind power compete with other sources of electric power  generation. For example, technology improvements in turbine design and  components have dramatically increased the efficiency and cost  competitiveness of wind power generation, and continuing research and  development will likely lead to further improvements. Regarding forecasts  for higher prices, EIA projects that 69 percent of the 235,000 MW of new  generating capacity needed in the United States by 2020 will be fueled by  natural gas and another 9 percent by coal. In recent years, prices for  natural gas have, at times, spiked dramatically, and the market for natural  gas remains volatile, with small shifts in the supply of or demand for gas  likely to cause wide price fluctuations. In addition, DOE and industry  sources anticipate that as domestic and international demand for natural  gas increases in the electric and other industrial and commercial sectors,  the prices for natural gas will rise, making alternative energy sources such  as wind power more competitive.
section_title: Growth of Wind Power Will Depend on Continued Government Financial Incentives and Prices for Fossil Fuels
paragraphs: According to EIA forecasts prepared at our request, future wind power  capacity could increase to 48,000 MW or more by 2025—enough to power  about 13 million homes based on current usage rates—if the federal  production tax credit were to remain available through 2010. On the other  hand, if this credit is not available after December 31, 2003 (its  authorization expired after that date and it had not been reauthorized as of  August 2004), capacity will increase to only about 11,000 MW by 2025.  According to EIA and other DOE officials, these forecasts are likely  conservative estimates because the assumptions used were conservative.  Other stakeholders have offered larger estimates. For example, AWEA  estimates that wind power capacity could grow to 100,000 MW by 2020,  representing about 6 percent of total U.S. production. In another case, the  National Petroleum Council estimates that renewable capacity—primarily  wind power—will grow to between 73,000 MW and 155,000 MW by 2025,  with the larger number dependent in part on proactive public policies to  promote renewable sources. Despite these varying estimates, DOE and  industry sources agreed that the key to the potential future growth of the  wind industry is the continued availability of the production tax credit or  other subsidy support, although expected increases in fossil fuel prices,  particularly for natural gas, also will be an important factor.
DOE and industry sources noted that prior periods of uncertainty about the  availability of the production tax credit led to a boom-and-bust cycle in the  installation of new wind power capacity. For example, in years in which the  authorization for the credit expired and its renewal was delayed, the  installation of new capacity fell dramatically compared with the years in  which it was available without interruption. Figure 8 provides information  on this cycle.
According to DOE and wind industry sources, the expiration of the  production tax credit at the end of 2003 has significantly reduced wind  power expansion. Potential developers are reluctant to commit resources  to the planning and construction of new capacity without the certainty that  the tax credit will be reauthorized. For example, AWEA estimates that the  uncertainty over the reauthorization of the tax credit has caused the loss of  over 2,000 manufacturing and construction jobs related to wind power and  put about 2,000 MW of new wind energy production and nearly $2 billion in  economic activity on hold. Thus, industry sources expect a significant drop  in the installation of new capacity in 2004 from 2003 levels—capacity  expansion in 2003 was a near record 1,700 MW, attributable in large  measure to the availability of the tax credit.
According to EIA, without the production tax credit, wind power will be  relegated to a niche resource whose expansion will depend largely on long- term trends in natural gas prices. Furthermore, in the view of some  stakeholders, the most stable, predictable production tax credit would  have a long-term or permanent authorization that would not induce market  booms and busts but would facilitate steady market development for wind  power and other renewable sources. Other stakeholders note, however,  that to the extent this credit would be used, tax revenues would be lost to  the federal government that could be used for deficit reduction or other  purposes. For example, the Congressional Joint Committee on Taxation  estimates that if the authorization for the production tax credit were  extended through 2006, its cost to the Treasury for the 10-year period  ending in 2013 would be $3 billion, or about $300 million annually. On the  other hand, some stakeholders believe that renewable energy sources  require subsidies such as the production tax credit to level the playing field  because various subsidies for fossil fuel and nuclear technologies have  made it difficult for renewable energy sources to compete, even when  renewable technologies become cost competitive with these conventional  technologies. In general, it is difficult to quantify all of the subsidies  provided to the fossil fuel and nuclear power industries, and there is  sometimes disagreement on how to define a subsidy. Nevertheless, many  stakeholders maintain that these subsidies are substantial—measuring in  the billions of dollars annually. For example, EIA estimates that the federal  subsidies to the oil, natural gas, coal, and nuclear power industries totaled  about $2.8 billion in fiscal year 1999, the most recent year for which EIA  compiled these data.
section_title: Wind Power Does Not Contribute Significantly to Total Farm Income, but Some Individual Farmers and Communities Have Benefited
paragraphs: Wind power does not currently contribute significantly to total farm  income in the 10 states with the highest installed wind power capacity,  although some individual farmers and rural communities have benefited  considerably from this energy source. However, wind projects located on  farmland have increased some individual farmers’ income significantly,  according to our site visits and analysis. In addition, large wind power  projects established in some of the poorest rural counties in the United  States have generally benefited these counties through the tax revenues  they produce and the employment opportunities they provide.
subsections: section_title: Wind Power Accounts for Only a Very Small Amount of Total Farm Income, but Provides Substantial Income to Some Farmers and Communities
paragraphs: In the 10 states we examined, total net farm income exceeded $14 billion in  2002, but total direct income to all U.S. farmers from wind power ranged  from only $10 million to $45 million, representing only a fraction of 1  percent of net farm income in these states. Nevertheless, wind projects  located on privately owned farmland—the majority of U.S. wind power  projects, according to AWEA—have increased individual farmers’ income  by as much as tens of thousand of dollars annually, according to our  analysis and site visits. In most cases, the farmers do not have an  ownership interest in the projects. Rather, they receive lease payments  from energy development companies for the use of the land and the  associated “wind rights.” According to AWEA and other sources, the  compensation a farmer receives for leasing land for wind power turbines  effectively amounts to between $2,000 and $5,000 per year per MW of  installed capacity. However, actual compensation received varies widely,  depending the following factors:   The number of turbines. One California project includes turbines with a  total generating capacity of approximately 60 MW. Based on data  developed from our site visit to this project, we estimate that one of the  landowners has enough turbines on his land to have generated over  $200,000 in annual lease payments from the project owner. In another  case, an Iowa project consisting of about 260 turbines has a total  generating capacity of approximately 190 MW. However, the turbines are  spread out over separate properties owned by 65 farmers. According to  the project owner and one of these farmers, the average annual lease  payment is about $2,000 per turbine, with each farmer’s total payments  depending on the number of turbines located on that farmer’s land.
The value of electric power generated by the project. Land lease income  is often linked to wind power project revenues. For example, land lease  income may be a percentage of the gross revenues from the sale of the  project’s wind power. Thus, the higher the sale price of power, the  higher the lease income to the landowner. The price paid by utilities for  the electricity produced from wind power projects has varied by  location and over time. Nationwide, these prices currently range from  $20 to $35 per MW hours (MWh). However, power purchase contracts  signed in California in the early 1990s tended to be well above this  range. For example, the price currently received for electricity from one  California wind power project is about $70 per MWh.
The terms of the lease payments. The lease payments may include a  single lump sum payment, fixed annual fees per turbine or per unit of  power generation capacity, or a percentage of the project’s gross  revenues. The farmer may receive additional lease payments for other  structures or considerations related to the wind project, such as  substations, operations and maintenance buildings, and rights-of-way,  including roads leading to and from the project and transmission poles  and lines to connect the project to the local power grid. In cases in  which the farmer has an ownership interest in the project, the potential  financial benefits may be even greater per turbine. However, farmer- owned wind projects tend to be smaller, because farmers generally do  not have the financial resources of an energy development company to  establish larger projects with more turbines.
Whatever the lease arrangements, the income farmers receive from wind  projects located on their land is relatively stable compared with the income  they derive from crop and livestock production, according to some farmers  and other sources. Although the income from wind projects may be  modest, these individuals said, it serves as an important hedge against  possible fluctuations in income from crop and livestock production.  Furthermore, income from wind turbines located on a farmer’s land  generally does not fluctuate significantly, although higher or lower average  wind speeds from one year to another can affect the amount of royalty  payments a farmer receives. Royalty payment rates—for example, 4  percent of gross revenues for electric power generated—are generally  negotiated for a period of years. In addition, contracts between a  landowner and a wind project owner often have a provision for minimum  payment per turbine per year to protect a landowner’s income in cases of  unusual low-wind periods or if a turbine is out of operation because of  weather-related damage or maintenance. In some cases, a farmer said the  additional income from the wind project helps keep the farm solvent and  the farmer’s family on the farm.
section_title: Wind Power Benefits Rural Communities by Providing Additional Investment, Employment Opportunities, and Tax Revenues
paragraphs: The construction and operation of a large wind project in a rural county is  likely to increase the county’s general level of economic activity and  wealth. Constructing a large wind power project with several dozen  turbines requires the services of multiple businesses and scores of skilled  and unskilled workers, as well as the purchase of equipment and material,  such as turbines, towers, asphalt, cement, concrete, and electrical cables.  In these activities, wind power project developers and operators have  directly benefited rural communities by hiring local people and purchasing  locally some of the goods and services needed to construct and operate a  project. Furthermore, according to DOE, increasing the proportion of the  nation’s energy generation attributable to wind power to 5 percent by 2020  would add about $60 billion in capital investment in rural America; provide  an estimated $1.2 billion in new income to farmers, Native Americans, and  rural landowners; and create approximately 80,000 new jobs. (To determine  the overall economic benefits of increasing wind power to farms and rural  communities, any losses to the fossil fuel industry need to be counted as an  offsetting factor.)
