03:16
Senator King
I call this meeting to order. First off, we have to approve some previous minutes. So if I can have a motion to approve the previous minutes. Okay. And we have approval. So anybody object? Okay, without objection. Staff corrected me. All right, thank you. We’ll approve those minutes.
Next, we’re going to change up the schedule just a little bit. We’re going to have these gentlemen– I’ll let you introduce yourself. Where this issue came about in Carroll County, it started with the biggest, the first in my district, the first wind project with Scout Energy came into Carroll County. And it’s been a pretty controversial issue up there. And so I talked about last year trying to look into the wind energy part and it just didn’t happen. So I decided to bring it up under this committee. And so anyway, we’ll let you gentlemen introduce yourself and then go into your presentation.
04:13
Simon Mahan
Well, I appreciate it. Got it. Thank you, Senator, for inviting us to come speak today about wind energy in Arkansas. My name is Simon Mahan. I’m the executive director of the Southern Renewable Energy Association. We’re a trade association of large scale renewable developers. Wind, solar, batteries, transmission, we kind of cover it all. And we work throughout the Southeast. But I actually live here in Little Rock. My family and I moved here about three years ago and the fishing here is much better than where I was. As I was mentioning just a little bit about us, we work throughout the Southeast.
We do an awful lot of work at the state public service commissions, working on integrated resource planning at the transmission level with both the Mid Continent Independent System Operator and the Southwest Power Pool are two big grid operators that we have here in Arkansas and then also throughout the rest of the Southeast with Entergy Southern Company, Tennessee Valley Authority.
I wanted to start out the presentation with just a few images of some nearby wind projects. I grew up in southwest Missouri by Joplin. So this wind project up in Joplin, the Tesla Owners Club of Arkansas actually went on a tour of it late last year. And we actually got to go up and see the wind turbines and go talk to the folks that were operating them. This is a newer wind project that went operational earlier this year in Tunica, Mississippi.
This project is selling its power and is currently operational, but it’s selling its power to the Amazon Data center that’s going to be built in Mississippi here soon in Mississippi. The Amazon Data Center. It’s going to be the largest investment they’ve ever had. It’s a $10 billion economic development asset and Amazon directed the state to ensure that they had the capability of procuring energy from wind farms and solar farms. And then this past week, I drove over to Wynne on my way over to Memphis and took some pictures of a wind project that’s going up over there in Cross County. And so this will be the first wind project operational here in Arkansas. And I’ll have Brad talk more about that here in a minute.
But to give you all a sense of kind of where we stand in terms of our neighboring states, Arkansas, we currently don’t have any wind projects that are up and operational. The things that are changing and what’s making Arkansas more interesting is the wind turbine technology is getting better. The blades are getting longer, the hub heights are getting taller. And so as you’re able to reach up into higher altitudes, you’re able to reach those better wind speeds. And so 10 years ago, the North Carolina wind project, which is also an Amazon project, wasn’t operational, but it was really those newer turbines that are enabling that. And then we’re starting to see wind projects that are scoping out construction in places like Arkansas, Louisiana, as I mentioned, Mississippi as well.
And so it’s really starting to develop in some of these states that didn’t previously have wind farms. But as you can see, Texas is by far the leader in wind energy in the country, with over 37,000 megawatts of windows installed in that state. Oklahoma, Kansas these are very windy areas that have a lot of wind projects up and running.
You know, one of the top questions I get about wind energy is what happens when the wind doesn’t blow? So in Arkansas, we are bifurcated between two different grid operators. There’s the Mid Continent Independent System Operator, or MISO, and then the Southwest Power Pool, or SPP. Both of those organizations have headquarters here in Little Rock.
And so we actually had a number of legislators from Louisiana come up to Little Rock a few weeks ago to visit the Southwest Power Pool to see how they managed the grid. What this image is showing you is that map is the power prices for the Southwest Power Pool. When I took this screenshot, and you can see there’s areas where the wind power is blowing very well. And because of that, the power prices are lower. And on this particular day, I think this was the 13th. So it wasn’t too long ago that entire middle region of the country was receiving about 50% of its power from wind energy. And so the Southwest Power Pool here in Little Rock helps manage that power flow.
So if the wind does die down, you back it up with natural gas, you back it up with coal, that’s how you maintain a stable grid. And so we’re able to have that stability because we have our grid operators handling the grid. The other part of the grid here in Arkansas is covered by MISO or the Midcon Independent System Operator. And again, this is a power map on the left hand side showing you what the power prices were during this time a few days ago. And you can generally see the power prices are actually much cheaper up in the north, where they have an awful lot of wind projects and a little bit more expensive down here in the south. And on this particular day, MISo was receiving about 23% of their power from wind energy.
Now, I did want to talk a bit about how a wind project gets built. There’s an awful lot that goes into it before you hear about it in communities or you see about it in a press release. Oftentimes the wind developers are spending years ahead of time with grid studies, with geophysical studies, with birds and bat monitoring and studies before they make a determination of moving forward with a wind project. And so this is a very simplified chart of it may take two or three years of just studies to figure out if a spot has enough wind energy, if it’s good with the local community before they even announce that they’re going to plan on construction in a year or two. But then after that, the wind projects are expected to last somewhere between 20 to 30 years.
This chart is really difficult to see. And so hopefully if you have some time to pick it out later, I highlighted in red here with those red arrows solar energy prices and wind energy prices. So if you look at the bars, just generally you can see pretty easily that wind energy and solar power utility scale, large scale solar power energy resources are some of the cheapest that you can get here in the United States today. And so as electric utilities, as corporations or as businesses are trying to figure out what their energy portfolios are going to be looking like in the next five, 10 years, they’re really weighing the costs of these different generation resources. And wind and solar continually come up to be some of the cheapest energy resources that they can get.
And that’s part of the reason why we’re starting to see more and more development of both wind and solar here in Arkansas. Wind potential in Arkansas So this is a map at 100 meter hub height. So about 300ft up in the air, the darker blue colors are a better wind speed than the lighter areas. But generally the areas that a lot of folks are looking at for wind energy, of course, you’ve got kind of the mountain areas up in the northwestern part of the state, but then there are an awful lot of wind developments being evaluated in kind of the central eastern part of the state as well. So basically between Little Rock and Memphis, that’s a really solid area for folks to be looking at as well.
As I was mentioning some of our electric utilities earlier, we get heavily involved as an organization on their integrated resource planning process, the IRPS or the integrated resource planning process that the utilities go through. Those are a 20 year horizon that the utilities are trying to figure out. How do we serve the power demands of our community over that next two decades. And so I pulled up the Southwestern Electric Power Company, which of course operates in much of the northwestern part of the state. The black bar that you’ve got on here is how much power they’re expecting over the next 20 years, how much power demand they need to serve over the next 20 years. And the different colored bars underneath it are the different types of power that they will be able to provide.
The white should make everyone in this room a little bit nervous. The white is the gap between the power that we have and the power that we need to serve, which is that black line again. And so in order to figure out how we can keep the lights on, we’ve got thousands and thousands of megawatts that SWEPCO is going to have to build over the next, really five years in order to make sure that the lights can stay on for their customers. And again this chart’s kind of difficult to see, but the bottom line is, and I circled it down here at the bottom. SWEPCO sees wind energy and solar power and then also natural gas resources as a kind of path forward for them and their customers.
