USING GIS TO ESTIMATE THE SPATIAL DISTRIBUTION OF WIND-POWER ROYALTIES IN WEST TEXAS A Thesis by MARY ELIZABETH TILTON Submitted to the Office of Graduate and Professional Studies of Texas A&M University in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE Chair of Committee, Christian Brannstrom Co-Chair of Committee, Andrew Klein Committee Member, Russell Feagin Head of Department, David Cairns December 2015 Major Subject: Geography Copyright 2015 Mary Tilton ABSTRACT Wind energy is one of the fastest growing sources of renewable energy in the United States, particularly in the Great Plains region. This remarkable expansion has been attributed to high social acceptance, a simple permitting system, renewable portfolio standards, and tax incentives. However, the extent of financial benefits of wind energy (royalties) to landowners is poorly known, and scholars have not yet estimated how royalties are distributed spatially. This research utilizes land parcel information in conjunction with County Appraisal District records for Nolan and Taylor Counties in west Texas; wind turbine (n = 1,746) location, name and nameplate capacity; and a royalty estimation. The research examines the spatial distribution of royalties, to compare local and absentee benefits, and to estimate the disparity in estimated royalty payments between landowners with turbines and those without who receive no direct financial benefits. The mean estimated royalty payment per turbine per year is $7,404 and total royalties for the wind-farms in the two counties is more than $11 million annually which is captured by approximately 3% of all rural landowners. Non-resident landowners with turbines, defined as those landowners who live more than twenty miles from their tax addresses (approximately 46% of total landowners), receive 47% of total royalties, with the majority (70%) of royalties received by non-residents in Texas, and 61% of royalties remaining in the two-county study area. When key components of the wind contract depress, the total mean estimated average royalty for the study site also depresses, with capacity factor having the most effect on royalties. More than 30% of ii landowners with turbines have some land tenure in effect, and 45% of royalties are distributed to this faction. Turbines, and therefore, royalties appear to be distributed unequally amongst rural landowners and parcel size is highly correlated to number of turbines and royalty payments. Many residents continue to welcome wind power despite the inequality of benefits, but more research is needed to determine what factors may affect public perceptions and how royalties may affect spending in the area. Future research should focus on how royalties are used. iii DEDICATION This thesis is dedicated to my husband for his encouragement and support throughout all stages of graduate school, but most importantly, his patience with the writing process and insistence that I am capable of completing this arduous task. It may have taken longer than expected, but I did it! I would also like to dedicate this thesis to my family for being my cheerleaders and understanding every time I pushed my deadline. Your unfailing support means the world to me. iv ACKNOWLEDGEMENTS I would like to thank my committee members, Dr. Klein, Dr. Brannstrom, and Dr. Feagin, for their guidance and support throughout the course of this research. You all gave me direction when I was lost, encouragement when needed, and valuable advice for research and writing. Thanks also go to my colleagues and the Geography department faculty and staff for making my time at Texas A&M University a great experience. I also want to extend my gratitude to Dr. Wendy Jepson, who provided the data for this study. Thanks to my family for their assistance and support throughout graduate school and for encouraging me to pursue this amazing opportunity to broaden my career options. Finally, thanks to my husband for his love, patience, and gentle urging to write; and Holly and Annie for their nose and paw keystroke contributions to my thesis. v NOMENCLATURE US United States KW Kilowatts KWh Kilowatt hours MW Megawatts MWh Megawatt hours GW Gigawatts GWh Gigawatt hours CF Capacity Factor NIMBY/PIMBY ‘Not In My Back Yard”/”Please In My Back Yard” AWEA/WWEA American/World Wind Energy Association PTC Production Tax Credit RPS Renewable Portfolio Standard RES Renewable Energy Standard vi TABLE OF CONTENTS Page ABSTRACT .............................................................................................................. ii DEDICATION .......................................................................................................... iv ACKNOWLEDGEMENTS ...................................................................................... v NOMENCLATURE .................................................................................................. vi TABLE OF CONTENTS .......................................................................................... vii LIST OF FIGURES ................................................................................................... ix LIST OF TABLES .................................................................................................... xi CHAPTER I INTRODUCTION .......................................................................... 1 CHAPTER II THE THREE DIMENSIONS OF WIND ENERGY ..................... 8 II. 1 The social dimension ................................................................................... 8 II. 2 The socio-economic dimension ................................................................... 21 II. 3 The public policy dimensions ...................................................................... 24 CHAPTER III DATA AND METHODS ............................................................... 28 III. 1 Data ............................................................................................................ 28 III. 2 Methods ...................................................................................................... 31 CHAPTER IV RESULTS ....................................................................................... 43 IV. 1 Spatial distribution of turbines .................................................................. 43 IV. 2 Spatial distribution of royalties .................................................................. 49 IV. 3 Resident/non-resident comparisons ........................................................... 56 IV. 4 Landowner type and land tenure ................................................................ 63 IV. 5 Sensitivity of royalties to fluctuation of contract terms ............................. 65 CHAPTER V DISCUSSION .................................................................................. 70 CHAPTER VI CONCLUSION .............................................................................. 77 vii Page REFERENCES .......................................................................................................... 80 APPENDIX ............................................................................................................... 88 viii LIST OF FIGURES Page Figure 1 Nolan and Taylor Counties in west Texas with parcel delineation and turbine points ........................................................ 29 Figure 2 Nolan and Taylor Counties with urban areas removed .................................................................................................... 35 Figure 3 Nolan and Taylor Counties with urban areas removed and dissolved by landowner address ......................................... 36 Figure 4 Nolan and Taylor Counties with urban areas removed, dissolved by landowner address, and landowners with turbines only .................................................................. 37 Figure 5 Output of code which feeds in the coordinate of the centroid of the parcel and the tax address and gives an output of the driving distance and time between the two points ..................................................................... 39 Figure 6 Parcels of landowners with turbines who live less than or equal to 20 miles driving distance or 45 minutes driving time from tax address ................................................ 41 Figure 7 Counties of landowners with turbines who live more than 20 miles or 45 minutes from the tax address (non-residents). ............................................................................ 42 Figure 8 Distribution of turbines by landowner quintiles ........................................ 47 Figure 9 Total turbines by land size in hectares ...................................................... 48 Figure 10 The spatial distribution of royalties to all landowners with turbines .......................................................................... 50 Figure 11 Total mean estimated royalty by land size in hectares ..................................................................................................... 51 Figure 12 Distribution of total mean estimated royalties per year by landowners quintiles .............................................................. 54 ix Page Figure 13 The spatial distribution of royalties for resident landowners of Nolan and Taylor Counties illustrated in gradients of blue .................................................................. 57 Figure14 Drive distance (in km) from situs address to tax address for all landowners in Nolan and Taylor Counties ...................................................................................................