Can you feel it Coming in the Air? Rural Economic Development and Wind Farms

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http://www.newsobserver.com/news/business/g49k6/picture27159454/ALTERNATES/FREE_640/IR-0045_01-2007Money may not literally grow on trees, but a glance at North Carolina’s rural economies reveals that cash crops sprout not just in our long-cultivated cotton and tobacco fields: they now also root in the steep hillsides of northwestern Christmas tree farms and navigate the waters flowing through the mountains and along the coast. The recent unveiling of plans for a large wind farm in northeastern North Carolina point to the air above farmland as the growing medium for the state’s newest cash crop. Just how excited should wind-tousled economic developers and public officials be?

Windfall Revenues

In mid-July, Amazon, the online retail giant, and Spanish energy company Iberdrola Renewables announced that they would build a 34-square-mile wind farm in Perquimans and Pasquotank counties. The 104 turbines that make up the first phase of the so-called Amazon Wind Farm US East will provide electricity for use by Amazon data centers in Virginia and Ohio beginning in December 2016. When fully built, the wind farm will have 150 turbines. 

The turbine farm is planned to coexist with the region’s thousands of acres of (agricultural) farmland. According to the News & Observer, Iberdrola will pay more than 60 property owners for “hosting access roads and turbines on their land.” In the first year, local property owners will receive $624,000, or $6,000 per turbine. And, as the massive blades spin overhead, “farmers can still farm,” says Wayne Harris, director of the Elizabeth City and Pasquotank County Economic Development Commission. In fact, crops can be grown and animals can be grazed right up to the base of turbine towers, according to the Department of Energy. Leasing space for a wind turbine on one’s farm essentially increases the productive value of that land, which is especially valuable for farmers, who often face slim and fluctuating margins.

In addition to making lease payments to individual property owners, by paying $520,000 in local taxes, or $5,000 per turbine, Iberdrola will instantly become the largest taxpayer in both counties, though it will receive a 94 percent tax rebate that first year, according to this News & Observer article (the article doesn’t describe this “rebate” in detail: tax rebates and tax abatements are not permitted in North Carolina, and it’s more likely that the counties provided a cash grant based on, but not directly connected to, Iberdrola’s taxes). Over 30 years, the annual per turbine rate will increase to more than $8,000. Perquimans and Pasquotank, both Tier 1 counties, can thus look forward to between $500,000 and over $1.2 million in annual tax revenues over the life of the farm.

Most Jobs Will Breeze Through

According to Iberdrola, the initial phase of the project will create 250 construction jobs. The Bureau of Labor Statistics says that a mix of local contractors and workers from specialized firms usually put turbines in place: “Under the supervision of more experienced wind-industry workers, local construction firms help build access roads and the foundations, made of reinforced concrete, that rest under the turbines. Skilled crane operators stack the tower segments atop one another before adding the nacelle and blades to the top of the turbine.”

Iberdrola estimates that the wind farm will have about 10 permanent, full-time jobs once it is operational. The BLS notes, “Wind turbines can run with little need for human supervision. Energy companies employ monitors, either locally or remotely, to observe energy flows and inform technicians of any problems. All wind farms employ local workers, but remote monitoring of wind turbines can allow for a cost-effective way to ensure that the turbine is generating power most efficiently and that local technicians are alerted to any potential problems.” It is the manufacture of turbines and the construction of farms that are labor intensive; the actual operation requires few on-site employees. According to Paul Copleman, communications manager for the firm, the farm will require a plant manager, wind plant technicians, and an administrative employee.

A job description Mr. Copleman made available to illustrate the likely requirements for a wind plant technician at the eastern North Carolina site (and available here on Iberdrola’s website) states that a wind plant technician is “responsible for the onsite operations, maintenance, repairs and replacement of equipment.” According to the BLS, “Wind techs are responsible for both regular maintenance and performing complicated repairs of wind turbines. The average workday is spent climbing and inspecting multiple turbines.”

Iberdrola’s requirements for wind plant technicians include one year of college or a technical school certificate, or one year of related experience or training; “knowledge of heavy equipment required for facility maintenance with a working knowledge of crane and rigging requirements;” and “familiarity with maintenance and electronic testing equipment.” The BLS says that due to the newness of the US wind energy industry “there is no one way to be trained as a wind tech. Wind techs need to have mechanical skills and the aptitude to understand how a turbine functions, so some wind techs come from technician jobs in other industries. Experience or training as an electrician also is beneficial.” Thus, local workers with transferrable skills may be able to fill some of the wind plant technician positions at the Iberdrola site.

Median pay for wind turbine technicians in 2012, the most recent year for which data is available, was $45,970 per year, or $22.10 per hour. The median household income for residents of Pasquotank and Perquimans Counties in 2012 was $44,998.

If local workers don’t have the qualifications, they could potentially choose to seek out training programs. But programs specifically geared toward wind turbine technicians are limited, and located in areas with greater wind power infrastructure, far from northeastern North Carolina. Currently, there are two programs that include wind power curricula in North Carolina, according to the US Department of Energy. One is at Appalachian State University and the other is at NC State University. Training through one of these programs could complement previous experience as a technician or electrician.

Typically, community and technical colleges can play an important role in preparing a local workforce for new career opportunities (see this blog post for more on workforce development and the community college system in NC). And with an expected December 2016 opening for the wind farm, there is still time for the type of fast-track training programs that these schools are well positioned to offer. But the low number of technician positions offered by the wind farm may not justify the costs of such a training program—and if workers do not get hired at the Amazon wind farm, they may struggle to find wind-power jobs elsewhere in the region (at least for now).