And so they’re looking to potentially add up to 3,000 megawatts of wind energy, 600 megawatts of solar energy. SWEPCO has already been purchasing wind energy for quite some time out of Oklahoma, out of Kansas, using the Southwestern Power Pool. And so it’s not something new to them. They’ve been doing it for quite some time already. And then for Entergy, I’m an Entergy customer, and so their line is a little different. So you’ve got a blue line for how much power demand they need and then the bars underneath it showing how much power they actually have. And so again, we have a gap starting in about 2028. So very soon, if we don’t do something, we’re going to have some power limitations with the Entergy operating company here in Arkansas.
Similarly to SWEPCO, Entergy goes through this evaluation of what types of resources are best for them and their customers. And similarly, they found that overwhelmingly solar power, batteries, wind, and then adding in some natural gas resources is really how they’re going to try and meet that new demand that they’re. That they’re expecting with all the generation that is not only retiring very soon, including the White Bluff and Independence coal units, but also any sort of new generation that they need because of new load that’s coming on. I mentioned earlier the Amazon data center over in Mississippi. It’s a $10 billion investment for them. They’re going to need 1,000 megawatts of new power by the year 2027 in order to serve that new load. Louisiana is going through a similar ordeal right now. There’s a $5 billion announcement for Northern Louisiana.
Entergy is trying to add in about 1500 megawatts of new solar and about 2000 megawatts of new gas in order to serve that new data center in northern Louisiana. But again, it’s a $5 billion investment that’s being made there, and it’s predominantly going to be served by renewable resources. You’ll notice in my slide deck I have an awful lot of additional slides towards the end. Those are for your reference at a later time. And if you have any questions, I’m available. I’m here in Little Rock and I’m available for questions. Unless we want to move on over to Brad.
15:58
Senator King
Are there any questions? Yes, you’re recognized.
16:04
Senator M Johnson
First of all, thank you for coming. Other witnesses. I look on the slide with the SWEPCO capacity position. Yeah, I guess that’s it. Yeah. And I see the gray, which is coal, down near the bottom.
16:21
Simon Mahan
Yes, sir.
16:21
Senator M Johnson
And then in 2028- 29, it reduces by roughly one third. I presume that is because of some coal plant somewhere in their system, not necessarily in Arkansas, coming offline.
16:37
Simon Mahan
Yes, sir, that’s right.
16:38
Senator M Johnson
And then we go out to 2039-40, which seems like eons ahead of us, but I recognize it’s not really that. Then it cuts in half again. And that is, I assume when Turk is taken offline.
16:53
Simon Mahan
That one’s actually Flint Creek.
16:56
Senator M Johnson
Okay. And I know Turk’s in there somewhere, but the fact is that as those gray areas get smaller, those white areas get bigger. And as I have been saying and said this weekend on Arkansas Week, you don’t replace something with nothing. And while your black line is not real steep, it is climbing. And I think you are maybe even being a bit optimistic about how the demand will increase. I think demand will increase even more.
17:34
Simon Mahan
I think you’re right.
17:35
Senator M Johnson
But I’m just, I guess my question is how do we reconcile this even whether wind or solar are specific parts and they are parts. But I go back to what happens when the wind’s not blowing and the sun’s not shining, which you said you would address. So I’ll let you do that.
17:53
Simon Mahan
Yeah. And that’s kind of what the Southwestern Power Pool is doing on a daily basis right now. So when the wind does blow, it’s a very good low cost energy resource. It is reliable. We can forecast days ahead of when the wind is going to go up and go down. And that gives the grid operators enough warning that they need to ramp up the coal or the natural gas. The long term. You know, wind provides very good energy resources during the wintertime and then also during the night. Solar does well during the summertime and during the day you add in batteries and you can cover a pretty significant chunk of the times that we’re in.
But there will be times where it’s a cloudy day and there’s not enough wind and the batteries have been depleted, where you’re going to need some sort of backup power. And we’re starting to see across our region more and more that the utilities are starting to look at combustion turbine natural gas units to serve kind of those quick peaks of we need a little bit of power very soon. And then also they’re starting to couple them with oil backup. So they’ll usually have maybe about three days of oil on site if there is a problem with the natural gas system. In the past couple of natural, the past couple of winter storms, we’ve seen winter storm Uri, which took Texas out, and then winter storm Elliott.
There were blackouts over in the Tennessee Valley Authority and then also over in the Carolinas in part because the natural gas system was strong, struggling to provide enough fuel to those natural gas plants. So having some sort of backup system is the way that the systems are going to grow into the future. But as it is right now the Southwest Power Pool, we’re relying on less and less coal already. And so I think we’re going to see more solar grow, more batteries grow, and then more interest around these combustion turbine natural gas units.
19:53
Senator M Johnson
Well, I’m supportive of batteries and I think the technology is going to improve exponentially because for once in our world’s lifetime, people are actually paying attention to batteries, where for about 100 years it was that little black box under your hood that got your car started and then it ran on gasoline. But I’m really, I like to see or hear where these, whether it’s oil or some of the other things you mentioned to help take care of the baseline, What is the status of those types of projects? As you know, we can’t, as I said on the TV on Saturday, you don’t go to Walmart and buy a generator and throw it in your pickup and that fixes it. This is a, it takes a while to build these things out notwithstanding the permit process. Where are we in our region in that type of project situation?
20:48
Simon Mahan
We are much further along with wind and solar and batteries than we are with natural gas plants.
20:55
Senator M Johnson
Which is my worry, why I ask that question.
20:57
Simon Mahan
And so you’ll notice in the slides that I didn’t go through, these are the generator interconnections for our region throughout the Southeast. And so in order to plug into the grid, any power plant has to go through what’s called a generator interconnection queue or a line. And in that process you’re trying to figure out where I can plug in and not cause a disruption on the wires that exist. If there is a disruption, you can pay in order to upgrade the system so that way you’re able to plug into those locations. But these red dots that we’re seeing up here, these are battery projects all across the Southeast. These are natural gas plants that we currently or that we had in the generator interconnection queues earlier this year in May. And so this gets updated on a daily basis almost.
And so we are starting to see a few more natural gas generators show up here in Arkansas and down in Louisiana. But this process can easily take two or three years to get through a generator interconnection process. And it’s incumbent upon our utilities to file those requests with MISO with the Southwest Power Pool so they can begin studying them. But we have a lot more hybrid generators which are the solar plus battery projects. And then also we have just a significant number of solar generators that are trying to interconnect as well. And so we are much further behind on the natural gas generator interconnection process than what we are for wind, solar and batteries.
22:37
Senator M Johnson
Okay, but I still didn’t get a year number, Simon, on these nice ideas of an oil powered project or a natural gas powered project? Are they 6 years out, 9 years out, 20 years out? About where are we? Because while all these new technologies are good and they’re going to increase our generation capacity, they’re not going to take on the baseload burden that coal is doing right now. And of course, nuclear is doing it right now.
23:13
Simon Mahan
Yeah. And so in the meantime, Entergy’s latest integrated resource plan, they have this gap in 2028 and 2029. They do not know how to serve that with the generation that they’re going to build. And so their proposal in the meantime is to use short term capacity contracts in the MISO market. So MISO operates a kind of air traffic control for the power stations across the region. And so they actually have an option where if your neighbor has more capacity than you do, if they have spare power plants, you can actually contract for those spare megawatts on a short term basis, usually a one year basis. And so every year that auction comes up and new prices come out so that all the different utilities can bid on the remaining megawatts.
And so Entergy’s plans, at least for at least what they’ve said in their integrated resource planning processes in 2028 and 2029, they’re really expecting to lean on the MISO market to sign short term capacity contracts to serve that. But what that does is that buys them some time to get other projects built. And so if you look at the SWEPCO numbers it’s again kind of a difficult chart to see, but SWEPCO anticipates adding a new combustion turbine somewhere in the 2029-2030 time frame. And so if you’re trying to build new generation between now and 2030, you’ve really got four options. It’s going to be a natural gas plant. It’s going to be solar, wind or batteries. Those are your four war technologies that can get built in the next four to five years.