In general, a county with a larger, more diversified economic base can more  likely provide these services and supplies, thereby retaining more of the  project’s direct economic benefits. For example, according to the  developers of a large wind project—High Winds in Solano County,  California—they obtained much of the services and supplies needed to  construct this project within the county, which has over 400,000 residents  and a diversified business community. However, if a county cannot provide  some of the services and supplies needed, other nearby counties or cities  that can provide these services and supplies may benefit. In Pipestone  County, Minnesota, for example, wind power developers purchased some  supplies locally, such as concrete, but had to contract with a firm in Fargo,  North Dakota, for a crane large enough to erect the turbines and with a firm  in Minneapolis to do the electrical wiring. Pipestone County, located in  southwestern Minnesota, has about 9,800 residents and a small business  community.
Furthermore, businesses and individuals directly employed by the wind  project are likely to spend part of their income at local businesses, such as  restaurants, hotels, and gas stations, and hardware, clothing, and food  stores. In some cases, the benefits from these activities may exceed the  level of a project’s direct benefits. For example, according to the Fort  Stockton Economic Development Corporation in Pecos County, Texas, the  county experienced a 10 percent increase in gross sales during the  construction of several wind power projects.
The property tax revenues resulting from the establishment of a wind  power project in a county creates additional revenues that support schools,  hospitals, fire protection, and other public services. Following are some  examples:  Lincoln County, Minnesota, with a population of about 6,200, obtained  about $470,000, or 18 percent of its property tax revenues, in 2003 from  local wind power projects with a combined capacity of 156 MW.
Pipestone County, Minnesota, obtained about $660,000, or 8 percent of  its property tax revenues, in 2001 from wind projects with a combined  capacity of 113 MW.
In Pecos County, Texas, with a population of about 16,000 the school  districts received about $5 million in 2002 from property tax revenues  directly associated with wind power projects in that county. For  example, the Iraan-Sheffield School District, obtained one-third of its  property tax revenues from wind power projects that year. These  projects also added about 30 to 35 full-time permanent jobs to operate  and maintain the projects.
For some counties, tax benefits may have to be deferred to attract wind  power developers. These counties have offered generous tax abatements,  forgoing part or much of the tax revenues that would have otherwise been  collected for the period covered by the abatement. For example, to attract  wind power developers, Texas’s Upton County offers a tax abatement of 10  years, waiving all property taxes during this period with the exception of  taxes collected for schools.
In terms of other taxes, counties that have sales taxes or that receive a  share of state sales tax revenues are likely to realize income from the sale  of taxable goods and services connected with the construction and  operation of a wind power project. In addition, in states that have a  personal or corporate income tax, the increased employment and business  opportunities associated with a wind power project are likely to increase  these tax revenues, which are then shared with counties in the state or  used for public projects that benefit county residents.
To better gauge the significance of general increases in economic activity,  we asked NREL to use its Wind Impact Model to estimate these benefits, as  well as direct benefits, for the counties we visited. NREL developed a  number of estimates, varying the size of the wind project but otherwise  keeping key model assumptions constant. In general, the results of NREL’s  analysis confirm our observations from our site visits. For example, NREL  estimates that the operation of a 150 MW project located in Alameda  County, California—a county with a large population and diversified  economic base—would result in the creation of 65 new jobs in the county  and increase total income in the county by $5.4 million. However, the same  size project located in Upton County, Texas, which has a much smaller  population and economic base, would result in only 47 new jobs and an  increase in total county income of $2.75 million. This is because in the case  of Upton County, more of the staff needed to operate the project would be  hired from outside the county. Nevertheless, the impact of the local hires  on employment in Upton County may be greater than in Alameda County  because the population of Upton County is so much smaller. A detailed  discussion of this model and NREL’s analysis is contained in appendix III.
section_title: Leasing Land for Wind Power Projects Is Easier Than Owning, and Most Farmers Do Not Qualify for Tax Credit
paragraphs: Ownership of a wind power project may be more profitable to a farmer  than leasing, based on our fieldwork and analysis. For example, whereas  lease payments per turbine may provide several thousand dollars a year to  the farmer, ownership may double or triple that income per turbine as the  profits are not shared with an energy company. On the other hand, a farmer  may only be able to afford to construct 1 or 2 turbines, as the cost per MW  of installed capacity is about $1 million. In contrast, leasing land to an  energy development company could result in the installation of a dozen or  more turbines. In the latter case, although the farmer’s income per turbine  is less, the total income received by the farmer would be substantially  greater. In addition, farmers and other small investors generally lack  sufficient tax liability to take full advantage of the federal renewable energy  production tax credit. However, some states offer incentives that help  landowners develop wind power projects.
subsections: section_title: Farmers Find Leasing Is Easier Than Owning Wind Power Projects
paragraphs: Nationwide, farmers and other landowners own less than 1 percent of  utility-scale wind power capacity. We found that farmers generally find  leasing their land for wind power projects to be easier than owning projects  because of the complexity of, and risk associated with, developing a wind  power project. In general, development of a project may take 2 years or  more from conception to completion, especially when multiple turbines are  involved. Table 1 summarizes the major steps in project development.  These steps are also discussed in greater detail in appendix V.
The associated capital costs for a wind power project could also be  daunting to an individual landowner—approximately $1 million per MW of  generating capacity installed. Thus, even purchasing just one or two utility- scale wind turbines can be a substantial investment for even a large farm or  ranch.
Leasing land to a wind power developer relieves a farmer of many of the  formidable challenges of developing a wind power project, but the benefits  of leasing may depend on the type of the lease arrangement offered. Table 2  summarizes information on lease payment options.
A landowner may need expert advice—from an attorney to ensure the lease  protects the landowner’s interests and from a financial adviser to  understand the income and tax implications of various lease payment  options. For example, University of Texas officials indicated that legal and  technical resources available to the university were critical to negotiating a  favorable lease agreement for a wind project on university property.
Landowners may also face other problems in leasing land for wind power  projects, as illustrated in the following examples:  A Minnesota wind developer went bankrupt before completing the  project. Unable to collect from the developer, the construction  contractor that poured the concrete foundations for the turbines placed  a lien on the farmer’s land. In the end, the farmer assumed responsibility  for completing the project.
In California, a landowner who leased land to wind developers for 200  turbines had to renegotiate leases with the tenant farmers who also use  this land. These farmers charged that they were disadvantaged by the  wind power project because (1) the turbines prevented them from using  aerial crop dusting; (2) the project created obstacles, such as the  turbines, substations, and access roads, that the farmers had to drive  their equipment around, causing their fuel costs to rise; and (3) the  turbines and associated structures had reduced the acreage available for  cultivation (by approximately 40 to 50 acres out of a total of 1,100  acres). Although he lost some revenue from the renegotiated lease  agreements with the tenant farmers, the landowner indicated he had  more than recouped these losses from the income associated with the  lease agreement for the wind turbines. The landowner also said the  tenant farmers ultimately benefited by the adjusted (lower) rents for the  land they farm.
During our fieldwork, some farmers indicated it was difficult to make  informed decisions about owning a wind power project or leasing their  land to a commercial wind power developer because of a lack of readily  accessible information. One farmer also noted it would be helpful to have a  forum in which farmers could exchange relevant information and  experiences. A number of entities offer information on wind power,  including the pros and cons of ownership versus leasing. These include  AWEA, NREL, the Union of Concerned Scientists, Wind Powering America,  and Windustry. They also include state-based groups such as the California  Wind Energy Collaborative, Iowa Policy Project, Minnesota Sustainable  Energy for Economic Development Coalition, Oklahoma Wind Power  Initiative, and Texas Renewable Energy Industries Association. However,  federal and industry officials said that while access to information is  important, it is not enough. According to these officials, given the  complexity of owning a wind project or leasing land to a wind power  developer, farmers and other rural landowners should seek legal, financial,  and technical advice, as appropriate, before making a commitment to a  project.
section_title: Farmers Generally Cannot Use the Production Tax Credit
paragraphs: Farmers generally cannot use the federal renewable energy production tax  credit, which many stakeholder groups view as crucial to making wind  energy projects economically viable for project owners because of these  projects’ high capital costs. According to Department of Treasury officials,  for a farmer who does not materially participate in a wind power project to  make use of the production tax credit, the farmer must have tax liability  attributable to passive income (e.g., rental income or income from  businesses in which the farmer participates only as an investor) against  which to claim the production tax credit. Passive income does not include  income from the farmer’s active farming business, wage income, or interest  and dividend income. Unless a farmer materially participates in the  production of wind power, the production tax credit cannot offset tax  liability attributable to income from these sources. Since many farmers do  not have passive income and do not materially participate in wind power  production, this passive versus nonpassive income distinction limits the  number of farmers that are able to take advantage of the renewable energy  production tax credit. Furthermore, even in a case where a farmer  materially participates in and operates a wind project, the value of the tax  credit is usually greater than the income tax on the revenue earned by the  project for wholesale electricity generation as well as from other relevant  sources, such as revenue from the farming business and wage income  related to off-farm employment.
