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Wind industry leaps hurdles in Oklahoma as investment booms

Developers are busier than ever with gigawatts of future capacity including the nation's largest combined wind, solar and battery energy storage project

Wind developers are busier than ever in Oklahoma, investing billions of dollars in projects through 2022 after overcoming retroactive fiscal policy changes, efforts to tax generation and opposition from politically powerful fossil fuel interests.

Among the reasons: low cost of energy, quality of wind resource and available sites.

On 31 March, the number three US wind state with 8.07GW installed capacity had 1.13GW under construction and 650MW in advanced development. Since then, utility holding company American Electric Power (AEP) announced three projects totaling 1.5GW – the largest multi-site initiative in the country.

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Last week, NextEra Energy Resources unveiled plans for a two-phase, 700MW combined wind, solar and battery energy storage project – the nation’s largest - in Oklahoma. The 250MW wind phase is due online this year and 250MW solar and 200MW battery storage by the end of 2023.

While some build-out reflects efforts by developers to have projects online by the end of 2020 to qualify for 100% of the federal production tax credit (PTC), others are targeted for later completion dates at lower values.

The PTC will sunset at the end of this year while the 30% solar investment tax credit (ITC) will phase down in value starting in 2020 to a permanent 10% for commercial-scale projects in 2022.

"I think you're going to see a lot of investment even if the federal government phases out these programs just because the cost curve continues to come down," Mark Yates, a vice president with the Advanced Power Alliance, an Austin, Texas-based advocacy group, told The Oklahoman.

Wind is proving a lower cost alternative to coal imported by rail from Wyoming and natural gas in older power plants. Oklahoma is a leading crude oil and natural gas producing state,

Wind projects built after 1 July 2017 no longer receive state tax incentives. The industry relinquished two of them worth $500m as part of a 2015 political deal to help the state with its finances.

Lawmakers later broke a pledge to preserve the remaining incentive worth $250m through 2020, phasing it out three years early. That move and efforts last year by prior Governor Mary Fallin to tax wind generation angered wind industry leaders and led several developers to cancel projects.

Since then, the state’s fiscal situation has much improved and new Governor Kevin Stitt, another Republican who took office in January, has let the wind generation tax idea die. Project developers have favorably responded.

State officials and regulators also appear more amenable to smaller expansions after AEP's 2GW Wind Catcher Energy Connection project collapsed in spectacular fashion last year, in part due to opposition within Oklahoma over project cost and necessity.

Wind resource quality is also driving investment. In 2018, Oklahoma obtained 32% of its electric power (28 million MWh) from wind while Iowa, the industry’s number two state by installed capacity, got 34% (22million MWh).

That additional production reduces the levelised cost of energy and makes Oklahoma more attractive and profitable for independent power producers. Availability of quality sites and project development costs lower than the national average are other reasons to invest there.

On the cautionary side, grid congestion and problems exporting wind energy east to other electricity systems remain impediments for wind development in the far western Panhandle region containing the best resource.

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