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Wind Energy Report AN EXAMINATION OF THE COMMUNITY LEVEL DYNAMICS RELATED TO THE INTRODUCTION OF WIND ENERGY IN INDIANA Report June 2020 Prepared by Z. Bednarikova, R. Hillberry, N. Nguyen, I. Kumar, T. Inani, M. Gordon, M. Wilcox Purdue Extension – Community Development Purdue University – College of Agriculture Purdue Center for Regional Development 1 TABLE OF CONTENTS EXECUTIVE SUMMARY .................................................................................................................................. 4 INTRODUCTION ............................................................................................................................................. 5 METHODOLOGY ............................................................................................................................................ 6 PROFILE OF THE WIND ENERGY SECTOR IN INDIANA ................................................................................... 7 I. Indiana’s wind resource ......................................................................................................................... 8 II. The footprint of utility-scale wind energy generation in Indiana ....................................................... 12 III. The wind industry as a source of income .......................................................................................... 15 IV. Payments to local governments ........................................................................................................ 22 V. Policy ................................................................................................................................................... 26 VI. Conclusion .......................................................................................................................................... 31 PROBABLE ECONOMIC EFFECTS OF WIND POWER FOR INDIANA COUNTIES A LITERATURE REVIEW ................................................................................................................................ 32 I. Analytical Framework .......................................................................................................................... 35 II. A compendium of possible economic effects of the industry on the local economy ......................... 36 III. Impacts on the level of economic activity and employment ............................................................. 37 IV. Impacts on the distribution of income .............................................................................................. 44 V. Impacts on local public finances ......................................................................................................... 45 VI. Effects on the structure of local economies ...................................................................................... 46 VII. Possible externalities created by wind farms ................................................................................... 48 SOCIO-ECONOMIC PROFILE OF BENTON, WHITE, JAY, RANDOLPH, TIPTON, MADISON, TIPPECANOE, CLINTON, AND MONTGOMERY COUNTIES ................................................................................................. 53 I. Demography ......................................................................................................................................... 54 II. Economy .............................................................................................................................................. 56 III. Labor market ...................................................................................................................................... 60 IV. Quality of Life ..................................................................................................................................... 66 WIND ENERGY ATTITUDES IN BENTON, WHITE, JAY, RANDOLPH, TIPTON, MADISON, TIPPECANOE, CLINTON, AND MONTGOMERY COUNTIES ................................................................................................. 69 I. Group 1 – For wind energy counties .................................................................................................... 69 2 II. Group 2 – Against wind energy counties ............................................................................................ 73 ON-LINE LISTENING SESSIONS .................................................................................................................... 74 ONLINE KEY INFORMANT SURVEY .............................................................................................................. 74 LOOKING FORWARD ................................................................................................................................... 74 ACKNOWLEDGEMENT ................................................................................................................................. 74 REFERENCES ................................................................................................................................................ 74 APPENDIX – ON-LINE KEY INFORMANT SURVEY ......................................................................................... 74 3 EXECUTIVE SUMMARY The utility-scale electricity generation by using wind power has been part of the Indiana landscape since 2008. The earliest projects were concentrated in the west-North Central part of the state, the area that had the most favorable wind conditions for the turbine technology of that time. Subsequent technological innovations, especially the development of taller turbines of larger capacity, have expanded the potential for other parts of Indiana to host utility-scale wind farms. While a large-scale generation of electricity from wind power is now viable in many counties of Indiana, county governments have used their legal authorities to inhibit or preclude development. Understanding how and why counties come to such decisions is the primary question of interest for this report. While many studies have examined the benefits and costs associated with wind power introduction and expansion, there is still not an overall consensus at the local, state, or national level. Our project tries to find a coherent way to address the variety of assets and challenges that the communities are facing in terms of wind energy farm’s construction and use. This report examines the wind energy sector in Indiana and selected counties and includes information gathered via two different replicable approaches: rigorous secondary data analysis and primary data collection using an online survey and online listening sessions. The goal was to assess the wind energy sector in Indiana. County governments that have allowed the development of utility-scale wind farms have benefitted financially from the decision. The counties that allowed the first turbines – Benton and White Counties – collected $4.3 million and $2.3 million, respectively, in 2019, property taxes from their local wind farms. The industry also makes substantial payments to the counties under the terms of economic development agreements. Road use agreements and decommissioning agreements are designed to offset other potential burdens the industry might place on the county. The wind-generated electricity industry is capital intensive, which means that a large share of the industry’s revenues must go to compensate those who financed the substantial investments made at the time of construction. But the industry also makes payments to local citizens. The industry pays local landowners – primarily those who host turbines on their land - but also others that are affected by its presence. In the short periods of construction, there is an intense economic activity in the local areas and numerous short-term employment opportunities. In the operation phase, the employment numbers are smaller, but the jobs are more stable and well-paid. Trying to capture the multi-dimensional nature of community development, online listening session participants identified the following key assets of wind energy in White County and Benton County: natural, cultural, human, social, political, financial, financial, and built capitals. 4 Wind energy represents a huge infrastructure investment in Indiana communities. The wind farms bring geographically diverse and long-lasting benefits, including millions of dollars in property tax revenue, annual lease payments for Indiana’s farmers, and well-paid maintenance and construction jobs as the main source of employment. But wind energy is associated with skepticism, suspicion, and opposition. We provide a couple of suggestions that might help in the effort to support the development of wind farms: • Awareness of key assets and challenges in counties supporting or declining wind farms that are related to the wind energy • Legislative instruments • Technology development • Awareness-raising capacity building and education • Fostering positive relationships between the commercial wind energy company and local communities INTRODUCTION Wind power, electricity created by capturing the kinetic energy of wind by modern wind turbines, is an attractive, clean, and one of the lowest-cost renewable electricity alternatives currently available (IOED, 2019). Wind energy is not new to Indiana. According to the Indiana Office of Energy Development, by 2017, there were 1,095 large-scale wind turbines located in much of the northern half of the state (IOED, 2019). Most of the wind projects are built in rural areas, and they represent a source of revenues for
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