24:55
Senator M Johnson
Okay. And I probably, Mr. Chairman, would want to save any further questions on that line. I know Mr. Bethel is back here. I don’t know if he’s going to testify, but Mr. Mayan has done a great job of talking about what the utilities can do and might do, but I guess I’m going to have to, after the first of the year look at bringing in joint energy to ask what will you do. Thank you, Mr. Chairman. Thank you.
25:20
Senator King
Well, this issue has been going on in Carroll County. My brother’s on the corn court up there. So it’s been going on a while up there. And you look at this area, a big part of it’s in my area up there. But so let me ask you this. You know, we talked about the power needs. You mentioned Amazon. So naturally we just have to think. They don’t, obviously don’t keep me in the loop, but maybe Walmart’s going to do something. I mean these energy demands, crypto mines, we’ve been through that. I mean, northwest Arkansas, they’re expecting Benton, Washington County, I think to have like a million people by a certain date. Isn’t that right, Austin? Something like that. Yeah. So I mean our power needs are going to increase.
So that’s what looking at it looks like it looks like we’re headed for a cliff in some ways. So, let me ask you this as far as the general question. One of the questions I sent to you guys was so the Cleanline project, you guys remember the Cleanline project that was supposed to go through and then that was headed through, looked like it was going through and then President Trump got in. I don’t want to get into the political thing of what happened in election or two or four, but what changed in that, the Cleanline project got shut down basically when the Trump. I mean, what do you see in D.C. now that all this is rolling and all this is going and then we’ve had to change. Where do we, where is this going from there? I mean, are we going to have like that? I mean, that is something real to think about.
26:42
Simon Mahan
Yeah, no, absolutely. I’m glad you bring it up. You know, Cleanline was a kind of an unusual project. As you recall, they were trying to connect over in Memphis and sell power over to the Tennessee Valley Authority. My opinion of all of that at the time was TVA was really the crux of the problem. TVA wasn’t willing to transact on actually building and contracting for wind energy to come out. Had TVA moved, had they signed a contract, they could have signed up $25 per megawatt hour or two and a half cent power for the next 30 years. TVA actually had blackouts a couple of years ago because they didn’t have enough power during the wintertime.
And so I think there were some bad decisions being made over at TVA that were not necessarily because of the election, but because of just kind of timing wise that’s really how it worked out. I will say TVA now is planning on building some sort of new transmission line to better connect them with the Southwest Power Pool to import about 800 megawatts worth of wind energy. And so I think, again, that was just kind of a poor timing thing, not necessarily a federal election issue. We actually saw quite a lot of growth in solar and renewables during Trump’s first presidency. You know, a lower tax base, tax rate on industry as a whole was really helpful. You know, low interest rates for loans was really helpful. It helped reduce the cost for these projects.
You know, the largest cost for wind and solar and batteries are the actual capital construction costs, just buying the equipment and then actually installing it. And so the more that you can drive down that interest rate on any capital that you’re using for those projects, that’s going to be a helpful thing. And I think that’s something important to the Trump administration coming in is to ensure that the business taxes and that the interest rates are meant to come down. So I’m not terribly concerned that things are going to change all that much for energy. And in particular, because, again, as we’re trying to build more energy sooner rather than later, there’s really only four technologies that can do that. It’s going to be the natural gas plants, wind, solar, and batteries. And so I think if we want more energy sooner, more domestic energy sooner, it’s going to be one of those four technologies or a mixture of them.
29:18
Senator King
And so, and this would be a question for you. I mean, there’s this thing, we have this question of foreign ownership and foreign. I mean, generally, typically these companies out here, where does that network go of like the windmill blade, the turbines, the technology the companies, whoever, Scout or whoever, where are these linked back to? Are they all US or are they foreign, in Canadian or Netherlands or China or where?
29:51
Simon Mahan
A lot of the wind turbines themselves, a lot of the components are manufactured here in the United States. I can’t remember the exact number. It’s something like 70 or 80% of the components of the wind turbines are manufactured here in the United States. I know General Electric has a really big manufacturing facility out of Pensacola, Florida. And so if you’re ever driving along I10, you will see the giant gearboxes driving along and through Louisiana. The blades are often made here in the United States. It’s just very expensive to try and ship these massive components overseas. And so it’s much better for them to make them and manufacture them here. But I will say Siemens Gamesa, Siemens is a German company. Vestas is a Danish company.
These are kind of it’s Siemens, General Electric and Vestas are really kind of the top three turbine manufacturers in the United States. But oftentimes the components, the towers, the blades, the gearboxes, many of those components are made here in the United States.
30:56
Senator King
And we had back, I’ve been around a while, I think it was LM manufacturing out here. And then of course it was heavily subsidized and then eventually went out too. So just concerned. So we’ll let the rest of you present and then we’ll open it up for questions.
31:27
Bill Paschall
And I’m not going to present, Mr. Chairman. I’m just here to provide moral support and answer questions if you have some that I can. So we just have one more presentation.
31:39
Brad Lila
All right, so I’m Brad Lila. I’m vice president of development for Cordelio Power. Thank you very much for allowing me to speak here today and give you a presentation. We are the probably largest wind development company operating in Arkansas right now. I don’t think it’s even close. We got multiple projects throughout the state. We can go into more detail if you have questions exactly where and how large. Happy to answer those questions. Right now we’re constructing a 135 megawatt wind project in Cross County and just on the west side of Wynne. And the construction is going great and hopefully we’re going to be constructing more projects. We have another project in Cross County that we will hopefully break ground on that project in 2027 and complete probably in 2028.
And then we have other projects in, or I should say really one large project in Jackson, Woodruff and Independence counties that we’re focusing on right now. Cordelio Power. I’m not going to, I’m not going to go into a lot of detail about this slide, but you did just ask a question about foreign influence and you mentioned Canada as well. We are funded by the Canadian pension fund. The Canadian pension fund is one of the largest funds in the world. And basically in the simplest of terms, it is Canada’s version of Social Security. So anybody and everybody who receives a paycheck in Canada pays into that pension fund. And the pension fund really does like investing in the United States in the renewable energy market. And you know, I’m happy to work for a Canadian company. I’ve been in this industry for 18 years.
And I worked for independent power producers through the years. Oftentimes just private equity money. I was a cop for 11 years. My wife is a first grade teacher. So I happily spend all my time working on these projects. So everyday ordinary people who put money into this pension fund will be the ones receiving the benefits of this rather than making a billionaire, another billionaire. So it’s a good organization to work for. And I’m really pleased that they do invest in these projects. Now we have a map up here that identifies our projects that we have around the United States. And you do see that we’ve got a few dots in Arkansas, Mississippi and Louisiana. So we are one of the first movers in developing wind energy in the southern part of the United States.
And I’ll explain a little bit why. Simon’s presentation really covered some of the stuff that I was going to cover as well. So I’m going to abbreviate this a little bit so we don’t repeat each other, but I will add a little more color to it. So, the question really is sometimes why are you building in Arkansas right now? Why weren’t you building here five or six years ago or so? And we’ll talk a little bit about because load, as Simon had mentioned, there’s a need and generated retirements. We’ll talk about that a little bit. Turbine technology and increased efficiencies. I’ll just bring that up right now. So basically we would not be developing these projects if this was five years ago or so.
