Wind Energy Systems and Personal Property Tax

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Wind Energy Systems and Personal Property Tax

• Brian Miles
• Wind Energy Extension Specialist
• NC Solar Center, NC State University

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Introduction

• Wind Energy in the U.S.
• Wind Energy in North Carolina
• Wind Energy Technology 101
• Tax case studies
• Small wind
• Utility wind
• Questions

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DOE 20 Wind by 2030 Scenario

• Generate 20 of U.S. electricity with wind energy
  by 2030
• Would require growth from 29 GW today to 300 GW
• Considered technical, environmental, and
  financial feasibility
• DOE concluded that 300 GW goal is possible
  without fundamental technology breakthroughs
• To meet the goal we need to address these
  challenges
• Policy support stability
• Electric grid expansion
• Workforce development

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500 MW onshore
800 MW in mountains
gt 10,000 MW offshore
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Wind Energy Technology 101

• Grid-intertie v. Off-grid
• Nameplate power capacity (e.g. 1 kW, 10 kW, 100
  kW, 1,000 kW or 1 MW)
• Capacity factor (typically 20 - 40)
• Annual Energy Production (AEP), measured in kWh
  or MWh
• Scale small v. large/utility-scale

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Small Wind Turbines

• Definition less than 100 kW generator
• Configuration 2 or 3 blades aimed into the wind
  by the tail
• Over-Speed Protection Furling (rotor turns out
  of the wind), no brakes
• Generator Direct-drive, permanent magnet
  alternator (no brushes), 3-phase AC,
  variable-speed operation
• Inverter and controller Electronic device that
  delivers
• DC power for charging batteries
• AC power for utility interconnection
• Result Simple, rugged design Only 24 moving
  parts Little regular maintenance required

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Small Wind Towers
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Small Wind Lifetime

• Low Maintenance not No Maintenance
• Inspection and maintenance every 1-2 years
• Inspect mechanical and electrical connections,
  check for corrosion, check guy wire tension,
  inspect/replace leading-edge tape, etc.
• Beyond 10 years blade or bearing replacement may
  be needed
• Lifetimes of 10 to 30 years expected with proper
  installation and regular maintenance
• A wind turbine will see as many operating hours
  in one year as an automobile will see in 200,000
  miles!

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Small Wind Cost and Warranty

• Installed cost is between 3,000 and 6,000/kW
  for a small wind turbine with controller and
  tower.
• There is a trade-off between the incremental cost
  of a taller tower and increased energy output.
• Buyers must make judgments between initial cost
  and rugged/durable design.
• Warranties 2-10 years Coverage of materials
  and workmanship

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Large Wind Turbines

• Definition greater than 100 kW generator
• Configuration 2 or 3 blades aimed into the wind
  by active yaw motors
• Over-Speed Protection Feathering blades, brakes
• Generator Direct-drive or with multi-speed gear
  box, permanent magnet alternator (no brushes),
  3-phase AC, variable-speed operation (600V
  typical)
• Transformer delivers grid-compatible AC
• Result Complex, robust design with electronic
  control Many moving parts Regular maintenance
  required

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Utility-scale Wind Turbines
 
1.5 3.0 MW per WTG
115-150 ft
Cape Lookout
200 - 345 ft
315 - 495 ft
160 ft
Slide courtesy of Acciona NA
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Utility-scale foundations
Construction
Operation
Subsurface Concrete Foundation 40 - 50 diameter
Turbine Pedestal 14 18 diameter
Gravel Crane Pad 40 x 60
Each wind turbine requires 0.5 - 2 acres. A
typical facility requires only about 1-3 of the
total land under lease.
Slide courtesy of Acciona - NA
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Property Tax and Wind Energy

• Property tax exemptions for small renewable
  energy systems are used as an incentive for
  development
• Currently no property tax exemption for small
  wind systems in North Carolina statutes (as there
  is for solar photovoltaic systems, see DSIRE
  database)
• It is up to local taxing authorities to assess
  and levy these taxes
• Property tax revenue is seen as a benefit of
  allowing utility-scale wind in a community

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Small-scale tax case study

• Kingsmill Farm, Durham County
• 3 small wind turbines, 6 kW total capacity
• No property tax exemptions
• Taxed as personal property, not real

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Utility-scale tax case study

• Property Taxation of Wind Generation Assets
• Warren Ault, in North American Wind Power, May
  2006.
• Findings
• Average property tax 6,500 per MW nameplate
  (2.10/MWh, assuming 30 capacity factor)
• Five approaches to assessment of taxes
• Asset valuation
• Economic income
• Comparable asset sales
• Power generation
• Tax exemption (with in lieu payments)
• Components (turbine, blades, footings) taxed
  differently

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Conclusion

• The decision of how to tax wind energy systems
  depends on a countys goals
• A variety of taxation schemes can be used
• A scheme should be chosen carefully for possible
  unintended consequences
• e.g. blanket exemptions can promote small wind,
  but take away community incentive for
  utility-scale wind.

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Resources
Property Taxation of Wind Generation Assets
Warren Ault http//www.windustry.org/sites/windust
ry.org/files/NAW0506.pdf NCSC DSIRE renewable
incentives tracker http//www.dsireusa.org/ Windus
try Promotes community wind development http//www
.windustry.org/ Wind Powering America U.S. Dept.
of Energy program to promote wind http//www.windp
oweringamerica.gov/ 20 Wind by 2030
report http//www.20percentwind.org/ North
Carolina Solar Center (NCSC) http//www.ncsc.ncsu.
edu/wind/
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Questions Comments

• Brian Miles, Wind Energy Extension Specialist
• NC Solar Center
• College of Engineering
• NC State University
• 919-515-3799
• brian_miles_at_ncsu.edu
• http//www.ncsc.ncsu.edu/wind/