Although an individual farmer may not be able to use the full amount of the  production tax credit, farmers can benefit from this tax credit in other  ways. For example, in Rock County, Minnesota, some farmers interested in  wind power have formed two limited liability companies, pooling their  individual passive incomes and associated tax liabilities in order to make  use of the production tax credit. These arrangements have led to the  establishment of two wind power projects, Minwind I and II. Each  company has rules similar to a traditional farmer cooperative, although  legally they are not cooperatives. Each company sold stock to more than  30 individuals and required that 85 percent of the shares be owned by  farmers; the remaining 15 percent of the shares are available to local  residents and investors. No single person can own more than 15 percent of  the shares. These projects started operating in late 2002, and each has a  capacity of 1.9 MW. Furthermore, seven additional Minwind projects (III  through IX) are under development in Rock County. When complete, these  projects will have 200 local owners and a combined capacity of 12 MW.
In addition, some individual farmers in Minnesota have entered into equity  partnerships with an investor in order to benefit from the production tax  credit indirectly. In these cases, the investor owns nearly all of the interest  in the project for the first 10 years, receiving most of the net cash from the  project and the benefits of the production tax credit and accelerated  depreciation. After this 10-year period, the ownership switches, or “flips,”  to the farmer and the farmer receives most of the project income. For  example, at one wind project we visited in Pipestone County, an equity  partner owns a 99 percent interest in a 1.5 MW project (two 750 kilowatt  turbines) for the first 10 years of the project’s operation. The farmer who  provided the land for the project has the other 1 percent interest. The  equity partner provided most of the up-front capital needed to establish the  project, and the project’s assets provide the collateral for the remaining  required debt. However, the equity partner also reaps most of the profits  and the benefits of the federal production tax credit. During these first 10  years, the farmer receives lease payments of about $2,000 per year per  turbine, plus management service payments of about $30,000 per year,  based on a percentage of the revenues associated with the electricity  production. After the 10th year, majority ownership of the project will be  transferred to the farmer, who will start earning about $120,000 per year  through the end of the project’s expected lifetime (an additional 10 years or  more). Thus, beginning with the 11th year, the farmer’s annual income from  the project will more than triple.
section_title: Minnesota Offers Renewable Energy Cash Payments and Other Incentives to Promote Landowner-Owned Wind Power Projects
paragraphs: In addition to the federal tax credit, landowners may benefit from state  incentives. For example, Minnesota offers several incentives to promote  farmer, rural landowner, and rural business ownership of small wind power  projects. Federal and industry officials often cited Minnesota as being  particularly proactive in this regard. Table 3 summarizes these incentives.
According to Minnesota and wind industry officials, the most important of  these incentives is the state’s Renewable Energy Production Incentive  program. As of December 2003, this program had benefited about 170  renewable energy projects in the state, including 130 wind power projects  that are collecting incentive payments and another 43 that have secured  eligibility but are not yet operational. According to a Windustry official,  more than one-third of the beneficiaries have been farmers and rural small  businesses over the life of the program. This official also said that because  of current difficult fiscal conditions, it is uncertain whether Minnesota will  expand the program beyond the 200 MW cap to assist additional projects.
section_title: USDA Can Do More to Promote Wind Power
paragraphs: USDA has not fully utilized all of the farm bill’s renewable energy  provisions to promote wind power development on farms and in rural  communities, although it has provided some funding through other  provisions of the farm bill. In particular, USDA had not issued a regulation  for loans and loan guarantees under the farm bill’s key wind power  assistance program—the Renewable Energy Systems and Energy  Efficiency Improvements Program (Renewable Energy Program). As a  result, although grants are available, farmers and other applicants cannot  obtain loans and loan guarantees under this program, which limits the  ability of the program to promote renewable energy sources. In addition,  USDA may be missing opportunities to leverage information, resources,  and expertise available from EPA in implementing the Renewable Energy  Program and to simplify the program’s application process.
section_title: Farm Bill Provisions Promote Renewable Energy Systems, Including Wind Power, but USDA Has Not Made Full Use of These Provisions
paragraphs: Among other things, the 2002 farm bill promotes the use of renewable  energy systems, such as wind turbines, on the nation’s approximately 900  million acres of farmland and rangeland. According to USDA and other  sources, these farm bill provisions will create economic opportunities in  rural communities, give farmers a means to earn additional income,  diversify the nation’s energy production, reduce its dependence on  imported fossil fuels, and help protect the environment. Table 4  summarizes information on the farm bill provisions for promoting  renewable energy systems, including wind power.
During fiscal year 2003 and through August 2004, USDA has made limited  progress in using the farm bill provisions to further the use of renewable  energy systems. Table 5 shows the status of USDA’s efforts. As the table  shows, in several cases these provisions have not been used yet. In other  cases, the provisions cannot be fully used until USDA has developed  relevant regulations. USDA officials told us that the newness of these  provisions—the farm bill was enacted in May 2002—and the lead time  needed to train its staff, disseminate information to the farm community,  and develop regulations and publish them in the Federal Register for  comment, as appropriate, has slowed the agency’s ability to fully use these  provisions.
Many stakeholders consider the Renewable Energy Program as the key  USDA program for promoting renewable energy sources, including wind  power, on farms, ranches, or other rural lands. The program focuses on  promoting renewable energy generation and energy efficiency  improvements and was authorized a total of $115 million—$23 million  yearly—for fiscal years 2003 through 2007 for its implementation. This  funding can be used for loans, loan guarantees, or grants to farmers,  ranchers, or rural small businesses. Eligible projects include those that  derive energy from a wind, solar, biomass, or geothermal source.
Since passage of the farm bill, USDA has undertaken a number of actions to  begin to implement the Renewable Energy Program.
In November 2002, USDA formed a rural energy working group—with  representatives from several USDA agencies as well as DOE and EPA— to strengthen interagency relationships and to leverage information,  resources, and expertise to assist in implementing the Renewable  Energy Program. This group met again in December 2002 and January  2003.
In November 2002, USDA issued a Federal Register notice announcing a  public meeting to solicit comments and suggestions from stakeholder  groups on how to implement the Renewable Energy Program. This  meeting was held on December 3, 2002.
In February 2003, the Under Secretary for Rural Development requested  that all Rural Development State Directors designate a Rural Energy  Coordinator to, among other things, coordinate the implementation of  the Renewable Energy Program.
In April 2003, USDA issued a Notice of Funds Availability (NOFA) in the  Federal Register inviting applications for grant assistance under the  Renewable Energy Program for fiscal year 2003. According to this  notice, $23 million was available for this program. Applications were  initially due by June 6, 2003. In May 2003, USDA issued another NOFA  extending the application deadline to June 27, 2003, and clarifying  information regarding requirements for financial information and utility  interconnection agreements.
In August 2003, USDA signed an Interagency Acquisition Agreement  with DOE to obtain its assistance in implementing the Renewable  Energy Program. Among other things, this agreement calls for DOE to  assist USDA in evaluating the technical aspects of proposals submitted  for renewable energy projects or energy efficiency improvements. In  part, this agreement also helps to fulfill the farm bill’s requirement that  USDA consult with DOE in implementing the Renewable Energy  Program. USDA’s Rural Development mission area made about $162,000  available for this purpose.
In August 2003, USDA signed a contract with MACTEC Federal  Programs (MACTEC), a consultant, to develop a regulation for the  program, including proposed and final regulations to be published in the  Federal Register. USDA’s Rural Development mission area made about  $317,000 available for this purpose.
In May 2004, USDA issued a NOFA in the Federal Register inviting  applications for grant assistance under the Renewable Energy Program  for fiscal year 2004. According to this notice, $22.8 million is available  for this program in fiscal year 2004. Applications were to be  postmarked by July 19, 2004. As of August 2, 2004, USDA indicated that  it received a total of 56 applications for wind projects totaling about  $10.8 million.
In fiscal year 2003, wind power projects represented about one-third of the  projects selected and grant funds awarded under the Renewable Energy  Program, or 35 of the 114 grantees selected and $7.4 million of the $21.7  million awarded. The applicants selected for wind projects included four  farmers and 31 rural small businesses located in eight states. Table 6  summarizes the grant assistance provided for renewable energy projects,  including wind power, under the program in fiscal year 2003.