Turbine technology has increased substantially to the point where we’re able to put in a 4.5 megawatt machine and basically produce two to three times more the amount of energy for the turbines now compared to even 5, 6, 7 years ago when they were 1.5 megawatt or 2 megawatt machines. So we can put up one turbine compared to what you could put up three turbines six years ago or so. So the technology is so much better. The turbines are going taller, the blades are longer, but you capture more wind. So t. hat’s kind of the secret sauce to building in the Delta area. So it definitely does work. And the turbines that are going up are very efficient. You asked the question about where these turbines are being made and other components, et cetera.
The turbines that we’re putting up in Cross County right now, those are made by Vestas. All of the projects that we’ve ever built in the United States, we use Vestas turbines. Vestas turbines come from Colorado. The blades, the towers, the components here all come from Colorado. So. I mean, quite honestly, this question comes up all the time at County board meetings, et cetera. You know, a lot of times the question is are any of these China turbines? Right, Chinese turbines. And you know, the Chinese just have never found a foothold in this market at all. There was a company called Goldwyn one time. I don’t even know if they still exist anymore. Build a Chinese based company and it just doesn’t take off.
You know, it’s a really difficult sell to put Chinese turbines in some of these areas around the United States and almost every area of the United States. So these are all coming from Colorado. And then the other thing I’ll just touch on a little bit is the stable price of energy. Talk about that in a moment. So Simon had mentioned the Entergy IRP 2024. So Entergy is, as you guys know, the large supplier of energy in the amount of 5,500 megawatts of capacity right now in 2024. Now they have goals of reaching 3,000 megawatts of renewable energy by 2030 with a carbon reduction target of 50% by 2030 and be net zero by 2050.
When we see that as a company we pay attention to any type of IRP throughout the US and we took a long look at Arkansas and saw what the goals were of the state and what the utilities goals were as well. And then we do a comparison in regard to generation retirements and basically look for that gap of the very effective slide that Simon had where the black line and area and white. Right. That’s what, that’s what companies like ours really pay attention to. And I’ll go into a little more detail about that.
So you had mentioned about the coal plant closures and we are building one of these projects and it’s a very sizable project near Independence coal plant that’s going to go offline in 2030. December 31st of 2030. I understand it may actually go offline even sooner than that.
That’s 826 megawatts of generation. It’s a substantial amount. So one of the reasons we chose that area is because when coal plants go offline, you have available capacity on the lines in the area. So naturally it brings a company like us. We’re developing wind and there’s quite a few solar projects, not ours, also being developed in the area and being constructed in the area right now. So that’s with the whole intent of replacing that 826 megawatts and it’s likely going to be replaced mostly with renewable energy in that area. And then you’ve got the White Bluff coal plant, which is also going offline in 2028 of 1638 megawatts, as well as the Lake Catherine natural gas plant in 2027 of 522 megawatts. So we as well do our homework and looked at that and saw the definite need in Arkansas for energy.
I just put this is a slide from Entergy’s IRP and basically the reason I put this in there is that because Entergy does realize the ability of wind energy as a known and proven form of generation and consequently identified it within the IRP and also identified existing nuclear, solar, battery energy storage, et cetera, as well as some other upcoming forms of generation that are not yet proven but potentially could be. But you know, you see on the bottom slide here or the bottom of the slide where they’re going to end the use of coal at the end of 2030 entirely throughout the whole service territory. I found this slide in Entergy’s IRP very interesting because they identified the cost of energy here and I’ve got a levelized cost of energy slide coming up here soon just like the one that Simon had shared.
And what you should know about the levelized cost of energy, basically what that means is that is the all in cost. That’s when they figure in everything from subsidies to anything and everything, accelerated depreciation, et cetera. When you’re talking about identifying the true cost of energy. So oftentimes people will look at when we reference a price of wind and they’ll say, well, yeah, but you get these subsidies. These prices in here take all that into account. So Entergy estimates that the onshore wind in MISO south in this area is going to be roughly $58. That is pretty accurate. But what I found most interesting about this slide is the next one down where it’s onshore off system wind, SPP, at $141 a megawatt hour. Which you know, at first I saw that number and I thought boy can that be right.
And so I researched it internally with our origination group and really what you see there is, you see the cost of transmission is what that amounts to. So there’s a lot of wind generation going on west of us in Nebraska and Kansas and Oklahoma, etc. But it’s very difficult and very expensive to send energy east because we really lack transmission in this country. So when you think about Arkansas’ needs, sometimes people automatically say that well geez, let’s just bring it in from windy states. Well if you’re going to bring it in from the windy states, you’re going to pay a lot for it. You know, Entergy is assuming about $141 a megawatt hour. So it’s a fix, but it’s a very expensive fix.
So that’s why we look at Arkansas, eastern Arkansas especially, and think this is a market that really needs local wind generation. All right, so this is a very busy slide, and hopefully you can see this here. But I think this is a very important slide because this is all about the cost of energy. We as a company are not a company that runs around waving a green renewable energy flag. We believe in baseload generation. We believe we need natural gas. We need that for the system to operate. Right. But we also realize that renewable energy is a very cheap form of energy. It’s a very stable form of energy.
And what is real important to know about wind energy is we’re really not impacted with the fluctuation of the cost of gas or the cost of coal or anything like that. When you put a wind project in, 95% of your costs are sunk, right? And for the next 30 years, all that blade does is spins around and generates energy. And it doesn’t matter what the price of natural gas is. It doesn’t matter if Russia invades Ukraine and somehow impacts our markets, because they don’t impact the wind. Right? So it’s. super stable. And so when you see these levelized costs of energy in here, as you see wind on the bottom there, which is the blue line, it’s at roughly $50 in 2024.
You can go up throughout this entire graph here and really identify what the costs are, what the historical costs are, and what these costs are essentially doing right now. Right? So you’re at wind energy. at $50 a megawatt hour. Solar right now is at $61. Combined cycle gas, natural gas, $76. The problem with natural gas is when you build a natural gas project, you typically can’t get contracts for that gas more than five years out, right? So you. really can’t look into the future in natural gas and really fully understand what that picture is going to be like. In the 1980s, there was a lot of natural gas plants that were built around the United States because the price of natural gas was real cheap, and then it shot through the roof.
And there’s a lot of people gnashing their teeth wondering why they did that. Right. With wind, you put that project up, you know what that price is going to be for the next 30 years. You’ll see nuclear on here. If you go up on the kind of the bluish purple number, that’s $169 a megawatt hour. Nuclear is a great form of energy. We love it. It’s a great baseload form of energy, but it is expensive. It’s real expensive. Coal has gotten very expensive too. Now you look at coal here. It’s, what is that, $118 a megawatt hour. That is way more than double of what wind energy is right now. And again, there are areas where the coal plants are operational and it’s a great form of baseload, but it’s just, it’s a very expensive form of energy.
All right, move on here. So on this side, this is again the levelized cost of energy input assumptions. The reason I put this one on here is because Entergy– and this is an Entergy slide from their IRP. Entergy identified that the percent of the cost for wind energy is going to substantially drop throughout the years to the point of a negative 41%. You know, factor in all the capital costs, et cetera. So it’s, that’s really about the only purpose I put this one in there is that the fact that the local utility company does identify the cost of wind energy and the fact that it is dropping and will continue to drop.
