The Black Hills Pioneer hosted Scott Minos, the US Department of Energy’s senior policy and communications specialist for the office of Energy Efficiency and Renewable Energy and Rapid City-based attorney David Ganje to discuss wind energy development in South Dakota at a Wind Power Workshop Friday morning in Spearfish.
Wind energy forum covers potential for development in SD as well as risks, rewards
By Adam Hurlburt
Black Hills Pioneer
SPEARFISH — Wind energy is expanding rapidly across the county, especially on the windswept plains of the Midwest. A 2014 US Department of Energy report found the nation’s total 2014 wind farm capacity sat at some 65.88 percent while roughly 96 gigwatts of new wind power projects laid in waiting for permits. That’s serious expansion. And with the South Dakota legislature reducing production taxes on new wind projects this year, wind projects may be in the rise here soon. With that in mind the Black Hills Pioneer hosted a Wind Power Workshop Friday morning at the High Plains Western Heritage Center in Spearfish.
The US Department of Energy’s (DOE) Senior Policy and Communications Specialist for the office of Energy Efficiency and Renewable Energy Scott Minos flew in from Washington D.C. for the workshop. He discussed the viability of wind energy as a renewable resource, the potential for further wind energy development in South Dakota, and the main stumbling block for commercial wind farms on the eastern side of the state: lack of access to transmission lines to connect wind farms to markets interested in purchasing the energy.
DOE rules forbid Minos from being quoted in any non-government-sourced publication without oversight.
David Ganje, a Rapid City-based attorney with experience in energy, natural resources, and environmental law spoke at length at the workshop.
Ganje discussed South Dakota’s uninspired promotion of wind energy for economic development and comparatively lackluster wind farm-related statutes and regulations. He also provided detailed advice for landowners on how to negotiate a wind lease or easement to ensure maximum satisfaction with contract terms.
“I think that wind is a wonderful non-fossil natural resource that should be developed more in this state, that’s my opinion. I’m pro-wind development,” Ganje said. “There’s no question about it, South Dakota has significant potential. There’s no question about it when you look at the statistics, when you look at the data, but there is a question about it when you look at the terms of what’s going on in this state.”
Ganje noted that South Dakota state government had an agency called the South Dakota Energy Infrastructure Authority (SDEIA) from 2005-2015, which studied and promoted wind energy in the state until it was axed during this year’s legislative session. In the 10 years the SDEIA was active more than 85 percent of the commercial wind farm turbines in the state were built, he said.
South Dakota produces roughly 25 percent of its electricity through wind, second only to Iowa, at 28 percent. But if you compare a map of South Dakota’s current wind farms to a map of the state’s wind resource estimates you’ll see that there’s a significant amount of space in the state for more wind farms, especially on the western side of the Missouri River, where there are currently no active commercial wind farms. This isn’t due to mere oversight.
“One of the major challenges that the state does have as a big picture issue is the ability to export this energy. We don’t have the infrastructure that other states do. We don’t have the transmission lines that will take the capacity to transfer this stuff. In my opinion that is problem that I think the state should look at and find ways in which the state can cooperate with utility companies to develop better transmission lines,” Ganje said. “The issue of transmissibility of energy is there and has been around for a long time. That’s why we haven’t become an epicenter of it yet, in my opinion, of it.”
The SDEIA said in 2008 report that “it’s virtually certain that significant investments in transmission infrastructure will have to be made before a portion of South Dakota’s wind potential can be developed and exported.”
There is some wind development stirring in western South Dakota, though. And if it’s successful it may be a catalyst for addressing the lack of viable transmission lines on the west side of the state.
If the South Dakota Public Utilities Commission (PUC) accepts Wyoming-based Wind Quarry LLC’s application, the $210 million, 45-turbine, 103-megawatt Willow Creek Wind project proposed for a site roughly 10 miles northeast of Newell could be western South Dakota’s first active commercial wind farm.
If wind energy development spreads across South Dakota like Minos and Ganje think it should — and perhaps will at some point, South Dakota landowners and local governments must be prepared. As with any development, there are risks and rewards.
“County governments are given very broad authority to manage the zoning, the regulation, and the function of these wind farms (in South Dakota). “This is good if the county government sees that it will be subject to wind farms and it’s bad if the county government desires not to participate in the process because it’s got a hands-off philosophy.”
Ganje said counties must do their homework and research any and all proposed wind farm developments carefully. They must take into consideration where the wind farm will be sited, how the wind farm and supporting infrastructure will be constructed, how much damage will be done to existing public roads while constructing the wind farm, what will happen to the wind farm and infrastructure should it be abandoned, and more.
“You need to think ahead when you are involved in whatever capacity in dealing with one of these wind farms because these things are here forever,” he said. “South Dakota has some restrictions. One of them is that no easement can last more than 50 years. Fifty years is two generations; that’s a long time. You have to think about what will occur during all that.”
South Dakota does not require a surety bond from wind farm operators during operation. This leaves the establishment of such a bond up to county officials. Ganje strongly suggested that landowners establish a similar bond in land easements. South Dakota doesn’t require wind farm operators carry liability insurance, either. This again is up to individual counties and landowners to negotiate with the wind farm operators.
Landowners have even more to be concerned about than county officials when negotiating easements with wind farm developers/operators.
“The development stage in South Dakota is curious. South Dakota statute says the developer has five years within which to first start construction. Five years, that’s a long time,” Ganje said. “And in South Dakota development is defined as laying down a concrete pad. That’s considered the first step of development. Put one done and they meet that five-year requirement.”
Closing up these fantastic loopholes is solely up to each landowner. It’s not unheard of for a wind developer to sign an easement with a landowner, do some initial construction, and then break it off and abandon the would-be wind farm if they have problems finding a power company to purchase the energy the farm would develop.
Landowners must also shrewdly negotiate liability issues, ensuring that the wind farm developer/operator is liable for any potential damage to wind farm infrastructure and landowner property as well as repair to wind farm infrastructure, and more.
“The landowner should not be held accountable, and the language in the easement should say that,” Ganje said.
Landowners should also negotiate for indemnification agreements, establish that operators are responsible for restoration of the land upon completion of construction and at decommissioning, negotiate to receive energy production data with every royalties payment, and establish language to hold every subsequent operator is beholden to the same legal guidelines should the wind farm change hands.
“It (wind energy) works. You’ve got to set it up right, you’ve got to make sure you’re with the right company, the right developer, but it works,” Ganje said. “It’s not speculative stuff. It can generate a profit, it can benefit society, and it can integrate energy into our system. There is something here that can be done and should be done and is being done now.”