Notwithstanding the above actions, USDA’s implementation of the  Renewable Energy Program in fiscal year 2004 remains incomplete.  Although USDA has issued a NOFA, it will again offer only grants, as was  done in fiscal year 2003. According to USDA officials and documents, the  Rural Business-Cooperative Service (RBS)—the USDA agency responsible  for implementing the program—had planned to issue proposed and final  versions of the program regulation during fiscal year 2004 and to make  awards of loans and loan guarantees, as well as grants, during the year  based on the final regulation. However, RBS was not able to hold to this  schedule. According to RBS officials, they underestimated the time that  would be needed to develop and process the regulation. In this regard, they  cited several factors that have contributed to the time needed.
First, these officials said the Office of Management and Budget (OMB)  designated the regulation as “significant” according to Executive Order  12866, as amended. A regulation designated as significant is subject to  OMB review. Specifically, the executive order provides that significant  regulations are subject to review by OMB’s Office of Information and  Regulatory Affairs. This office may take up to 90 days for its reviews at the  proposed and final regulation stages before publication of the regulation in  the Federal Register. In addition, the executive order provides that  agencies should afford the public a meaningful opportunity to comment on  any proposed regulation, which in most cases should include a comment  period of not less than 60 days.
Second, USDA has opted to apply the Administrative Procedure Act’s  notice of proposed rule making and public comment requirements in  certain instances where not required by law. This policy, promulgated by  former Secretary of Agriculture Clifford Hardin, was published in the  Federal Register in 1971. The policy is known informally as the “Hardin  memo.” Specifically, this memo provides, in part, that the public  participation requirements prescribed by the Administrative Procedure  Act, 5 U.S.C. 553 (b) and (c), will be followed by all agencies of the  department in rule making relating to public property, loans, grants,  benefits, or contracts. Thus, while the act does not require notice and  public comment for regulations related to these matters, USDA’s policy is  to follow the public participation requirements of the act for these types of  regulations as well. USDA officials noted that the Hardin memo is  consistent with the recommendations of the Administrative Conference of  the United States, and although the memo was promulgated more than 30  years ago, it remains in effect.
Third, delays occurred in contracting with MACTEC. This contract was  signed in August 2003, about 15 months after the farm bill’s enactment  (May 13, 2002). Specifically, delays occurred with GovWorks, a federal  contract acquisition and administration office used by USDA to handle the  contract solicitation and administration. According to USDA officials,  GovWorks took longer than expected to complete the solicitation phase— including advertising the solicitation and performing the initial evaluation  of applicants—due to staffing shortages and its responsibilities for other  major federal contracts. The solicitation produced a number of applicants,  from which four were selected for interview by RBS staff. USDA officials  indicated that it took additional time to arrange these interviews. MACTEC  was selected from among the final four firms.
Fourth, USDA officials noted that the draft proposed program regulation is  a very large document—over 200 pages. Thus, the time needed for review is  longer. In early June 2004, USDA officials noted that the draft had been  under review within USDA since February and was now in final  departmental clearance. Among other offices, the Rural Development  mission area, the Office of General Counsel, and the Office of Budget and  Program Analysis have reviewed the draft. USDA officials noted that as  much as possible, the draft was reviewed concurrently by relevant offices  and that the Office of General Counsel assigned one of its attorneys  virtually full time to review the regulation in order to expedite that office’s  review.
Finally, USDA officials described the Renewable Energy Program as a new  and unique program. These officials said that neither USDA nor DOE had a  grant or loan program similar to it before its creation in the energy title of  the farm bill. Thus, USDA did not have an existing program to use as a  model for developing the program regulation. In addition, these officials  said that RBS staff were generally not familiar with renewable energy  technologies and thus needed to reach out to other agencies, such as DOE  and EPA, to obtain technical assistance. They also noted that consultation  with DOE is required in section 9006 of the farm bill.
Although USDA officials maintain that the agency’s development in early  2004 of an emergency pilot program for developing renewable energy  systems from the use of diseased livestock as a process raw material for  energy generation was not a source of delay, it may have been a  contributing factor. This pilot program was announced in a NOFA  published in the Federal Register on May 18, 2004. According to the NOFA,  this program is a further action to support USDA’s efforts to address the  risks associated with bovine spongiform encephalopathy (BSE), also  known as mad cow disease. The NOFA states that RBS expects projects to  be constructed that will produce energy through the destruction of  diseased cattle.
Under the pilot program, USDA plans to provide guaranteed loans totaling  up to $50 million for up to three project proposals. USDA estimates the cost  of the pilot to be about $3.1 million, needed to fund the credit subsidy  costs. According to USDA officials, these funds will come from the fiscal  year 2004 appropriation for the Renewable Energy Program, reducing the  funds available to make grant awards under this program by an equivalent  amount. Although it will use funds from the Renewable Energy Program,  these officials said the pilot program is a distinct 1-year program that will  not be addressed in the regulation for the Renewable Energy Program.  Instead, the NOFA indicates that the program regulation for USDA’s  Business and Industry Loan Guarantee Program is being used as the basis  for the delivery of the pilot program, with certain provisions of that  regulation revised to accommodate the pilot’s purpose. For example,  changes to the guaranteed fee and the percent of guarantee were made to  provide a further incentive to lenders to participate in the pilot program.
MACTEC, the same contractor that USDA is using to develop the proposed  regulation for the Renewable Energy Program, was also used to develop  the NOFA for the pilot program. The original contract with MACTEC was  modified for this purpose. Specifically, a contract amendment signed in  February 2004 provided for additional payments of about $25,000 for this  purpose, increasing the total value of the contract to about $342,000.  According to the amendment, MACTEC was to begin work on the NOFA in  late February 2004. USDA officials indicated that MACTEC had delivered  the draft proposed program regulation for the Renewable Energy Program  to USDA for review prior to beginning work on the pilot program, and thus  the work on the pilot did not delay the work on the proposed program  regulation. However, progress reports prepared by MACTEC in March and  April 2004 indicate that there was overlap between the two efforts,  although the reports do not make clear whether work on the pilot delayed  progress on the program regulation.
subsections: section_title: USDA’s Inability to Offer Loans and Loan Guarantees under the Renewable Energy Program Limits This Program’s Potential
paragraphs: USDA’s continuing inability to offer loans and loan guarantees under the  Renewable Energy Program, as specified in the farm bill, limits the agency’s  ability to achieve a much higher program level. For example, according to  USDA’s fiscal year 2005 Budget Summary, the Consolidated Appropriations  Act for 2004 and the administration’s budget proposal for 2005 provide  sufficient funding for the Renewable Energy Program—about $23 million in  2004 and about $11 million in 2005—for $200 million in program level each  year, based on a combination of loans, loan guarantees, and grants. This is  possible because for direct loans and loan guarantees, program funds  would be needed only for the credit subsidy cost. Otherwise, direct loans  are made from funds borrowed from the U.S. Treasury, and guaranteed  loans are made by private lending institutions. Thus, a greater number of  renewable energy projects could be financed. In addition, providing loans  or loan guarantees in conjunction with grants could provide individual  recipients with a greater level of assistance. That is, while grants can be  used to pay up to 25 percent of the eligible project costs, a combination of  grants and loans or loan guarantees may be used to pay up to 50 percent of  the eligible costs. In addition, loans may be a more cost-effective way to  provide federal assistance than outright grants, as the funds used for loans  are repaid by the recipient.
USDA’s continuing inability to offer loans and loan guarantees under the  Renewable Energy Program also limits the program’s potential benefits and  the agency’s ability to achieve one of its performance goals: to increase  economic opportunity in rural areas. For example, USDA’s fiscal year 2005  Budget Explanatory Notes indicate that the $21.7 million in grant awards  made in fiscal year 2003 under the Renewable Energy Program resulted in  an estimated 736 jobs created or saved and 100 million kWh of electricity  generated. However, the agency estimates that the addition of loans and  loan guarantees in fiscal year 2004 would result in (1) a program of about  $200 million, (2) an estimated 7,169 jobs created or saved, and (3) 888  million kWh of electricity generated. Jobs created or saved and electricity  generated are identified as key performance measures in the Budget  Explanatory Notes.
USDA’s ability to offer loans and loan guarantees is also important because  of uncertainty regarding the Renewable Energy Program’s future funding.  Although the program was fully funded in fiscal years 2003 and 2004, the  administration’s budget proposal for fiscal year 2005 provides only $10.77  million of the $23 million authorized in the farm bill. If enacted as  proposed, this level of funding would represent less than 50 percent of the  resources authorized for the program. Since direct loans and loan  guarantees require appropriations for only the credit subsidy cost, not their  full face value, they may result in making more financing available at less  cost to the government than outright grants. Also, the ability to leverage  greater amounts of private financing with loan guarantees would take on  added importance. Many stakeholder organizations, including AWEA, the  Environmental and Energy Study Institute, the American Council for an  Energy-Efficient Economy, and the Environmental Law and Policy Center,  have expressed concerns regarding this proposed cut.
section_title: USDA’s Ability to Offer Loans and Loan Guarantees under the Renewable Energy Program in Fiscal Year 2005 Is Uncertain and Questions Remain
paragraphs: In June 2004, USDA officials indicated that they anticipate publishing the  final regulation for the Renewable Energy Program in late spring 2005.  Specifically, documentation related to the agency’s contract with MACTEC  indicates that the final regulation will be published in the Federal Register  on May 31, 2005. Assuming this schedule is met, only 4 months in fiscal year  2005 would remain for (1) USDA to issue a notice in the Federal Register  announcing the availability of funds for loans, loan guarantees, and grants;  (2) program applicants to prepare project proposals and applications,  including obtaining professional assistance from an engineer, financial  adviser, or environmental consultant; and (3) USDA to receive and analyze  program applications and to consult with DOE or EPA, as appropriate,  regarding the technical merit of the proposals. USDA officials  acknowledged that this would be a very tight schedule, but expressed the  view that they could offer loans and loan guarantees in fiscal year 2005 if  this schedule is met.