And by the way, Simon’s comments too, about the Trump administration coming in, you look at this backslide over here, how the price of wind is increasing and matter of fact, the price of all forms of energy in the last since 2021 here has been on a rise. That’s simply because of capital costs, right? Everything just costs more, right. It’s not just the cost of financing a project, it’s also the cost of materials. Right? Steel is expensive, fiberglass is expensive. So let’s just talk about load forecast for a moment. Senator Johnson, you made the comment that you feel that Entergy, and I’m assuming other utility companies out there, and I see this all over, is they’re under in their IRPs, they’re not identifying load is going to increase as much as maybe you think it will.
And I absolutely 100% agree with you. When Entergy came out with their IRP–. Matter of fact, let me see here in this slide here. In their load forecast from Entergy, you’ll see that they mentioned the cost of solar, electric vehicles, building electrification, energy efficiency. But nowhere in here do you see anything in regard to AI? We’ve been hearing in this industry that artificial intelligence is going to basically require us to double the amount of generation that you have in the United States. And that’s finally coming true. You’re seeing it more and that’s why they’re putting in a $5 billion facility in Northern Louisiana and they’re building them all over the United States. If you want to bring back manufacturing in the United States from China or from abroad, you’re going to have to double the amount of generation in the United States.
So you factor in artificial intelligence, you factor in bringing manufacturing back to the United States, these load forecasts are considerably low in my opinion. I just found this incredibly interesting and a good way to kind of illustrate what artificial intelligence is going to do to our system. So if somebody types in, gets on Google and types in that they want to do a video AI request, right? So I type in ‘Do a five minute video for Brad Lila, whatever, discussing renewable energy.’. The amount of energy it takes for that AI system to do that is almost equivalent to running your air conditioner for an hour, right? It’s almost equivalent, you can see on the graph here, you run a Tesla Model 3 for one mile, you use 230 watt hours, whereas just one video request is over 3,000.
You know, so it’s, this is, this was an eye opener for me, right? I mean they’ve been talking in the industry about how we’re going to need to double our generation. And now you actually see it demonstrated here in what it’s going to take. So, I’m just going to talk about our projects and kind of how you develop a wind project and the impacts of a wind project. And you know, there’s a lot of community involvement that goes into it. We recognize that it is impactful, these projects are very impactful to our local communities. We really like the fact that when we build a wind project, for instance, we do employ people for the wind project, more so than solar projects. With wind energy, you do need some maintenance.
So our project for instance, in Cross County right now, I think we’re going to have about eight full time employees. And projects over in the Newport area where we’re probably going to be anywhere from like 25, 30 plus employees. So these are individuals that do live and work in the areas. We do really like to hire as many local people as possible and sometimes it’s difficult in Arkansas since there are no standing operating wind turbines anywhere. It’s hard to find wind techs. So what we did is we approach Arkansas State University in Newport and we’re hopefully going to be partnering with them to bring a program to that community, either potentially a wind tech program. They have a very robust high voltage program there that we would really like to be involved with.
So we’re trying to fund the local ASU campus there so that we can hire local people to work on these projects right in Arkansas. So tax revenue. I know sir, you had some questions about tax revenue and we can discuss that particularly. Did you want to ask anything?
51:19
Senator King
Yeah. So basically what Scout, for example, is doing up there, they’re saying, well, this will generate mostly tax revenue for the local schools. Well, the way our school funding works, there’s not very many schools in Arkansas that are on the wealth index, as we call it. Where maybe Bentonville, Eureka Springs is on that. West Side, I think up in Heber, Fayetteville. But most of them receive funding. So they may be at a funding level if they’re on a wealth index of 54% and that means that 44% will come from the state to make it up. So it’s typically been where if your assessments go up and you generate locally, then the water winds up leveling.
So we don’t know that basically is that going to be a net increase for the local school because is the state just going to contribute less. So I’ve got that question to our Bureau attorneys. And so I know you have an attorney back here too with Wright Jennings that maybe we can include in on the conversation because I think in Cross County you signed it in lieu of taxes, right?
52:18
Brad Lila
Yes, sir.
52:19
Senator King
They’re not being assessed by your local assessor. You’ve signed a different agreement for how many years?
52:24
Brad Lila
30 years.
52:26
Senator King
So you know, I mean, I would — we have chicken houses, me and my brother for 33 years. I mean we didn’t sign a 33 year agreement. Believe me, it’s been up and up. So I mean, kind of some issues with that. I don’t know how that’s going to work out. But typically what have you done in that lieu of taxes– and maybe we have to–. Senator Johnson is going to be the Energy chairman next year. So that may be something we need to look at.
Because I mean, if it’s not a net increase up there, then I think people on the front end need to know that it’s not going to be a net increase to their schools. Also this 30 year agreement, I mean that just sounds like a pretty good deal and certainly not one the poultry industry has of growers and stuff. So I’m just kind of interested about this agreement. I don’t know what Scout’s doing up there in Carroll County.
53:22
Brad Lila
Right, right. And it really is. And Walter, please step in if I get anything wrong here. So the agreement that we have in place in Cross County we approached the County for a pilot agreement, a payment in lieu of taxes, and discussed it in detail with some of their committee members for a while and negotiated it. And we got to the point where we did go in front of the quorum court and I believe it wasn’t unanimous, but it was one short of being unanimous. And essentially what we agreed to do is the County gave us the pilot agreement which is up to 65% and we agreed to share 50% of that savings with the County. So every year for the next 30 years, we’ll cut a check to the County, roughly in the amount of $400,000 every year.
While at the same time, we are paying roughly around $489,000 a year in taxes. And to my understanding, and this is conversations having had with the local officials in Cross County that roughly 80% of that money goes towards the school. So essentially the schools there are going to be receiving roughly around $400,000 every year from the wind project. Now we haven’t done the math on this yet, but I have to believe that between our wind project and another solar project in Cross County that in the end here the state probably will not be writing any checks to Cross County schools because of these two projects alone should increase the tax revenues to the $8,000 per student. And that’s basically where the state steps in is to cover that difference between anything that where you come up with the deficiency of $8,000 per student.
I feel that we’re likely going to get to that point where the state isn’t going to be sending any money to Cross County at all. So yeah, I do believe it’s going to be positive.
55:29
Senator King
Okay, well, I don’t know what the school situation is in Cross County, but like I said, I don’t know that 400,000 is going to be make them where they’re not like Fayetteville not contributing. But we’ll get that sorted out. And if the attorney back there wants to visit with our attorneys, I’m kind of curious about that. So let me tell you a little– the foundations, how deep do the foundations go? Because I mean, obviously, the topography up there where I’m at in the hills and rock, I mean, and down there, how deep do these foundations go down? I mean.
56:00
Brad Lila
Yeah, interesting question. Right. So where you’re at, the foundation could be entirely different. Where we’ve, where I’ve been involved with developing projects in rocky areas, ridge top type areas, sometimes you use the foundation, regular concrete foundation, sometimes you’ll just drill down and put piers down into the ground. I can, I can speak to Cross County where I believe the foundations are roughly 12 to 13 ft below the surface.
56:29
Senator King
Okay. One of the other things, in my discussions with people in several states, the blinking lights. You know, the first windmills were all blinking lights and then now they’re making, I think, in Washington State there was a bill filed to make it where you had to go, or the windmills have to go back and they’re basically dormant until a plane gets in the area, then they blink. Is that following–. I mean, what are these going to be? Are they going to be blinking all the time or are they going to be…
56:57
Brad Lila
No, sir. So we have an internal policy at Cordelio regardless of the local ordinance or requirements, we install this ALDS system where as you mentioned, we have a radar unit. So the only time that the lights come on is if a plane gets within, I think a mile or two miles of the wind project. So that’s not just in Arkansas. That’s everywhere in the United States where we build projects.
