Alabama has become a hotbed of wind energy activity. At least four different wind farms have been proposed across the Yellowhammer State – from upstate, mid-state and downstate Alabama. Alabama Power is buying 404 megawatts of wind energy from the Plains (enough to supply 3% of the company’s power), and the state’s biggest power company just erected a tiny 4 kilowatt turbine on its headquarters building in Birmingham. The flurry of activity has some people asking, “Why?” Here’s just a few reasons that may help explain the interest.
State electric costs are high. As of 2011, Alabama residents pay the highest average utility bills in the contiguous 48 states (Hawaii residents have the highest utility bills – in part because they import 94% of their fuel). Alabama’s average utility rates are the second highest in the South (Florida’s rates are higher, but Floridians electric bills are about 10% lower than Alabama residents). When costs are high, low-cost wind energy becomes extremely attractive. When Alabama Power recently announced it would be receiving electricity from out-of-state wind farms, the Alabama Public Service Commission stated that the “price of energy from the wind facility is expected to be lower than the cost the company would incur to produce that energy from its own resource…with the resulting energy savings flowing directly to the Company’s customers.”
The wind is better than estimated. If you go through the history of wind resource maps developed by the U.S. Department of Energy, they start as far back as the 1980s. While government wind maps have gotten better over thirty years, they still don’t tell the full story. For the longest time, Alabama and the rest of the region haven’t been prioritized for wind resource assessments; but now that wind turbines have advanced by leaps and bounds, wind farm developers are taking note of the region and collecting actual measurements on-the-ground to identify the region’s best wind resources. Perhaps unsurprisingly, the wind resources are better than estimated – especially on ridge tops and coastal areas.
Alabama’s Pro-Business. The South has a long history of being pro-business, pro-jobs and pro-development. Last year, Alabama wound up as one of the Top 10 “Pro-Business” States in the country. This year, the state is in the Top 5. The state is also fiercely protective and respecting of private property rights. Article I, Section 35 of the state’s constitution states “That the sole object and only legitimate end of government is to protect the citizen in the enjoyment of life, liberty, and property, and when the government assumes other functions it is usurpation and oppression.” Any government bureaucrat or politician looking to restrict a private industry on private property could risk treading on the state’s constitution – and their constituents are watching.
Wind turbines have dramatically improved. Wind turbines are getting taller, and blades are getting longer. New hardware and software is making wind turbines cheaper, and more effective at capturing more moderate wind speeds, like those that exist throughout the South. Better turbines make it almost inevitable that wind farms will be developed in the South.
Wind energy costs are predictable. Wind farms have low operational costs and no fuel costs, unlike coal, natural gas or nuclear power plants. As such, the cost of energy from wind farms is predictable and stable over the lifetime of a wind project, which may reach 25 or 30 years. With the risk of additional regulation on coal-fired power plants, and price volatility of natural gas, wind energy is an attractive addition to a utility’s portfolio. In 2010, about 40% of Alabama’s electricity came from coal-fired power plants (and a portion of that coal came from the country of Colombia), and another 25% came from natural gas. A diverse utility portfolio is a safer, smarter one.