Spanish Fork's wind farm is being hailed as a model economic engine for the entire state ¬ -- and the investment is already paying off.
A new study from Utah State University and the U.S. Department of Energy praises the wind farm, which is Utah's first commercial wind power plant, for pumping more than $4 million in economic output into the state during its construction. Located at the mouth of Spanish Fork Canyon, the project supported 38 jobs with a total payroll of almost $1.4 million.
Perhaps most significant of all, the Spanish Fork wind farm has pioneered the way for other projects, a slew of which are now under consideration.
A company called First Wind is developing a large wind project in Beaver and Millard counties called the Milford Wind Corridor Project which will dwarf the Spanish Fork farm by generating up to 203 megawatts of clean energy using 97 turbines. One megawatt powers about 800 homes.
Eleven of those turbines will reportedly be located on school trust lands, generating millions of dollars in lease payments to benefit local schools, said Edwin Stafford, a professor of marketing at the Jon M. Huntsman School of Business.¬ Construction is expected to be completed by the end of this year.
"We are aware of many wind developers in Utah working to develop projects across the state, and many are still in the approval process," said Stafford's fellow professor Cathy Hartman. "These are proprietary projects, so we can't reveal much detail on specifics. However, there are several policy and tax incentives that will encourage wind and other renewable energy development in the state."
Hartman said the demonstration value of the Spanish Fork project has been immense.
"I think being able to demonstrate the economic benefits that can accrue to local communities is one of the most important pieces of information in our report," she said.
"Being a pioneer is never easy," Stafford said, noting that those who built the wind farm "blazed a path for other developers to follow for future wind development. ... Clearly, understanding the pitfalls and hurdles that Spanish Fork encountered in its development can provide other developers insights about Utah's market."
Utah is more and more likely to turn to wind energy. For starters, Gov. Jon Huntsman has said he would like to see Utah become a center for renewable energy and the jobs and income it generates. In addition, while more than 90 percent of Utah's electricity comes from coal, there are compelling reasons to begin working on alternatives such as wind.
"While coal has allowed Utah to enjoy some of the least expensive electricity rates in the nation, there are several risks associated with coal for the future," Stafford said.
The Utah Geological Survey has reported that Utah's economically viable coal reserves are dwindling, with estimates ranging from 12 to 40 years.
"While there's some debate as to how long those reserves may last, the concern is that digging deeper for coal or needing to import coal from Wyoming via railroads could drive the cost for Utah's electricity upward," Stafford said. "A utility executive we spoke with in our research indicated that he saw wind power as a hedge against the railroads -- that is, wind displaced his company's need to rely on railroads to move coal. There aren't any alternatives for transporting coal."
Also, the Crandall Canyon Mining accident in 2007 also brought to focus the human safety risks of digging deeper for coal as well, Stafford said.
Furthermore, the introduction of carbon taxes or restrictions is "inevitable," said Hartman, and that will increase the cost of burning coal for electricity.
"Utah's participation in the Western Climate Initiative guarantees that restrictions on carbon emissions are just around the corner and coal's cost advantage may disappear," she said. "The Spanish Fork project will prevent the emission of 13,500 tons of CO2 that would be created if the same amount of electricity were produced from coal. If carbon were taxed at the rate of $12 per ton, that is currently projected by some utility companies including Rocky Mountain Power, this would mean a cost savings of $162,000 annually."
More and more, Utah residents concerned about air pollution from burning coal have been putting pressure on utilities to curb pollution, Hartman said. "In short, diversifying our electricity resources can be a hedge against these risks."
Wind power is also attractive because it is price-stable, Stafford said.
"The bulk of the cost of wind is from the cost of turbines and infrastructure," he said.¬ "Because the wind is free, the price of wind is predictable and stable. Long-term purchase agreements for wind power can often be set at locked-in prices for 20 or 25 years."¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬
The economic benefits of the new Spanish Fork project are myriad, according to the study.¬ For each year of operation private landowners will be paid leases to the tune of $74,000. And Nebo School District gets $84,000 a year.
"I might add that Spanish Fork is a small wind project with only nine 2.1 megawatt turbines, and the city, county and school district agreed to a 70-percent reduction in taxes for the first 10 years of the project," Hartman said.
The report found that getting the project off the ground was far from easy -- in fact, it might be better described as an absolute battle.
"The developers faced obstacles at every turn and had to break new ground on many fronts," said Stafford. "Our report provides a detailed case study of the four-year struggle Tracy Livingston and his company, Wasatch Wind, took to establish the Spanish Fork wind project. Key hurdles included the changing of state and local policies, procuring investors, establishing policies for pricing wind power, and addressing resistance to the project from some local residents."
In addition, negotiating a power purchase agreement with Rocky Mountain Power was a "difficult two-year process, requiring the Utah Public Service Commission to step in and establish a policy on the pricing of wind in Utah," Stafford said.
Though some residents derided the windmills, "the viewscape of Spanish Fork must be quite appealing as in the few short months it has been in operation, it has captured the attention of professional photographers," said Hartman. "A picture of it was featured in the New York Times, and it is the subject of a recent photo contest called the First Global Wind Energy Photo Contest."