57:18
Senator King
Okay, these over there, are they going to be the 670 foot tall turbines over there? The same one I think Scout’s in. What about the decibel levels of those and the proximity to several of them and then what’s the decibel levels that go out?
57:33
Brad Lila
Well, the decibel level is really based on a distance away from a wind turbine. So turbines like this, we would want to operate them–. Let me put it this way. In most states in the United States, the standard is 50 decibels. In order to get 50 decibels with most wind turbines, you need to be back from an occupied dwelling roughly 500, I mean 1500ft. Where we’re building these projects in Cross, I can’t really comment because I wasn’t involved in those early developments of them. But the other projects that we’re looking at, there’s going to be very few homes that we’re probably even close to 2,000ft away. So we will make sure internally, we make sure that we operate less than 50 decibels for, I believe all of our projects around the United States.
58:23
Senator King
Is that an industry standard that you know of? I mean, is Scout going to operate 50 decibels or less? I mean, we’re in a little bit different area up there.
58:31
Brad Lila
Yeah, I would. I can’t speak for Scout, but I believe that they likely would. Okay, I’m sorry.
58:37
Senator King
Oh, go ahead.
58:38
Brad Lila
Well, I just wanted to say that when, like these projects we’re putting in Jackson and Woodruff and Independence County, we’re getting together with the counties. We’ve already met with the judges from those counties, and there’s no zoning in the area right now. So what we want to do is we want to put three agreements in place. We want to put a decommissioning agreement in place, we want to put a development agreement in place, and we want to put a road use agreement in place. So in that development agreement, we’re going to agree with these counties that we will not exceed, like, 50 decibels or we will not exceed a setback from a home.
We’re gonna agree on, like, a timeline for a project during development. We’re gonna agree on a decommissioning agreement. We’re gonna agree that we’re gonna put funds aside, either cash or a letter of credit or a bond, that in the event that our company were ever to go bankrupt, that there. ‘s going to be funds set aside. That’s just good, sound development. It’s good practice. And I think you need to do that with communities. Even if you don’t have ordinances in place, doesn’t mean that you should just step in and just develop a project without some parameters.
We want to set these parameters for ourselves and get that agreement in place with the County so that we know how to operate, and we want to make sure that we operate so it’s fair to all the residents within the County, and they know how we’re going to operate. And we’re going to have that document in hand, signed and approved long before we even think about putting a shovel in the ground. Same thing with a road use agreement. It’s very important. I always tell any landowner or any County official, government official, you need these three agreements in place. You need a road use agreement in place. Because when a wind project comes in, these equipment are heavy, the cement trucks are heavy, we will damage roads.
But in the end, the roads are going to be in better shape than when we arrived, and that’s going to be identified in a road use agreement. So you want all those documents in place. You know, Long ahead of time.
01:00:40
Senator King
So in that regard, in this decommissioning, you’re going to have a decommissioning bond put up in case there will be a bond of some type or something in these things. Okay, so setbacks. You know, I’ve heard this from other states that once these devices, snow is on these and they start turning again, they may throw them out, I don’t know, 2,000ft or something like that is.
01:01:03
Brad Lila
Yeah, that’s, I mean, that’s not true.
01:01:06
Senator King
That’s not true. Okay.
01:01:07
Brad Lila
You know it’s– There’s a lot of, there’s a lot of information on the Internet that, as you know, is not true. These wind turbines, especially in an area like Arkansas, it’s probably not as big of a deal compared to in some of the more northern climates where I’ve spent a lot of time operating and developing projects. But as I mentioned before, turbines are taller, the blades are longer, and the blades are actually more flexible. So they’re much better at shedding ice than potentially turbines that were put up 15 years ago, 10 years ago. So they don’t throw big chunks of ice or anything, as you otherwise see. So typically it’s when you have ice build up on a turbine, the turbine will stop operating and then it’ll slide off and fall right at the base of the turbine.
01:01:54
Senator King
So mentioned the wildlife part up in my area. You know, now the bald eagles are back. You know, we’re having a lot of that. I mean, obviously you put in that more birds are killed by cats, but yet there’s several million cats. So I don’t know that’s really– And not as many windmills. But the other day I saw the eagles again. And so that’s an issue up there in my area. I don’t know if the duck issue is going to be an issue down there. The fire danger part, I mentioned that. I know in your area it’s a little bit different. I mean, in our areas, if you look at your one slide up there, if you put them on the mountain in Green Forrest, especially when we have a dry– and we’re in our dry season right now. People don’t think that. Up there, our dry season is the winter with all the leaves and everything.
You know, our road structure to get in there and fight a fire, if it is, no matter what it’s caused by. I mean, if we just have a road into the windmill, but yet there is a lot of burnable stuff real quick during our dry season. And our rural fire departments are just as taxed as they can be right now with lack of volunteers and hard. So explain the fire danger. And can air tankers get in and put these things out?
01:02:58
Brad Lila
Yeah. So first off it’s very rare that a wind turbine will start a fire. There’s not a lot of flammable stuff within a turbine. Typically, as you get about 90 liters of gear oil in there naturally, which is enclosed right within the nacelle. There are fire suppression units within turbines. So first off, it’s very seldom that even happens. But in the event that a wind turbine does happen, really, the protocol is to– you know, and we have conversation with the fire department, etc., and do some training on that– is to basically containment. Right. Just show up and contain the area, make sure fire doesn’t spread. In the event that if something were to happen, then you just stay around a turbine and make sure it doesn’t spread outward. But fire is natural with anything, right?
You build a house, you got a fire risk. It’s. just the way it is. But there’s just not a lot to burn up there. So just let the gear oil burn out and that’s it.
01:04:05
Senator King
Well, I’m not worried about that. But if there is a fire or lightning hits it or something it starts right there. It could cause mass amount of damage where in Cross County or some type of roll-in that you can get in there with trucks or do something. So that’s a bigger issue up there. And let me ask you one last question. And we’ll go to Senator Love and then Senator Caldwell. So if you’re looking at this map and up here, it looks like the prime– even I didn’t really realize this even more than East Arkansas– it goes along this area through Crawford County, into Franklin County, Madison County, Carroll County in there. You know, that’s a big tourism area.
And you know, we have some of these states that you have viewways that– is there laws or something in these viewways or–. I don’t know if it’s viewways, but that don’t allow windmills because that might greatly impact our tourism industry up there.
01:05:02
Brad Lila
Yeah, you know, it’s interesting you ask that question because I have spent a lot of time in Michigan, for instance, where the thumb of Michigan is a very large tourism area, and it is also the windiest area in Michigan, and there are thousands of wind turbines. I’ve personally developed a couple of those projects up in that area. And they actually call it wind tourism because people come from Detroit and other areas out of Ohio to come up and see the turbines in Huron County, Michigan. So I don’t, I think some people might look at them and not like what they look like, but there are a lot of people out there that think they’re pretty cool and will actually go out of their way to see them. So are there areas where they’re not permitted because of a view shed issue? I’m sure that is likely the case here and there, but I don’t know of any areas in the US that are prohibited because of view shed. I’ve never seen that anywhere.
01:06:03
Senator King
Okay. Well, up in my area with the big tourism, with all the Buffalo river and all of our Kings river and all the Mulberry, I’ve not heard the tourism people are very concerned about that. In Vermont, when I was up in Vermont, they put a moratorium on windmills. Is that correct up there?
01:06:21
Brad Lila
I’ve never developed in Vermont.
01:06:23
Senator King
Never developed. Well, I did hear that they put a moratorium up there. Senator Love, you are recognized.
