U.S. States: a profile of Oklahoma

Kari Williamson

Last year Google announced its power purchase agreement for the output of an Oklahoma wind farm. So why is Oklahoma such a good place for renewable energy developments?

Oklahoma Factfile (courtesy of David Margolis from the The PONT Group).

  • Ranked 8th in the United States for existing wind capacity;
  • Total existing wind installed as of February 2012: 2,041MW;
  • Total MW under construction currently: 1119.45 MW;
  • Ranked 5th in the United States for total new capacity installed in 2011 with 525 MW;
  • Over 1000 turbines are installed in the State;
  • Turbines installed: GE NEG Micon, Vestas, Suzlon, Acciona, Siemens;
  • On tap to be installed in 2012: DeWind, RePower, Mitsubishi, GE.

Interview with Mike Ming, Oklahoma secretary of energy

Renewable Energy Focus (REF): Oklahoma has a voluntary 15% renewable energy target for 2015 – any chance of making it obligatory or raising the bar?

Mike Ming, Oklahoma secretary of energy (MM): While it is possible that the Oklahoma Legislature could make the state’s renewable target obligatory, or perhaps even raise the bar beyond the current 15% target, it is not currently under consideration. Oklahoma’s renewable energy standard (RES) is designed to encourage the development of installed renewable electricity generation capacity.

Unlike a variety of policies in other states, which require that a specified percentage of electricity is generated from renewable sources, Oklahoma’s policy was created to encourage the development of a more robust renewable energy infrastructure throughout the state. Oklahoma certainly hopes to harness the full potential of its renewable resources, but it is important that measurable goals are kept attainable and that the state and industry are permitted the flexibility necessary to effectively integrate renewables into an effective power generation portfolio.

“In recent years, the wind industry has been the state’s primary renewable energy growth sector and has been a significant driver of economic growth in the state.”
Mike Ming, Oklahoma Energy Secretary

REF: What impact does renewable energy have on the Oklahoma economy?

MM: The energy industry has always been an important part of Oklahoma’s economy, and the growth of the Oklahoma renewable energy industry is no exception. In recent years, the wind industry has been the state’s primary renewable energy growth sector and has been a significant driver of economic growth in the state. The American Wind Energy Association (AWEA) reports that approximately 2000-3000 direct and indirect jobs were supported by the industry in 2009, and that more than US$13 million in annual property tax and lease payments have been collected. As the industry is still in its infancy, the economic impact is expected to continue to grow.

Oklahoma is already home to two major wind energy manufacturing facilities, in addition to one of the world’s largest small wind turbine manufacturers, and hopes to continue attracting new businesses to the state. With Oklahoma’s vast resource potential and attractive investment incentives, the renewable energy sector should continue to be a strong area for economic growth in the near future.

REF: Is there any renewable energy technology preference?

MM: Oklahoma has not codified a preference as to renewable technologies, although the Oklahoma Energy Security Act does provide for a statutory preference toward natural gas when considered among fossil fuel sources for electricity generation. Wind, solar, photovoltaic (PV), hydropower, hydrogen, geothermal, and biomass are all among the renewable resources the Act seeks to promote, and as such, each is considered a viable renewable option to the State, although currently wind and hydropower are by far the largest renewable sources of energy in Oklahoma.

It is also important not to pick winners and losers, but rather to create policy that allows the markets to function and make the correct choice.

REF: How does the Energy Department in Oklahoma define clean energy? Do you include for example CCS and nuclear?

MM: Just as there continues to be vigorous debate at the Federal level on a definition, there is currently no set definition for clean energy in Oklahoma.

REF: What are the transmission issues for renewable in the state, and how could they be overcome?

MM: As to wind development in Oklahoma, the existing transmission infrastructure is one of the most significant challenges the state faces in its effort to realise the full potential of its wind resources. The geographic areas with the highest wind density and therefore greatest resource potential are currently underserved by Oklahoma’s existing transmission system. A comprehensive regional transmission infrastructure that provides access to these areas of the state is crucial to the state’s ability to distribute renewable wind power throughout the state and to other nearby regions. A number of regional transmission proposals are currently under consideration, as are several private venture projects.

“The existing transmission infrastructure is one of the most significant challenges the state faces in its effort to realize the full potential of its wind resources.”
Mike Ming, Oklahoma Energy Secretary

REF: In an ideal world, what would be the energy mix in Oklahoma?