However, questions remain as to when the proposed and final program  regulation will be published. The proposed regulation completed final  departmental clearance on June 23, 2004, and was sent to OMB for review.  As noted, OMB may take up to 90 days for its review. USDA must then  make revisions to the proposed regulation to address OMB’s comments  before its publication in the Federal Register for public comment. USDA  has already revised its target date for publishing the proposed regulation  several times—from November 17, 2003, to May 24, 2004, to the fall of 2004.  Similarly, it has revised its target date to publish the final regulation from  June 7, 2004, to May 31, 2005.
USDA officials said that 60 days would be allowed for public comment on  the proposed regulation after its publication. In addition, they said they  expect a large volume of comments and that it will take time to review  these comments and consider revisions to the regulation. These officials  said they would consider options to speed up the agency’s review, including  detailing additional staff to assist with this work. Once USDA has  completed its review of the comments and revised the regulation, as  appropriate, the agency will submit the final regulation to its internal  clearance process and then to OMB for review. Regarding its internal  clearance process, USDA officials said they would consider doing  concurrent reviews to speed up this process. However, these officials noted  that RBS lacks the authority or control to compel other offices in USDA to  expedite their reviews of the program regulation. These officials noted that  USDA’s Office of Budget and Program Analysis is responsible for  overseeing the timely completion of this clearance process. Regarding  OMB’s review, this agency again may take up to 90 days for its review.
Any unanticipated problems could affect USDA’s current plan to issue the  proposed regulation by the fall of 2004 and the final regulation by May 31,  2005. As noted, many delays already have been experienced in developing  this regulation. Further delays, possibly pushing the publication date for  the final regulation beyond May 31, 2005, would likely preclude USDA from  offering loans and loan guarantees in fiscal year 2005, as was the case in  fiscal years 2003 and 2004. The Renewable Energy Program was authorized  for 5 years—fiscal years 2003 through 2007. If USDA is unable to offer loans  and loan guarantees again in fiscal year 2005, only 2 years will remain to  utilize all of the financial mechanisms provided by the legislation. As noted,  utilization of these mechanisms would increase the program level and  benefits. In this regard, eight members of the Senate Agriculture  Committee sent a letter to USDA in June 2004 noting that a third year  without a final regulation in place could impede and undermine the full  potential of the Renewable Energy Program. Accordingly, they urged USDA  to issue the proposed and final rules as soon as possible.
Another concern is staffing. RBS’s Processing Branch has lead  responsibility for implementing the Renewable Energy Program. This  branch is also responsible for administering five other national grant or  loan programs. According to USDA officials, the branch has been able to  implement the Renewable Energy Program as a grant program to date  without the need for additional staff. However, these officials said that  once USDA starts to offer loans and loan guarantees under the Renewable  Energy Program, staffing could become an issue. Currently, the branch has  four program specialists in addition to the Branch Chief. According to the  Chief, administering a loan program is more complicated than a grant  program, and therefore a loan program requires more staff resources and  time. For example, administering a direct loan program requires agency  resources to handle loan origination, processing, and servicing functions.
section_title: USDA Has Taken Some Actions to Promote Wind Power through Other Programs
paragraphs: Aside from its actions to implement specific provisions of the 2002 farm bill  to promote wind power, USDA has provided additional assistance for this  purpose under several of its programs. For example:  From May 1997 through March 2004, USDA provided about $13.3 million  in grant and loan assistance to 25 rural electric cooperatives or small  businesses to procure or manufacture small wind turbines for on-farm  use.
In 2001, the Animal and Plant Health Inspection Service entered into an  agreement with a local utility to purchase 25 percent of the electricity  used at its National Wildlife Research Center in Colorado from wind- generated sources.
In fiscal year 2003, USDA provided a $2.5 million grant under its High  Energy Cost Program to the Alaska Village Electric Cooperative to  address high energy costs in Chevak, Alaska, an impoverished  community of about 800 residents. Among other things, the funds will be  used for a wind generation system.
In October 2003, USDA signed a memorandum of understanding with  the National Rural Electric Cooperative Association to increase the use  of renewable resources to generate electricity. The agreement provides  for cooperation in conducting renewable energy technology research  and for conducting education and outreach to promote the use of  renewable energy resources, such as biomass, solar, and wind power, in  rural areas.
The Agricultural Research Service conducts research and development  to lower the costs of wind generation for isolated farms, ranches, and  rural communities that lack access to affordable and reliable electrical  energy. Currently, the service is conducting research with Sandia  National Laboratories on lowering the costs of wind turbine blades,  which account for more than 50 percent of the cost of new wind  turbines.
section_title: USDA May Have Opportunities to Obtain Additional Assistance from EPA
paragraphs: In implementing the Renewable Energy Program, USDA may also be  missing opportunities to obtain further assistance from EPA. USDA’s rural  energy working group included a representative from EPA’s AgStar  Program, but this program is focused solely on the production of power  from the anaerobic digestion of biomass such as livestock manure.  According to EPA officials, other EPA offices also may be able to offer  information, resources, and expertise to assist USDA’s implementation of  the Renewable Energy Program for other renewable sources, including  wind power. For example, an official in EPA’s Office of Air and Radiation  said that this office has extensive contacts with the electric power utilities  through its Green Power Partnership Program, and could therefore help  Renewable Energy Program applicants find buyers for the electricity they  will generate and negotiate related power purchase agreements. In  addition, this office could help answer applicants’ questions on project site  selection and permitting for environmental impacts, where applicable.
USDA officials said they recognize that other EPA offices may be able to  offer assistance and that they would welcome such assistance. However,  these officials noted that the rural energy working group has not met since  January 2003, having identified at that time the information, resources, and  expertise available from the group’s participants to assist USDA’s  implementation of the Renewable Energy Program. There are no plans for  the group to meet again. More recently, USDA officials indicated that they  are considering an interagency acquisition agreement with EPA to obtain  technical assistance from the AgStar program in reviewing project  proposals for anaerobic digestion. This agreement would be similar to the  agreement USDA has with DOE regarding the review of project proposals  for other renewable energy technologies. According to the Chief of RBS’s  Processing Branch, he has had discussions with the lead EPA official for  the AgStar program as to whether other EPA offices should be included in  this agreement; as of June 2004, USDA officials said this matter was still  under discussion.
section_title: Stakeholders Are Concerned about the Complexity and Short Time Frames for Submitting Applications under the Renewable Energy Program
paragraphs: Various stakeholders have expressed concerns about the complexity and  short time frames for submitting grant applications under the Renewable  Energy Program. For example, in the course of our fieldwork during 2003,  we heard a number of concerns from farmers and others about the  complexity of this application process and the short time frames for  completing and submitting applications. The applications must include  economic feasibility studies, tentative agreements with an electricity buyer,  financial information demonstrating need under the program, and  information for completing environmental assessments. USDA officials  acknowledged some of these concerns and indicated they have been and  continue to look for ways to simplify the application process. However,  these officials also cautioned that renewable energy projects are, by their  nature, legally, technically, and financially complicated ventures, and,  consequently, it is not surprising that applicants might find the application  process difficult and need the assistance of an attorney, engineer, or  financial consultant.
Regarding the complexity of the application process, USDA officials noted  they have applied lessons learned from the agency’s experience under the  fiscal year 2003 grant program to the fiscal year 2004 program. The NOFA  for the fiscal year 2003 program invited comments from applicants and  other stakeholder groups. USDA officials said they considered these  comments and other subsequent comments that have been received from  various stakeholders over the past year. As a result, the NOFA for the fiscal  year 2004 grant program is about three times as long as the one for the  previous year. Among other changes, the 2004 NOFA contains specific  application guidance for each renewable energy technology covered by the  program.
