Minnesota is “amping up” its wind watts.

The state now has about 750 megawatts of wind energy capacity and could add more than 2,000 megawatts of additional capacity by 2015. Xcel Energy, Minnesota’s largest utility and the nation’s top wind-power buyer, will nearly double its supply of wind power in Minnesota over the next five years, to 1,125 megawatts.

Minnesota is aiming to generate 20 percent of the state’s electricity from renewable sources by 2015 — up from 10 percent today. At least half of that renewable power is expected to come from wind, according to a 2005 Minnesota Commerce Department report.

Wind power revival

Before rural electrification began in 1935, every Minnesota farm had a windmill to pump well water. About 1920, farmers started using windmills to power small generator-and-battery sets, bringing electric lights and radios to farmhouses for the first time. A Minnesota extension service expert wrote in 1921 that “the future possibilities of wind-driven electric plants appear to be good.”

As power lines were extended into the Minnesota countryside in the late 1930s and 1940s, windmills were abandoned. It would be decades before the state again turned its attention to “the future possibilities” of wind energy.

Interest in wind power revived in the 1990s. In 1994, Minnesota ordered Northern States Power Co. (now Xcel Energy) to add 425 megawatts of wind power to its portfolio in exchange for storing spent nuclear fuel at Prairie Island. In response, scores of wind towers went up in Lincoln, Pipestone and Murray counties, the state’s windiest region.

Little more than a decade later, nearly 800 wind turbines dot the rural Minnesota landscape. They range in size from single turbines that power individual homes, farms or schools, to large commercial wind farms with dozens of turbines and more than 100 megawatts of capacity. Minnesota now ranks fourth in wind power, behind California, Texas and Iowa, according to the American Wind Energy Association.

Wind drivers

What’s driving this expansion?

University of Minnesota economist Douglas Tiffany, who has written extensively on renewable energy, says Minnesota’s wind industry has been spurred by several factors:

With tax breaks and other publicly-funded incentives, wind power can be a good investment on windy sites accessible to the transmission grid. The federal wind-production tax credit offers 1.9 cents per kilowatt-hour for 10 years.

Minnesota offers financial incentives, too, and has invested in wind research. Turbine design improvements are also cutting the cost of wind power.

Renewable power mandates and goals create a market for wind power. Minnesota requires utilities to offer consumers renewable power. And Xcel Energy must generate 10 percent of its power from renewables by 2015.

Backing ‘green’

In addition, consumers are demanding clean, “green” energy, says Paul Adelmann, an Xcel Energy spokesman. The utility’s WindSource program has 50,000 subscribers, Adelmann says, making it “the largest voluntary consumer wind-purchasing program in the nation.” Particularly in Minnesota, Adelmann says, “our customers are very aware of environmental issues. They are asking for more wind power … and it’s having an impact.” That’s one reason why Xcel Energy has exceeded state wind power mandates, says Michelle Swanson, Xcel Energy policy analyst. “We recognize that wind is an important part of our portfolio.”

The price of wind power is dropping, too. Twenty-five years ago, when the first utility-scale turbines were installed, wind-generated electricity cost up to 30 cents per kilowatt hour, according to the American Wind Energy Association, a trade group. Today’s state-of-the-art wind power plants can generate electricity for less than 5 cents a kilowatt-hour in many parts of the United States, according to AWEA.

That compares favorably with the cost of new coal power (4.8 to 5.5 cents per kilowatt-hour) and gas combined cycle power (3.9 to 4.4 cents per kilowatt-hour), the AWEA estimates. High natural gas prices are also making wind power more competitive, Swanson says, although steel and construction costs for wind towers are up, too, she adds.

Benefits and barriers

Wind turbines generate clean, renewable energy, with no emissions and little environmental impact. Advocates say wind power also fosters rural business development, creates jobs, generates new property tax revenues and offers farmers leasehold income. Still, Tiffany says, “There are substantial economic issues, such as investments in transmission capacity, that must be surmounted before greater portions of total electrical capacity can be replaced by wind.”

Wind’s chief limitation is obvious: it’s variable. Wind-power producers can’t guarantee delivery of electricity at scheduled times. This makes the commodity worth less to utilities, which must supply power to retail customers on demand.

Wind plants can have much higher capital costs than conventional power plants, so financing can be a hurdle, Tiffany says. Transmission costs are also higher, because the best wind resources are in rural areas, distant from population centers. Getting access to the electric grid can be a problem, too, says Jack Keers, Rural Minnesota Energy Board chair. More transmission lines will be needed to distribute wind power to customers in the Twin Cities and other markets, he says.

Windy outlook

Despite these hurdles, the outlook for Minnesota wind power is good, Keers says. Last year, the federal production tax credit was extended. Xcel Energy is investing $160 million in new transmission infrastructure in southwest Minnesota. And new wind-speed maps show that wind turbines are feasible not only in southern Minnesota, but also in western, northwestern and south central Minnesota.

Minnesota has made it easier for small wind power projects to get started, too. The Community-Based Energy Development program offers a new financing option, more flexible grid access and other incentives for local wind-power producers, Keers says. And Xcel Energy has agreed to buy 500 megawatts of electricity from community-based wind energy providers.