DES MOINES—Gov. Terry Branstad announced Wednesday that MidAmerican Energy will invest $1.9 billion in new wind energy farms, the largest economic development project in Iowa to date.
“We are pleased to announced the largest economic development program in Iowa history,” Branstad said, joking that the mantra has been a broken record recently as the state has worked to lure large-scale fertilizer and data center projects to the Hawkeye State. “As wind energy grows, so does the Iowa economy.”
The project will create about 460 construction jobs over the next two years and 48 permanent positions, said Lt. Gov. Kim Reynolds at an afternoon press conference along with MidAmerican CEO William Fehrman.
“I am a true believer in the idea of an all the above energy approach,” Branstad said. “In Iowa, we don’t produce oil or coal, but we are a leader in renewable energy.”
MidAmerican plans to add 656 new wind turbines by the end of 2014. The investment, which occurred without state tax incentives, will provide the state more than $360 million in property tax revenues over the next 30 years. The company also plans to pay farmers and other landowners $3.2 million.
The project is also projected to stabilize electric rates for customers by providing a rate reduction of $10 million per year by 2017 (representing an average 1 percent bill reduction for a residential customer).
Des Moines-based MidAmerican Energy, owned by the Warren Buffet’s Berkshire Hathaway holding company, started building wind farms in 2002. They’ve since installed 1,267 turbines, costing $4 billion. By the end of the new project, 39 percent of their energy generation will come from wind (reducing the company’s carbon footprint by 10 percent). The Iowa Utilities Board must still sign off on the project.
Branstad said that Iowa’s low-cost energy and diversified approach has been a significant factor in attracting capital investment from companies such as Microsoft, Facebook and Google, which all have existing or planned data centers in the state.
Fehrman cited Iowa’s congressional delegation for its support of wind energy production tax credits, which he said were instrumental to the company’s decision to invest more in wind energy.
Congress revived the wind production tax credit (PTC) on New Year’s Day as part of the “fiscal cliff” deal, just hours after the credit expired. It is now slated to expire at the end of the year (although all projects started in 2014 will still qualify for the credit). Wind energy companies want a permanent extension but many budget hawks, especially House Republicans, remain critical of the subsidy. The credit provides companies 2.2 cents per kilowatt-hour for electricity produced over a farm’s first 10 years, which brings the price of wind energy in line with conventional fuels.
Critics contend that the government shouldn’t pick winners and losers in the energy economy (the PTC subsidy is equivalent to 50-70 percent of the wholesale price of electricity). Joe Kristan, a CPA at Des Moines-based Roth & Company, mocked the project on his personal blog Wednesday.
“Supporters of the project dismissed objections that the pyramids are a waste of money, diverting resources from more efficient ways to inter dead politicians, saying ‘you must hate jobs,’ wrote Kristan, who authors the influential Tax Update blog.
Sen. Chuck Grassley, R-Iowa, defended the wind PTC in a release Wednesday.
“Continued investment in wind-energy production emphasizes the value and success of the federal production tax credit,” he said. “Wind energy has proven that it’s a force in America’s energy supply, providing clean, renewable, and home-grown power. Wind energy comes from local farms, it’s for local customers and, most often, it adds investment value to local communities.”
Grassley authored the wind PTC with an amendment to the Energy Policy Act of 1992, aiming to “level the playing field” with coal-fired and nuclear electricity generation. Iowa ranks second in wind energy production, which supports 6,000 jobs in the state, Grassley’s office said.
UPDATE: Iowa Democrats credited former Democratic governors for the development.
“Today is a great day for the state of Iowa and would not have been possible without the forward thinking of Governors Tom Vilsack and Chet Culver and Democrats in the state legislature. Democrats years ago had the vision of making Iowa the wind energy capital of the world, and today’s announcement is just one more example that this dream is becoming a reality,” Iowa Democratic Party chairman Tyler Olson said.
Sen. Tom Harkin, D-Iowa, also chimed in with his support.
“We have long known the benefit of the production tax credit for wind in states like Iowa—not just to increase our domestic energy supply, but to create manufacturing jobs as well,” Harkin said in a release. “With Iowa leading the way in this innovation, today’s announcement brings the benefit of the wind production tax credit into focus with a major investment that was made possible in part by extending the tax credit.”
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