Regarding time frames, USDA initially gave applicants 2 months to submit  their applications under the fiscal year 2003 grant program. Specifically,  USDA issued a NOFA in the Federal Register on April 8, 2003, with a  requirement that applications be postmarked no later than June 6, 2003.  However, in part because of complaints from applicants and other  stakeholders regarding the short time frame, USDA issued a subsequent  notice in the Federal Register on May 19, 2003, to extend the application  deadline to June 27, 2003. As for the fiscal year 2004 program, USDA  issued the NOFA on May 5, 2004, with a requirement that the applications  be postmarked no later than 75 calendar days after the date of the  published notice (July 19, 2004). Although USDA’s issuance of the 2004  NOFA fell a month later in the fiscal year than the 2003 NOFA’s issuance  and the time frame allowed under the 2004 NOFA is shorter than that  allowed under the 2003 NOFA (including the extension), USDA officials  said they believed the time allowed in 2004 is sufficient. They noted that the  guidance in the 2004 NOFA is more detailed than the 2003 NOFA. They also  said that the agency’s rural energy coordinators encouraged potential  program applicants to begin pulling together information needed for  environmental assessments even before the 2004 NOFA was published.
In June 2004, USDA officials also said they expect to receive further  detailed comments on the application process and other aspects of the  program when the proposed program regulation is published in the Federal  Register for comment later in 2004. These officials indicated they would  use these comments to consider further refinements to the application  process. Also in June 2004, we discussed with these officials the potential  advantages of surveying program applicants, the agency’s rural energy  coordinators, and other stakeholders, as appropriate, regarding their views  as to how the application process could be improved and streamlined. We  suggested that a survey would comprehensively document problems and  related suggestions to better inform USDA as to the severity or extent of  the problems cited and whether corrective actions are warranted. USDA  officials indicated they did not think a survey is needed in addition to the  comments already received and those expected after publication of the  proposed regulation. They also noted the rural energy coordinators often  provide information on problems or concerns related to the application  process during monthly conference calls with USDA’s Rural Development  state offices.
section_title: Conclusions
paragraphs: USDA has yet to utilize all of the financial mechanisms of the farm bill’s  Renewable Energy and Energy Efficiency Improvements Program. Among  other things, USDA has not issued the final program regulation yet that  would allow it to offer loans and loan guarantees, as well as grants. The  addition of loans and loan guarantees would allow USDA to achieve a much  higher level of program activity, potentially increasing the number of  projects financed and providing benefits such as increased economic  opportunities in rural areas. Loans may also be a more cost-effective way to  provide federal assistance than outright grants. In addition, the provision of  loans or loan guarantees in conjunction with grants would enable USDA to  offer a greater level of assistance to program applicants.
While USDA has taken a number of actions to coordinate its efforts to  implement the program internally and externally, it may be missing  opportunities to leverage information, resources, and expertise that may be  available from EPA, such as from EPA’s Office of Air and Radiation.
Finally, applicants and other stakeholders have raised concerns regarding  the complexity of the application process for the program, as well as the  limited time frame provided for submitting these applications. USDA’s  continued collection and consideration of these concerns may identify  ways to improve and streamline this process.
section_title: Recommendations
paragraphs: To ensure USDA’s timely and effective implementation of the farm bill’s  Renewable Energy Systems and Energy Efficiency Improvements Program,  we recommend that the Secretary of Agriculture direct the Rural Business- Cooperative Service to take the following actions:  Work with other USDA offices, such as the Office of General Counsel  and the Office of Budget and Program Analysis, to identify possible  ways to accelerate the development of the program regulation to ensure  that all of the funding mechanisms required by the farm bill, including  loans and loan guarantees, be made available as expeditiously as  possible.
Work with EPA to identify other EPA offices, such as the Office of Air  and Radiation, which may be able to offer information, resources, and  expertise to assist USDA in its implementation of this program.
Continue to examine ways to simplify, improve, and streamline the  application process for the program, and as part of that effort, consider  the views of program applicants, the agency’s rural energy coordinators,  and other interested stakeholders.
section_title: Agency Comments
paragraphs: We provided a draft of this report to USDA for review and comment. We  received written comments from USDA’s Acting Under Secretary for Rural  Development, which are reprinted in appendix VI. USDA also provided us  with suggested technical corrections, which we have incorporated into this  report, as appropriate.
USDA agreed with our recommendations and provided information on how  it planned to implement them. Specifically, the Acting Under Secretary for  Rural Development stated that the agency is continuing to expedite the  development of the program regulation, noting that it is in the best interests  of all parties to expedite the rule making process. This official stated  further that the agency would work with EPA officials to identify EPA  offices that could provide USDA with information, resources, or expertise  to implement the program and that a draft interagency agreement, which it  planned to execute before the end of the fiscal year, would allow USDA to  fund specific support activities provided by EPA. Finally, this official stated  that the agency would continue to examine ways to simplify the program  application process through consultation with DOE, EPA, and other  interested stakeholders, including those commenting on the proposed rule  making during its 60-day comment period.
We also provided a draft of this report to DOE and EPA for review and  comment. These agencies provided us with suggested technical  corrections, which we incorporated into the report, as appropriate.
As agreed with your office, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days from the  date of this letter. We will then send copies to interested congressional  committees; the Secretary of Agriculture; the Secretary of Energy; the  Administrator, Energy Information Administration; the Director, Office of  Management and Budget; and other interested parties. We will also make  copies available to others on request. In addition, the report will be  available at no charge on GAO’s Web site at http://www.gao.gov.
If you have any questions about this report, please contact me at (202) 512- 3841. Key contributors to this report are listed in appendix VII.
section_title: Objectives, Scope, and Methodology
paragraphs: At the request of the Ranking Democratic Member, Senate Committee on  Agriculture, Nutrition, and Forestry, we agreed to examine (1) the amount  of wind power generation in relation to all U.S. electricity generation and  the prospects for wind power’s growth, (2) the contribution of wind power  generation to farmers’ income and to the economic well-being of rural  communities in the 10 states with the highest wind power generation  capacity, (3) the advantages and disadvantages for farmers and rural  communities of owning a wind power project or leasing their land to a  commercial wind power developer, and (4) the efforts of the U.S.  Department of Agriculture (USDA) to promote the development of wind  power on farms and in rural communities.
To determine the amount of wind power generation in relation to all U.S.  electricity generation and the prospects for wind power’s growth, we  interviewed officials or reviewed the documentation they provided at the  Department of Energy’s (DOE) Energy Information Administration (EIA),  Office of Energy Efficiency and Renewable Energy, National Renewable  Energy Laboratory (NREL), and Wind Powering America program. We also  interviewed officials or reviewed documentation from the American Wind  Energy Association (AWEA), Bonneville Power Administration, Edison  Electric Institute, Electric Power Research Institute, Environmental and  Energy Study Institute, Interstate Renewable Energy Council, Windustry (a  rural-based, wind stakeholder organization), Union of Concerned  Scientists, Energy Foundation, California Wind Energy Collaborative, and  National Corn Growers Association. From these sources we were able to  determine the extent of wind power capacity installed in the United States,  including a state-by-state breakdown, and information on the wind  potential of various parts of the United States.
These sources also provided information on prospects for wind power’s  growth, including factors that may either constrain or promote it.  Regarding these factors, we also reviewed our own past work, relevant  publications of the Congressional Budget Office and the Congressional  Research Service, and applicable laws, regulations, and executive orders.  Concerning one of these factors—production tax credits—we spoke with  staff of the Congressional Joint Tax Committee and the Department of  Treasury, as well as two tax lawyers and a certified public accountant who  specialize in these tax issues. In addition, we reviewed relevant literature  addressing the growth potential of wind power and discussed data related  to these projections with DOE officials.
We also asked EIA to use its National Energy Modeling System to forecast  wind power’s growth by 2025 under two scenarios. EIA uses this computer- based model to annually forecast future energy supply, demand, and prices,  typically over a 20-year period. The model uses assumptions regarding  economic growth; changes in world energy prices; technology,  demographic, and other trends; and the possible changes to current laws  and regulations. In short, the first scenario—EIA’s reference case— assumed that the authorization for the federal production tax credit would  expire and not be available after December 2003. The second scenario  assumed that authorization for the production tax credit would continue  through December 2010. Other assumptions, including those for  demographic and other trends, price increases for fossil resources, and  current laws and regulations, were held constant in modeling these  scenarios. In addition, EIA assumed that further design and technological  improvements in turbines—known as the “learning effect”—would occur in  both scenarios. However, the agency assumed that this effect would be  greater in the second scenario due to the continued availability of the  production tax credit. Specifically, the continued availability of this credit  would lead to greater interest in wind power, spurring further design and  technological improvements. These improvements would result in more  efficient and productive turbines, making wind power more competitive  with fossil fuels.
To determine the contribution of wind power generation to farmers’  income and to the economic well-being of rural communities in the 10  states with the highest wind power generation capacity, we started with the  information collected above to identify the relevant states. In particular, we  used data developed by DOE and AWEA to determine the 10 states with the  largest amount of wind power generating capacity as of December 2002;  these states represented about 90 percent of the nation’s wind generating  capacity at that time. From this list of 10 states, we selected 5 states to  visit: the 4 states with the largest generating capacity—California, Texas,  Minnesota, and Iowa—and the state—Colorado—that had the 10th largest  capacity. We chose Colorado as a point of contrast—unlike the top four  states, Colorado had few state programs to promote wind power. For each  state, we collected information on the number of farms; the types of  agriculture crops produced; total farm income; farm, ranch, and rural lands  acreage; wind energy generation sources; and state policies and financial  and tax incentives designed to encourage wind power development. We  obtained this information from a variety of sources, including USDA’s Farm  Services Agency, Economic Research Service, and National Agricultural  Statistics Service, and state and local taxing authorities.