College of the Albemarle, the nearest community college to the farm site, doesn’t currently offer a program for wind technology, but it did previously offer an associate’s degree and a diploma program in sustainable systems, which included wind power in its curricula. According to John Stolarczyk, who runs the college’s Customized Industry Training program, both programs were put on hold due to low enrollment. As part of their current Electrical Systems Technology program, the college offers one course on wind and hydropower systems. Soon after the wind farm announcement, Stolarczyk said that the college had not yet been in contact with Iberdrola, though it had previously talked to Apex Clean Energy, which is exploring the feasibility of a wind farm called Timbermill Wind in Perquimans and Chowan counties. Between the two sites—Iberdrola’s and Apex’s—and other wind farms that may be in pre-development in northeastern North Carolina, there may be sufficient demand for some type of local wind tech training program (Stolarczyk said that College of the Albemarle’s programs in sustainable systems had been seeking annual enrollment of just six students, which they failed to reach).

A lack of many permanent jobs, and the local workforce’s potential skills mismatch with those jobs, can be frustrating for residents that live near large development projects. Several North Carolina communities have also struggled with the gap between large public and private investments and small employment gains. Data centers—a growing presence in the state and the destinations for the electricity created at the Iberdrola site—don’t typically employ many local residents, either. That was one of the complaints of residents of Maiden, NC, a few years ago, after Apple opened a $1 billion data center in their town. After such a large investment—and a sizeable incentive package—residents were disappointed that the center directly employed only 50 people, and few of them were from the area. While the couple that sold Apple the one-acre plot for the data center made $1.7 million, many residents feel they themselves gained little, at the expense of large public concessions (Apple’s property taxes were cut in half; personal taxes were cut by 85 percent).

Wind Farms Have Fans, Critics

By making annual lease payments to so many landowners, the Iberdrola wind farm could have a direct economic impact on a greater number of long-term residents than would a typical rural data center, which, while relatively large, requires only a small fraction of the land of a wind farm. And if the turbines do not prevent farmers from productively using their land and do not strain local services, the payments, which will average about $10,000 per landowner in the first year, are free money for those who own selected properties. This could raise equity concerns: it’s effectiveness and efficiency, not uniform economic impact on community landowners, that drives decisions about where to place turbines. So while the daily view and drone of a large turbine might be easily borne by a property owner who is profiting from it, neighbors whose land abuts, but does not underlie, the turbines, may find the constant hum of the turbine more grating than sweet. In addition, the increased income of landowners through lease payments, at the exclusion of non-landowners, may exacerbate economic inequality and social friction in rural communities, which are often already suffering from higher than average rates of poverty.

As public officials are well aware, the disparate impacts of economic development projects make incentives highly controversial. The use of incentives spreads the costs of an intended benefit across many taxpayers, even though the benefit rarely accrues to them all. But the thinking is that any increase in local tax revenues, coupled with the ripple effects of increased income and spending of development beneficiaries, can often be worth the initial outlay of incentives. In the case of the Iberdrola project, if tax rebates were in fact the only incentives used, the local governments, and by extension their taxpayers, lose nothing (other than 94 percent of the available instant gratification, thanks to the first-year grant). Starting in year two, the expected revenue boost will likely feel worth the wait, at least for the local budget offices.

In addition to the unequal distribution of benefits among residents, wind farms can entail costs, or negative impacts, that don’t fall solely on the landowners who have granted access to their property. These impacts include the constant noise emitted by the turbines and the effect that large wind farms have on landscapes. In some communities, such as those around Nantucket Sound in Massachusetts, opposition has been fierce, well funded, and successful.

Watchers of wind energy in this state may remember the strong local opposition to a wind farm in Ashe County in 2007; the early-stage proposal to construct 25 to 28 turbines on Big Spring Mountain was eventually abandoned. Residents showed up in force at a public hearing to argue against the proposal–many on the grounds that, in addition to violating the Mountain Ridge Protection Act, the placement of turbines on the ridges and the substantial grading work required to install the turbines would damage the area’s greatest asset: its scenic beauty. It wasn’t just an aesthetic argument; the upsurge in tourism in Ashe County, tied to the area’s unspoiled beauty, had directly benefited many residents, says Walter Clark, an Ashe County resident who was involved in the local debate.

Yet other communities have embraced turbines, both as a way to generate local energy and better utilize undesirable properties, as detailed in this blog post. The Iberdrola project, notably, does not generate energy for the local market, but it is unlikely to face the same opposition as the projects in Nantucket or Ashe County. While the turbines will alter the rural landscape, their placement on largely agricultural parcels (far from the nearest mountaintop) stands to increase the productive value of those properties, not diminish it as they might for a more tourist-oriented economy.

In that way, wind very well may join North Carolina’s agricultural pantheon, taking its place beside (or, more accurately, neck-craningly high above) the sweet potatoes, the cotton, the bright and burley, and even the Fraser Firs. The experiences of residents of Perquimans and Pasquotank counties—in getting jobs as well as living and farming among the whirring blades—will likely influence the fervor with which other rural North Carolina communities embrace, or tilt at, these hulking giants.

Andrew Trump is a student in the Master of City and Regional Planning and Master of Public Administration programs at UNC-Chapel Hill and a fellow at the Development Finance Initiative.

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