Power line congestion leads to wind turbine shutdowns, denting county budgets

So many wind turbines have sprouted in Minnesota in recent years that power lines can't handle them all — and some rural counties are paying the price.

Wind turbines in parts of southern Minnesota are more commonly being shut off periodically because of transmission congestion. Wind farm taxes are key revenue sources for counties, and money only flows when the turbines are turning.

The 18 counties in Minnesota's wind belt reported a 14% drop in wind tax revenue in 2021, compared with the previous year. Hit hardest: Jackson and Murray counties, wind energy powerhouses that had declines of 21% and 34%, respectively.

"It will change our budget," said Dennis Welgraven, a Murray County commissioner. "It won't mean cutting services, but it could mean putting off projects."

A transmission shortfall has been building across the Midwest as more renewable energy comes online, with congestion acute in southern Minnesota. Curtailment — when turbines are shut off when they could be spinning — has always been a small factor, but in some counties it has become a much bigger issue.

"Southern Minnesota and our region does not have enough transmission capacity," Joe Sullivan, a Minnesota Public Utilities Commission member said at a public meeting this spring.

"Fundamentally, there is bottleneck," he told the Rural Minnesota Energy Board, which represents 18 southwest and southern Minnesota counties. "The pipes are not big enough anymore to get our product to market."

Gene Metz, a Nobles County commissioner long involved with the rural energy board, said in an interview that the problem will be "very expensive to solve. We are talking billions of dollars."

The solution is more power lines. But they take four or five years to get permitted and built in the best case scenario. And eventually electricity users pay the tab.

Wind expansion means more tax revenue

Minnesota is one of the nation's top 10 producers of wind power, and rural areas have particularly reaped the benefits.

Annual wind power production tax collections rose from $1.9 million in 2006 to $14.1 million in 2021, according to the Minnesota Department of Revenue. Last year's revenue increased by less than 1%, and some counties saw a decline.

By state law, wind farms are taxed on energy production, and 80% of the money flows to counties, with the rest going to cities and townships that host the facilities.

"As far as jobs and taxes, wind has been great," said Mike Kluis, a farmer and supervisor for Fenton Township in Murray County.

Fenton Township's wind tax collections, which account for about two-thirds of the township's revenue, fell 54% last year.

Murray County, home to Fenton, normally funds about 5% of its budget with wind revenue — and the industry is important enough to the agriculture-based county that its official logo prominently features a turbine.

Much of last year's tax shortfall stemmed from curtailment at Fenton Wind Farm, which is run by EDF Renewables and sells its electricity to Xcel Energy.

Like most wind farms, Fenton was built with federal production tax credits, which last 10 years. Fenton's credits have run out, so the farm and others with expired credits usually are shut off first when power lines are congested. It's simple grid economics.

Midwest power producers — whether wind farms or fossil-fuel plants — bid into a wholesale electricity market run by the Mid-Continent Independent System Operator (MISO). A nonprofit, MISO operates the grid in Minnesota and all or parts of 14 other states.

Wind farms' fuel cost is zero, so their power is particularly inexpensive. But power produced from farms with no tax credits costs more. "In effect, it leads to wind-on-wind competition," said Brian Tulloh, MISO's north region external affairs director.

Wind farms with tax credits can be curtailed, too, if they're near congested grid points.

Situation puts wind farms in competition

The power line problem vexes Murray County commissioner Welgraven.

"There's just not enough power lines to get the power out, yet they keep putting up more wind turbines," he said.

Walgraven and Fenton Township supervisors point to the Nobles 2 wind farm, which started up in late 2020 to supply electricity to Minnesota Power. It has tax credits and longer blades that scoop up more wind energy than the shorter blades at Fenton.

Fenton Township Chairman Dave Swart can see Nobles 2 from his farm: Its turbines seem to segue into Fenton's turbines on the horizon. With winds blowing at 25 miles per hour on a recent day, Nobles 2's turbines were spinning. At least half of Fenton's were not.

"Why would you put up another wind park when you don't have the transmission?" Swart said.

The big drop in the Fenton facility's output last year — and Murray County's and Fenton Township's wind tax revenue — coincided with an 18% surge in 2021 wind revenue for Nobles County, courtesy of Nobles 2. Metz, the Nobles County commissioner, noted that before Nobles 2 started operating, his county's wind tax revenues had been declining as curtailment increased.

2010s saw big build-out

Large wind and solar farms in Minnesota must be approved by the PUC. To connect to the grid, they need clearance from MISO.

There was a "bit of a land rush" in the late 2010s to get new wind projects onto the MISO grid, Tulloh said. A MISO-wide transmission build-out that began in the previous decade had freed up new power line capacity.

Then, in the 2010s, prices for wind turbines sank while technology improved. And power companies rushed to capture federal tax credits before they were reduced by decade's end.

Minneapolis-based Xcel, one of the nation's largest wind power utilities, has been on a wind farm spree in recent years.

"We have added a significant amount of wind, as have others, taking advantage of federal tax credits and great pricing from wind vendors," said Christopher Clark, Xcel's president for Minnesota and the Dakotas. "It is really helping us make the clean energy transition."

Still, wind turbine curtailment isn't good for Xcel's clean energy goals — or its customers. When power line congestion shuts down wind farms, the lost electricity can be supplanted by gas-generated power, which is dirtier and more expensive.

Expanded grid comes with cost

In July, MISO's board will vote whether to approve 18 new power line projects for the Midwest, which should help remedy congestion woes. The cost: $10.3 billion, including $2.2 billion for three lines in Minnesota, all to be built and owned by power companies.

New transmission lines, which also must be approved in Minnesota by the PUC, generally take four to five years to get permitted and built if no obstacles surface. But power lines tend to be classic not-in-my-backyard affairs, sometimes spurring opposition from landowners and environmental groups.

In the short-term, MISO, the PUC and transmission owners are working on fixes that would increase power running through existing lines.

One way is by reconfiguring power flows so that lines operate more efficiently. Another is using new technology or making minor upgrades to increase power line "ratings."

Based on engineering principles, transmission owners set ratings on how much electricity can flow through their lines, even though at times — for example, when it's colder or the wind is blowing — those lines can handle more juice.

Xcel, a major power line owner, recently completed a pilot program using new technologies that account for weather. The company found that on average they increased transmission capacity by 10% to 15%.

"We are looking at building this technology into our [power line] standards," Clark said.

Still, new line ratings and reconfigurations have limits. Power line owners can add risk by pushing through more power, said MISO's Tulloh, with extra wear and tear on equipment.

"The [electric] system benefits, but there is a chance the transmission provider does not," he said.