01:06:34
Senator Love
Thank you, Mr. Chair. And I want to, I want to kind of reiterate because I didn’t hear an answer in regards to the wildlife piece and I know that turbines are put in the same path the wind and the birds use it. So talk to me about that, that piece in and of itself.
01:06:54
Brad Lila
Yeah. So I’ll first touch on the eagle question. So wind turbines, when they first were being developed in the United States 30 years ago or so in California, there was the Altamont Pass, where they constructed wind turbines right next to each other, just lattice. And basically they built a gauntlet. And those turbines did in fact kill a fair number of bald eagles– I’m sorry, golden eagles– for the reason that golden eagles, when they hunt, they are flying around looking for the rabbit or the squirrel or whatever on the ground and they’re not looking in front of them. So those golden eagles were hitting turbines and a lot of them were being killed. Wind projects are not developed like that anymore at all, not even close to it. They’re spread out considerably. I was just mentioning Huron County, Michigan, in the thumb of Michigan.
Again, that’s surrounded by Lake Huron. There are eagles everywhere in that area. We would spend a million dollars on each one of these projects studying birds and bats and a lot of eagles. The first thing we do in all these projects that I mentioned to you, one of the first things we do is we hire a company, a third party engineering environmental firm to go out, and they’ll go out with either helicopters or planes and sometimes even drones and identify every single eagle nest within a project area and even several miles outside of a project area. And then we have to work with the U.S. Fish and Wildlife Service to stay away from eagles. Right. So bald eagles are not endangered. Not even close. There’s a lot of them in the United States.
But there is a federal protection on eagles, so we take that very seriously. I’ve never been involved with a wind project that ever killed a single eagle. When I think of Huron County, there’s probably a thousand wind turbines up there and all the eagles that fly in that area. I’m not aware of any eagles that’s ever been killed in that area. So it just doesn’t happen very often. You know, you had mentioned, like, water fowl when it comes to, like, ducks and geese. We do hear some concern about that in Arkansas because it is naturally a. big– tourism draws a lot of money to the state. The good thing about ducks and geese is when they fly, they’re just going from point A to point B and they’re not hunting, so they’re out looking straight ahead of them.
So it’s very rare that we ever kill any ducks or geese, water fowl when it comes to wind turbines. But really, more importantly, and actually Simon can probably even touch on this more so than I can, but all of the environmental groups in the United States, the Audubon Society, Sierra Clubs, et cetera, they all strongly support. And you can go on their websites and look at their stance on wind projects. They support wind energy because it’s a net positive over any other form of electrical generation. So occasionally do they kill birds? Absolutely. But other forms of generation typically will kill more animals, considerably more animals than. our wind turbines do.
01:10:05
Senator Love
Okay. Mr. Chair, I’ll get back in, I’ll get back in the queue. I have a couple of other questions in regards to the decommissioning and different things like that.
01:10:17
Senator King
Senator Caldwell, you’re recognized.
01:10:20
Senator Caldwell
Thank you, Mr. Chair. I appreciate you recognizing me. I want to comment on the fact that most of your project is in my district. Independence County is not, but Woodruff and Cross and Jackson County is. Senator King, I’m not here to try to talk you into letting these folks come put windmills in your district if you don’t want them. I understand that. I know the issue up there right now with the prison that’s been announced in Franklin County. In District 10, I have three prisons right now and if it were up to me, I’d have four. I would take it in a heartbeat. But again, that’s not why I’m here. I’m here on my own accord.
I was not invited to come, but I do want to come and talk about the fact that Cordelio is a super corporate citizen and we’re thankful that they’re in Cross County, have provided many jobs, brought many people in that shop at our restaurants and car dealers and grocery stores and we’re very thankful for that. Their roads that they build, you did address roads, is much better than what the County would ever build. And so we’re super thankful for that. But the fact that we’re going to get a few permanent jobs out of this situation. ASU Newport is in my district.
I have all of Jackson County, all of Woodruff County, and the fact that there are going to be permanent jobs also there and the tax base and revenue that it brings back to the County, to the school, I was not involved in that. I try to stay in my lane and I did get questions answered for the quorum court, but I did not go down, try to influence them. That’s their bicycle to pedal and I let them pedal theirs and I stayed in my lane. But I did want to come in and say that the only industry in my district that has any negative effect, and it’s very minor, and that’s the aerial applicators. That’s the crop dusters that we are having to make a few minor adjustments on.
And so I wish that we had more. You know, if you don’t like the aesthetics of it, then you deal with that and you vote whichever way you want to. But the offset is– and I don’t have any financial ties to this company. I don’t have a windmill on my property. I wish I had eight or 10. You know, I could be mad at you for that though. My property is very small, but most of the landowners around that wanted them got them, so to speak. If the landowner did want it, then he didn’t have to sign on it. And so we hear all this talk in the coffee shops about who did and who didn’t. But again, I noticed on an earlier slide it said it takes about a four year project from beginning of trying to locate to construction.
And that’s really what it was. I’ve been on the Energy Council here more than four years and when I first heard that we’re going to get windmills, I said, no, Arkansas is not on a wind map. We make wind maps just like we make highway maps and river maps and railroad maps. And weren’t on a wind map. But since we go higher and use bigger blades, then guess what? We’re on wind maps. And the fact that the Independence plant and the White Bluff plant are shutting down and we’ve got the transmission lines out there, then you all have transmission lines to send your power down. In Cross County, we have some major solar farms going in. Just outside of my district in Wilson, Arkansas, there’s one solar farm going in over there that’s 22,000 acres. 17,000 acres of that is in one spot.
So we’re taking out 22,000 acres of prime farm ground to put in solars when we can come back with the windmills. It takes out an acre and a half or two acres per spot. It really has a very minor imprint, foot imprint on our environment. But again, I’m not trying to talk anyone into bringing them into their counties. If you don’t want them, then vote against it. But as far as we’re concerned in Cross County, and what I’ve been picking up in Woodruff and Jackson is that we’re all looking forward to having those facilities there and the revenue that comes from it and the job to go along with it. Thank you, Mr. Chair.
01:15:01
Senator King
Senator Love, you have another question?
01:15:04
Senator Love
Bill, you better take care of Senator Caldwell. No, getting back to what I was going to ask in regards to what is the lifespan of a turbine?
01:15:18
Brad Lila
30 years is what we assume.
01:15:19
Senator Love
Okay, so 30 years. You have a 30 year agreement also on the land that? All right, and then what is– you said that you had a bond on, a bond of the decommissioning agreement. How much is that? How much is that bond?
01:15:39
Brad Lila
Yes, good question. So the way that you usually determine a decommissioning bond amount is we will work with the County to identify a third party engineering firm that they want to use and that we want to use. We pay for that firm to come in and do a decommissioning study, and that’s how the bond is set.
01:15:57
Senator Love
Okay, and what goes into decommissioning a site?
01:16:01
Brad Lila
Oh, what goes? I mean, just take down the turbines and basically you take everything out to a depth of 4ft below the surface is standard around the United States. So a lot of times you’ll leave cabling in the ground because that’s buried to a depth of four to five feet. And most landowners would prefer that you leave it in the ground at the end of a project anyways, because, number one, it’s made of copper, which is very expensive, or else aluminum, which is very expensive. So good for them. But secondly, they just don’t want their ground torn up to take it out. You don’t have drain tile in this area as much, but you have a lot of precision grading. And to disturb that surface, to take out some cabling, just doesn’t make sense. But otherwise everything else is taken out to a depth of four feet.
01:16:45
Senator Love
Okay. And is there any, any residual as far as batteries or any like what goes into the transmitting of the wind energy? I mean, besides the cabling, is there any batteries? Anything?