MM: We are currently working on this exact question, taking into account jobs, the economy, the environment, human health, reliability and affordability, and Oklahoma resources. It is basically a high-level optimisation exercise to provide a framework to ensure markets are able to function effectively on an even playing field.

When looking at what sets Oklahoma apart from other investment destinations, it’s our state’s willingness to work closely with companies looking to make investments in Oklahoma.

Google’s (Wind) Power

In spring 2011, Google signed a power purchase agreement (PPA) to buy the output of a 100.8 MW wind farm in Oklahoma when it becomes operational in late 2011.

NextEra Energy ResourcesMinco II wind farm will supply power to Google’s Mayes County data center through Google Energy LLC – Google’s entity allowing the internet giant to participate in the wholesale energy market.

Gary Demasi at Google’s Global Infrastructure team says Google has “made the commitment to be a carbon neutral company, and this purchase is part of our effort to minimise our impact on the environment.” In addition to buying renewable energy power, Google purchases carbon off sets for any remaining emissions.

“Our infrastructure team will continue to seek similar opportunities globally as Google’s businesses continue to grow. As a company we hope that purchases like these, plus the additional US$350 million we’ve invested in renewable energy projects, support the market and drive down the cost of clean energy. This will enable even more companies to invest in sustainable energy solutions,” Demasi concludes.

The fact that Google has entered a PPA directly with the wind farm instead of buying the power via a utility, ensure the money is going towards the wind farm enabling its construction.

Welcomed by Oklahoma

The Oklahoma Department of Commerce’s Wind Development Specialist, Kylah McNabb, told Renewable Energy Focus that she was very pleased with Google choosing Oklahoma, as it made a great showcase for future projects.

Asked why Google chose Oklahoma and the Minco II project, McNabb says: “What they were looking for was a good site to have their data center. And as soon as I saw that Google’s overall philosophy was to get to a zero carbon footprint and seeing the wind resource we have in this state, it made sense for them to push through the option of purchasing wind from an Oklahoma wind farm that was reasonably close by. It was just a matter of all the puzzle pieces fitting together just right for them.”

“It was just a matter of all the puzzle pieces fitting together just right for [Google].”
Kylah McNabb, Oklahoma Department of Commerce

McNabb believes Google’s choice could be an inspiration to other companies: “In what Google is showcasing in this state with their aggressive approach to being able to be carbon neutral and in utilising the local resource for what they need, is a fantastic example and they are truly setting the standard for other companies to follow. It showcases that we do have the wind resource in Oklahoma and showcases that we in Oklahoma have the ability make these deals, and so I would certainly expect other companies to follow.”

She is not aware, however, of any imminent deals on the horizon. “It is a new type of model for companies and Google is certainly leading the way, but I think it being established and being known, and the amount of projects that are in development in Oklahoma that are ready to provide Oklahoma’s wind resource – it wouldn’t surprise me to see something similar coming down the line in the next few years.”

McNabb cannot give much more details on the actual wind farm from what Google has announced, but she says it is an extension of an existing wind farm, which is about 30 minutes drive from the Oklahoma City metro area. The first phase consisted of GE 1.6 MW wind turbines, and although nothing has been revealed or confirmed, she does not think it unlikely that similar technology will be chosen again.

Although the wind farm is in such close proximity to the metropolitan area, McNabb says there has not been much opposition to the wind farm. “The companies in Oklahoma have a tendency of doing a very good job of outreach to surrounding landowners,” she says before adding that there has been a great focus on education. Together with the Oklahoma Wind Power Initiative, the Department of Commerce and McNabb make sure “people understand what’s coming down the line.”

“Since we have projects in the state, we can point to them and take them there and say: Look how big the components are, this is what you can expect. I think the education up front of all landowners in the area helps with this issue [of opposition].”

In terms of subsidies, the wind farm could be eligible for both state and Federal level production tax credit (PTC). The Oklahoma PTC is US$0.018/kWh, McNabb says. The credit could be paid out from 2012.

The wind farm does not only rely on tax credits and Google’s PPA however: “We’re blessed with a wonderful wind resource that helps the economics work out for this project,” she adds.

It is not clear who will benefit from the PTC in this case, but McNabb says: “My assumption is that it’s going to benefit Google because they actually signed the power purchase agreement, but it depends on the negotiations and the power purchase agreement.” This is something that is not usually disclosed to the public, however.

“It’s a fantastic showcase for the wind resource we have in Oklahoma and the market conditions that we have to enable such a model to take place,” she concludes.

This article was first published in Renewable Energy Focus U.S., May/June 2011

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Policy, investment and markets  •  Wind power