Leveraging Wind Resource into Nebraskan Economic Development
Nebraska ranks 6th in the nation in terms of its wind resource, but only 24th in terms of actual wind power output. A large majority of Nebraskans want to see this change and also want to see the economic benefit stay in Nebraska.
Fortunately, as is typical for Nebraskans, you have not followed the road most traveled. You have the opportunity to look down another road less traveled to lower the cost of renewable energy. This road allows you to pay for this renewable electricity early lowering its cost 25% or more. So electricity that would otherwise cost $40 a mega watt hour from NPPD’s proposed Madison Wind Farm could be purchased for about $30 - the same price as coal produced electricity during these bad economic times.
This road lets Nebraska enjoy renewable energy at a discount to Iowans who are paying in the mid $30's for privately owned wind power. This is because we are combining the best of Public Power (tax exempt debt) with the best of the private sector (access to federal tax benefits).
This cheap renewable energy will be a boon to rural Nebraska. Not just the windy parts. This resource would also spur light industrial development in cities like South Sioux City, Kearney and Aurora. Nebraska is actively trying to woo companies to set-up high tech data centers with good paying jobs. The Governor has already provided these three cities with substantial grants to literally pave the way. You can make Nebraska even more appealing since the number one selling point for sites is cheap energy. You already have that. In order to differentiate yourselves, you need cheap renewable energy.
Since Nebraska would be building renewable plants to meet the needs of these new customers, ones that may not otherwise come to Nebraska, the wind plants only bring positive value. They bring in new energy demand, new development, and new jobs. They also increase the demand for conventional power over the current low levels. For example, a data center using 50 mw of energy could use 25 mw of wind power and 25 mw of conventional power. This would use some of the excess demand. This is a good thing for Public Power and a good thing for Nebraska.
With your proud heritage of public power, you can lock in these low prices at this time if you pioneer a new financing system for wind farms. It is called Guaranteed Windpower. Because of Nebraska’s public power status, Nebraska utilities are not able to directly benefit from the federal tax benefits and subsidies available to private utilities. Guaranteed WindPower provides access to these benefits and more. The end result is the discounted prices that you would expect from public power.
The system has many similarities to McDonald’s. In 1948, McDonald’s was founded based on its ability to deliver 15¢ hamburgers. Dick and Mac McDonald took their burger drive-in to the next level by being efficient. They created a restaurant where everyone was asked to do one thing and to be the best at that one thing.
In the Guaranteed Windpower system, the developer develops the project (they are only flipping the burgers). Insurance companies that specialize in weather guarantee the wind – they are the most capable – like the “Frymaster” this job takes skill and experience to maintain a standard quality. Other insurers who are better with equipment cover the wind turbines. A private investor is asked to do what they do best, invest capital and use the tax benefits. Everyone plays the role that they are best at, and just like McDonald’s you can lower the price.
Through the years, one of the most important keys for McDonald’s growth is that they have also provided their owner/operator’s with low cost loans. And the loans are larger than they would be without the system support – that is how your local McDonald’s pays for those expensive playsets. Similarly, Guaranteed Windpower gives the wind farm owner/operators access to a large amount of the cheapest form of capital. This is tax exempt funding from your public power companies.
There is one other important lesson from the golden arches. Before McDonald’s came along, who would have predicted that by 1958, a single restaurant chain would sell over 100 million hamburgers? This success is built on having the right idea at the right time. With wind, Nebraska has the same opportunity to be at the right place at the right time. By reducing the price, we are driving the demand for businesses to locate in Nebraska and to grow more new jobs.
This cheap renewable energy ties directly to efforts to bring more data centers to Nebraska. Companies like Google and Yahoo are building these in states where energy is the cheapest. High-tech business has strong ties to renewable energy. Google in particular says that one of their goals is to make renewable energy cheaper than coal. Yet Google is building across the border in Iowa where they get 18% of their energy from wind. Yahoo has built in Nebraska and they created 50 high paying jobs, and they are investing over a $100 million. We need to create more of this. The strength of public power in Nebraska gives us an advantage over neighboring states.
Nebraska has the opportunity to pioneer the McDonald’s model to attract new customers with low cost renewable energy and increase economic development in Nebraska. McDonald’s built 100 restaurants in their first decade, seizing on their advantage and forming a new industry. Nebraska can have the same scale of success here by connecting your wind resource to Nebraskan economic development.