In the five states, we then visited nine wind projects in 10 counties to  obtain information on specific wind power projects. In addition, we visited  two other wind projects during the course of our work, but we did not  obtain detailed information on these projects. To select the projects visited,  we compared lists of wind projects for each state; we obtained these lists  from AWEA, Windustry, and the states of California, Iowa, and Minnesota.  From these lists we selected a mixture of leased, farmer-owned, and  community-operated wind projects that also were geographically dispersed  within a state. In addition to operating projects, we sought information on  projects that may have failed in the past 5 years; however, federal, state,  and local officials were unaware of any such failures in these states.
Our work focused on utility-scale wind power projects—projects that  generate at least 1 megawatt (MW) of electric power (from one or more  turbines) annually for sale to a local utility. Utility-scale wind power  accounts for over 90 percent of wind power generation in the United  States. In addition, we defined “community projects” as those operated by a  municipal or rural utility or by a school district. At the project locations, we  generally met with landowners, project owners and investors, state and  local taxing authorities, community leaders, and electric utility officials. To  some extent, our work was limited because we did not have access to cost  and income data of a proprietary nature. In other cases, we were able to  obtain this information but used it only to develop ranges.
In addition, we asked NREL to model the economic impact of wind power  projects on the counties we visited. Specifically, we asked NREL to use its  Wind Impact Model to assess the employment and income impacts of three  hypothetical scenarios on the 10 counties included in our visits. The  scenarios were (1) a 150 MW project that is owned by an out-of-state firm,  (2) a 40 MW project that is owned by an out-of-state firm, and (3) several  small projects with total capacity of 40 MW that are owned by county  residents. This modeling work, including related assumptions, is discussed  in greater detail in appendix III.
To determine the advantages and disadvantages for farmers and rural  communities of owning a wind power project or leasing their land to a  commercial wind power developer, we interviewed officials or reviewed  documentation from DOE’s NREL and Wind Powering America program;  AWEA; the Environmental and Energy Study Institute; the National Wind  Coordinating Committee; Windustry; the Izaak Walton League of America;  and the Union of Concerned Scientists. The documentation we reviewed  covered issues such as wind project economics and development, research,  technology, site selection, electricity transmission, economic and legal  constraints, and various federal and state incentives. We also discussed  these issues with farmers, landowners, wind project investors, state and  local government officials, including local taxing authorities, and others  during the course of our site visits.
To determine USDA’s efforts to promote the development of wind power on  farms and in rural communities, we interviewed officials or reviewed  documentation from USDA’s Agricultural Research Service, Economic  Research Service, Office of Energy Policy and New Uses, Natural  Resources Conservation Service, Rural Business-Cooperative Service,  Rural Utilities Service, and Office of General Counsel. In particular, we  reviewed USDA’s efforts to implement the Renewable Energy Systems and  Energy Efficiency Improvements Program (Renewable Energy Program)  provided for in section 9006 of the 2002 Farm Security and Rural  Investment Act (farm bill). We also spoke with USDA officials and  reviewed documents they furnished to determine the extent to which  USDA provided assistance under other rural development loan or grant  programs for wind project research, planning, or construction. In addition,  regarding USDA’s implementation of the Renewable Energy Program, we  discussed USDA’s consultation with DOE and the Environmental  Protection Agency (EPA) with officials from all three agencies.  Furthermore, during our site visits in the selected states, we discussed with  farmers, ranchers, and rural small business officials the financial or  technical assistance they may have received from USDA or other federal  agencies in developing their wind power projects. We also discussed with  them their experiences with the application process for seeking assistance  under the section 9006 program, including obtaining information on the  program and completing the application, as well as obtaining information  and assistance from USDA or other sources on the factors—economic,  technical, and legal—that need to be considered before embarking on a  wind project. Finally, we reviewed written comments submitted to USDA in  response to a December 2002 public meeting to solicit suggestions from  interested stakeholders about USDA’s implementation of the section 9006  program.
Finally, to get a better sense of what the federal government is doing more  generally to promote wind power generation and how these efforts may be  coordinated with USDA’s efforts to foster its development on farms and in  rural communities, we spoke with officials or reviewed documentation  from DOE, USDA, the Department of Defense, the Department of the  Interior, and EPA.
We conducted our review from February 2003 through August 2004 in  accordance with generally accepted government auditing standards. We  did not independently verify the data obtained from the sources noted  above. However, as appropriate, we discussed with these sources the  measures they take to ensure the accuracy of these data. These measures  seemed reasonable. Appendix II provides further information on the  sources used in our work.
section_title: Sources for Information on Wind Power Generation
paragraphs: Following are the names, addresses, and Web sites for sources of  information on wind power generation used in our work.
section_title: Results of NREL Modeling on Potential Economic Impacts of Wind Power on Rural Communities
paragraphs: We asked NREL to model the economic impact of wind power projects on  the counties we visited during our review. This appendix describes the  model used for the analysis, including the key data inputs and parameters.  It also describes the model results.
NREL has retained the services of MRG & Associates, a consulting firm  (the firm) that specializes in energy economic analysis. The firm developed  the Wind Impact Model (the model) to assess the impact of wind power  investments on employment, earnings, and economic output at the state  and local levels. Economic output as defined in the model is a measure of  economic activity (value of production) on the state or local level that is  similar to the measure of the gross domestic product on the national level.  For simplicity, this appendix refers to economic output as “income.”
We asked NREL to assess the employment and income impacts of three  hypothetical scenarios on 11 counties in the five states we visited. The  scenarios are: (1) a 150 MW project that is owned by an out-of-state firm,  (2) a 40 MW project that is owned by an out-of-state firm; and (3) several  small projects totaling 40 MW of capacity that are owned by county  residents. Table 7 lists the 11 counties for which the firm conducted the  analysis. We selected these counties because we determined that the NREL  analysis would be an appropriate complement to our visits. We also  believed that our visits would give us some general sense of the economic  conditions of the counties, helping us judge the differences in assumptions  regarding the counties in NREL’s modeling.
subsections: section_title: The Wind Impact Model
paragraphs: The model provides a tool that can be used by wind power developers,  decision makers, and others to identify the local economic impacts  associated with constructing and operating wind power projects. The  model, based on a spreadsheet, emulates, on a small scale, the basic  function of an input-output model. It relies on input-output multipliers that,  in this case, estimate how much a dollar of expenditures injected into an  economy will generate in total employment or income. Employment and  income multipliers for a given sector of a state’s or a county’s economy  depend on the spending patterns and the specific economic structure of the  jurisdiction in question. The source of the multipliers used in the model is  Minnesota IMPLAN Group Inc., whose databases and modeling system are  used by many government agencies, academic institutions, and other  researchers worldwide for economic impact modeling and analyses.
Input-output models are used to trace supply linkages in the economy. For  example, an input-output model of wind power would show how  investments in wind turbines benefit turbine manufacturers as well as  fabricated metal industries and others businesses supplying inputs to those  manufacturers. An input-output analysis of local benefits generated by  wind power project expenditures would depend upon how much of those  expenditures are spent locally and the structure of the local economy.
Different levels of expenditures support varying levels of employment,  income, and output, consistent with the spending pattern and local  economic structure. “Inputs” into the model include cost data for a given wind power project  and parameters that characterize the particular state- or county-level  economy being analyzed. Multipliers are used on the input data to calculate  the “outputs,” which are the estimated employment and income impacts of  the project.
The model is designed to examine economic impact on the state or county  levels, and it does so separately for the “construction period” and  “operating years” of a wind power project. Construction phase impacts are  reported as a 1-year equivalent of the incremental change to state or county  employment, earnings, and income attributable to a new project. For  example, if a project results in full-time employment of 200 workers for 6  months, the model will “see” this effect as 100 full-time jobs added for 1  year. On the other hand, a model output of 25 jobs for the operating years  of a project means that this project is expected to employ (directly at the  plant and indirectly) 25 full-time equivalent workers annually over its  lifetime.
The model divides a state or county economy into 14 sectors. For each  sector, the model has three sets of employment, earnings, and income  multipliers. One set is for direct effects, another for indirect effects, and a  third for induced effects. In the case of a 150 MW wind power project, for  example, the construction period direct employment effect includes the on- site jobs of the contractors and crews hired to build the project and jobs at  the manufacturing plants that produce the turbines. In the operating years,  the direct employment effect includes all of the workers who are employed  directly by the project (field technicians, administrative staff, and project  managers) as well as employment directly supported by expenditures for  goods and services used by the plant. The indirect employment effect  includes employment that results because suppliers of goods and services  to the project also procure goods and services from others. The contractor  who builds the project, for example, procures goods and services from  bankers, accountants, suppliers of construction and other materials, and  others. Finally, the induced employment effects refer to the change in  employment that occurs due to the spending of those persons directly and  indirectly generating income associated with the project. Direct, indirect,  and induced income effects follow the same logic.
section_title: Model Inputs
paragraphs: A major portion of the required “inputs” into the model are cost data,  including the following:  construction costs—for materials and labor, for example;  equipment costs for such things as turbines, rotors, and towers;  other construction period costs, such as for interconnection to the  electric grid, engineering services, land easements, and permitting;  annual operating and maintenance costs, including payroll of direct  employees, material, and various services; and  financing and lease costs and taxes.
Other inputs include estimates of “local share value” for certain dollar  expenditures and labor. For example, a 10 percent local share value for  construction material expenditures for Pecos County, Texas, means that,  for a wind project being built in this county, the model assumes that only 10  percent of the value of project expenditures on construction materials  accrues to local vendors. The relatively low number means that Pecos  County has a limited economy and much of the construction material  needed for the project would have to be obtained from outside the  county—possibly from neighboring urban centers, such as the cities of  Midland-Odessa and Lubbock, or from out-of-state locations. Similarly, for  Pecos County, the model assumes that only 10 percent of the labor used for  laying the foundations for the project’s turbines would be hired locally. In  contrast, the corresponding percentages for Alameda County, California—a  county with a much larger population and larger and more diversified  economic base—would be 90 percent for the local share of construction  material expenditures and 100 percent for the local share of labor used for  foundation work.
section_title: The Interaction between Local Share Values and Multipliers
paragraphs: The local share values and multipliers used in the model determine how an  expenditure of a particular type translates into employment and income  impacts on a county’s economy. The interaction between the model inputs  may be partly illustrated by comparing Rock County, Minnesota, with Weld  County, Colorado.
For Rock County, the model assumes the local share value for  construction expenditures is 4 percent. The model also uses a direct  employment multiplier of 10.1 jobs for every $1 million spent on  construction in the county.
For Weld County, the model assumes the local share value for total  construction expenditures is 76 percent, and the direct employment  multiplier is 8.3 jobs for every $1 million spent on construction in the  county.
The differences in the local share values and multipliers for these two  counties are attributable to the differing population and economic  characteristics of these counties. Rock County is rural, with a small  population and economic base, and thus the project developer must obtain  much of the construction material, equipment, and labor needed from  outside the county. In contrast, Weld County has a much larger population  and economic base capable of fulfilling more of the developer’s material  and labor needs.
On the other hand, the direct construction employment multiplier for Rock  County, at 10.1 jobs per million dollars of expenditure, is somewhat higher  than the corresponding multiplier of 8.3 for Weld County, reflecting a more  labor-intensive local economy in the former.
The difference in local share values and employment multipliers for Rock  County, Minnesota, and Weld County, Colorado, results in bigger  employment impacts of a wind power project in the latter. For example, the  model assumes that the construction of a 150 MW project will cost about  $15 million in each county. However, in the case of Rock County, only  about $600,000 of this amount will be spent within the county, while the  corresponding local share for Weld County will be $11.5 million.  Consequently, according to the model results, the $15 million construction  project results in direct construction phase employment for Rock County  of only 16 jobs compared with 141 jobs for Weld County.
section_title: Model Results
paragraphs: We have not summarized all model results—to do so would involve  publishing 33 large tables. However, those we do include are illustrative of  the results we found. Overall, the model results showed that employment  and income impacts  tend to be greater for counties that are more highly populated and have  a larger economic base, and   are considerably greater for projects that are locally owned than for  projects that are owned by out-of-area firms.
As discussed, the model estimates economic impacts for the construction  period separately from impacts during the years of the project’s operation.  Tables 8 and 9 summarize the model’s estimates of economic impacts for  the construction period, while tables 10 through 12 summarize the  estimates for the years of operation. Estimates for the construction period  are 1-year impacts.
subsections: section_title: Construction Period Impacts
paragraphs: Table 8 shows the economic impacts of constructing a 150 MW wind power  project owned by an out-of-area energy company (a company  headquartered outside the county). Table 9 depicts the impacts of  constructing a 40 MW project owned by an out-of-area company. As  depicted in these tables, the economic impacts during the construction  period are bigger for counties that have a larger population and economic  base. For example, the impacts of constructing a 150 MW project on Weld  County, Colorado, would include the creation of the equivalent of 349 full- time jobs for 1 year. Weld County has a population of over 200,000. In  contrast, the construction of a 150 MW project in Pecos County, Texas,  would create the equivalent of only 36 full-time jobs for 1 year in the  county. Pecos County has a much smaller population—about 16,000  people—and economic base. Thus, most of the labor and professional staff  resources needed to construct the project would be hired from outside the  county.
Tables 10, 11, and 12 provide annual estimates of the economic impacts  during the operations period of various size projects. Table 10 shows the  impacts of a 150 MW project owned by an out-of-area energy company.  Table 11 depicts the impacts of 40 MW project owned by an out-of-area  company. Table 12 shows the combined impacts of 20 small projects—each  2 MW—that are locally owned. Together, these 20 projects would constitute  40 MW of generating capacity. A comparison of tables 11 and 12 shows that  local ownership can generate significantly higher economic impacts for a  county. For example, a single 40 MW project built in Pipestone County,  Minnesota, would generate about $650,000 in new income for the county  annually. In contrast, 20 locally owned projects that are 2 MW each (40 MW  total) would generate about $3.3 million annually in the same county.
section_title: Caveats to and Reliability of the Modeling Effort
paragraphs: We did not expect a high level of accuracy in the model results because  data sources on costs and expenditures are limited, in part because  companies may consider these data to be proprietary. Rather, we expected  the model’s analysis to illustrate the differences between counties that have  different economic structures. The cost data and assumptions for local  share values seemed reasonable and consistent with what we found during  our visits regarding economic conditions in these counties. The model’s  results also generally conform to what we found during our visits,  especially for employment effects.
section_title: Summary of Visits to Wind Power Projects in Five States
paragraphs: This appendix summarizes key information for the nine wind power  projects we visited in 10 counties in five states (California, Colorado, Iowa,  Minnesota, and Texas).  At each site, we discussed the planning,  development, construction, and operation of the project with landowners,  project developers and owners, and local government officials.
subsections: section_title: Projects in California
section_title: Projects in Colorado
section_title: Projects in Iowa
section_title: Projects in Minnesota
section_title: Projects in Texas
section_title: The Wind Project Development Process
section_title: Comments from the U.S. Department of Agriculture
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the individuals named above, Jacqueline Cook, Philip Farah,  William Roach, and Carol Herrnstadt Shulman made key contributions to  this report. Important contributions were also made by Carol Bray, Oliver  Easterwood, Richard Kasdan, and Lynn Musser.
We also wish to give special recognition to our dear friend and colleague,  Patricia Gleason, who passed away during the course of our work. Pat’s  distinguished career with GAO was characterized by her strong desire to  make government programs more effective and efficient. Furthermore, her  courage, humor, and determination to keep working even as her health  declined were an inspiration to her co-workers who held her in the highest  esteem and miss her greatly.
section_title: Related GAO Products
paragraphs: Federal Energy Management: Facility and Vehicle Energy Efficiency  Issues.  GAO-03-545T.  Washington, D.C.: March 12, 2003.
Air Pollution: Meeting Future Electricity Demand Will Increase  Emissions of Some Harmful Substances.  GAO-03-49.  Washington, D.C.:  October 30, 2002.
Natural Gas: Analysis of Changes in Market Price.  GAO-03-46.   Washington, D.C.: December 18, 2002.
Restructured Electricity Markets: Three States’ Experiences in Adding  Generating Capacity.  GAO-02-427.  Washington, D.C.: May 24, 2002.
Renewable Energy: DOE’s Funding and Markets for Wind Energy and  Solar Cell Technologies. GAO/RCED-99-130.  Washington, D.C.: May 14,  1999.
Department of Energy: Solar and Renewable Resources Technologies  Program.  GAO/RCED-97-188.  Washington, D.C.: July 11, 1997.
Energy Security: Evaluating U.S. Vulnerability to Oil Supply  Disruptions and Options for Mitigating Their Effects.  GAO/RCED-97-6.   Washington, D.C.: December 12, 1996.
Federal Research: Changes in Electricity-Related R&D Funding.   GAO/RCED-96-203.  Washington, D.C.: August 16, 1996.
Energy Research: Opportunities Exist to Recover Federal Investment in  Technology Development Projects.  GAO/RCED-96-141.  Washington, D.C.:  June 26, 1996.
Electricity Supply:  Consideration of Environmental Costs in Selecting  Fuel Sources.  GAO/RCED-95-187.  Washington, D.C.: May 19, 1995.
Electricity Supply: Efforts Under Way to Develop Solar and Wind Energy.   GAO/RCED-93-118.  Washington, D.C.: April 16, 1993.
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