01:17:01
Brad Lila
Yeah, no, there’s no batteries. You know, a lot of projects now you will pair a battery with like a wind project or a solar project, right, to grab that energy and store it. But for your typical wind project, no, you typically don’t have batteries. You have the generator itself, you have transformers, and then you have the cabling that connects everything until you get to a project substation and you put it on the grid. So that’s really about it. They’re very technical machines, but really they’re pretty simple because they just spin in the wind. And just as it spins, it generates electricity.
01:17:39
Senator M Johnson
Okay.
01:17:40
Bill Paschall
And Senator Love, to follow up on your bird question, one of the things I learned in meetings with County judges is the turbines turn mostly in Arkansas at night. That’s when the wind picks up at that level. And so birds typically aren’t flying around at night. Ducks, geese aren’t flying around at night. Eagles aren’t. They’re not hunting at night as often. Maybe some owls. But so that decreases the chance of a bird being destroyed by a windmill as well. And it also, to the noise issue, obviously there’s less noise. I mean, at night when.
01:18:21
Senator Love
Yeah, I had to actually look up what 50 decibels would sound like, and it was like a normal conversation or whatever. So that wasn’t bad. I was really, you know.
01:18:32
Brad Lila
Yeah, actually, it’s far less than that. So if you go home, your refrigerator usually operates about 50 decibels.
01:18:39
Senator Love
Yeah, that was pretty, that’s pretty nice.
01:18:41
Brad Lila
All right. And you know, to comment on Bill’s comment really quickly too, about that wind turbines spin at nighttime, where that’s also very important is when it comes to aerial application. So a wind project in Arkansas, for instance, is going to operate maybe 35% of the time when that blade is going to be spinning with the majority of that happening at nighttime and also when you have the highest wind. So when you apply pesticides, etc., you always do it when it’s at least windy out. Right. So the odds of that and you don’t apply it at nighttime when the turbines are typically spinning either. So usually you don’t. These projects don’t impact the aerial application nearly as much because they operate mostly at nighttime and they’re in the windiest times of the year.
And also, by the way, as Simon had mentioned earlier too, most of the shoal years, the real good years for producing energy, the good months, most of that is from like October to March. So in the springtime and in the summertime when you’re applying the chemicals is probably the worst time for wind energy in regard to production.
01:19:53
Senator Love
All right, thank you. Thank you, Mr. Chair.
01:19:55
Senator King
Okay. We talked about the federal subsidy part. I mean, just a general thing trying to understand this. So each windmill that goes up costs, I don’t know, 100,000 or 10,000 or whatever it is, how much of that is subsidized by the taxpayers to go, or how much of this industry is subsidized? Because that’s what happened with the LM situation. I mean once the subsidies and all that stuff ran out, guess what, it all went south after that for a while. And then, of course, change in administration in Congress, then things go the needle keeps going back and forth in D.C. whether we want to like which side gets in or not. So typically, how much is federally subsidized in a windmill? If you had to say 30%, 80%, what is it?
01:20:41
Brad Lila
Well, I guess it depends on your definition of a subsidy. So we don’t receive any dollars. We don’t receive any, we don’t receive any cents. I’ve been in this industry for 18 years and never received a single dollar from federal or state. So there is no direct money coming into the industry. The only really subsidy that exists are production tax credits or income tax credits. Right?
01:21:03
Senator King
Yeah.
01:21:03
Brad Lila
And it really depends on a company that’s going to own and operate them. And if they really have a tax– I should say, I’m sorry, if they have a real tax need, then potentially they can take advantage of that. Otherwise, most companies out there will bring in tax equity, which means there’s going to be companies like banks, for instance. Bank of America has a huge tax burden on them. Right. So they will invest in renewable energy projects and then we basically almost sell into their ability to come in. So to some extent, it’s really just a production tax credit for those that need it. And as far as what is it worth potentially about $30 a megawatt hour right now for a production tax credit and 30% for ITC.
So it’s yes, it does absolutely help the industry, no doubt. All forms of generation receive tax credits. So it’s a lot of times it’s life would be easier if you just didn’t have these tax credits. This is Brad Lila was speaking, not Cordelio Power here, by the way. But it’s it’s just a part of the industry, but it really has helped the industry grow. It has really helped drop the price of wind energy. When I first got in this industry, wind energy was $115 a megawatt hour. And because of the tax credits, it has really increased the ability to make these turbines so much more efficient and in turn really drop the price of energy. And do you want to add any more to that at all?
01:22:45
Simon Mahan
No. Yeah. As Brad was saying, there’s kind of two different tax credits that the industry can use. And these are available to, as far as I understand, all zero emission resources starting next year. That’s the production tax credit, which is the complicated one. And it depends on how much you produce. So if you produce more clean energy, you get more of a tax credit. And then the other one is a lot more simple. It’s the investment tax credit where it’s just a 30% reduction in your total taxes for the particular project. Most wind developers will use the production tax credit. We’re expecting that nuclear will also use the production tax credit because you will produce more revenue over time using that. Whereas solar has historically used the investment tax credit, which again is about a 30% reduction.
And you can actually get– there’s a federal tax credit that you can get for your household if you put solar on your rooftop for a 30% credit for wind or for wind, for solar, for batteries as well.
01:23:50
Senator King
Well, I mean, when I bought my house, I looked into that. So it’s not a subsidy, I’m sorry, but it’s credit. But this carbon credit, all that’s in the mix with these companies and your investors and everything else.
01:24:03
Brad Lila
Yeah, it is. And you know, to your question about the new administration coming in, I wanted to just touch on that for a moment. You know, when President Trump was first elected we didn’t know what the industry would look like. But at the end of his four years, there’s actually more renewable energy megawatts built in four years under Trump than there was in eight years under Obama. He really didn’t do anything to slow the industry down. As a matter of fact in those four years, too, there were no other subsidies other than what we’re speaking of today, the production tax credit, income tax credit. Matter of fact, the final year of that program was in 2019, and the Trump administration actually extended that program an additional year so you could take advantage of those production tax credits.
So people would have thought that he would have done the opposite, but he didn’t. He very much supported it. And it also really rolled back some of the red tape in regard to siting turbines and permitting turbines on federal ground and stuff like that. He rolled back, it’s called NEPA, which is a federal standard for developing on federal land, et cetera. So it made things easier to really build these projects. The other thing that is, we all have to keep in mind is that 85% of all renewable energy projects are built in Republican areas. And so you have a lot of folks like you that are representing their landowners who are really the landowners get paid very well if you have a turbine or you’re near a turbine, etc., like that.
So there’s a lot of incentives in the red areas in the United States to keep these programs going. The other thing, too, is that part of these production tax credits do include like a 10% increase if you use domestic content, which we do everything we possibly can to use domestic content, which is why we buy turbines out of Colorado. So there’s a lot of incentive to keep a program like that in place because there are very few wind turbines, blades, towers, etc., that are bought outside of the United States. I don’t know of any projects that have been built in the last five, 10 years that I’m aware of where turbines came from overseas. So I really don’t see that they’re going to pare much of that back. I mean, we don’t know. None of us know. But I would be very surprised if things didn’t just remain status quo.
01:26:39
Senator King
I just mentioned the Cleanline project, the Keystone pipeline. These typically news hits that you’re getting out there about, like, where it starts and stops. Like I said, just looking at the past history in Arkansas about the LM that went in and received subsidies and then went out. And like I said Senator Caldwell’s area and my area is totally different. I mean the topography up there, the roads, you run the roads on flat out rock up there, you know. It’s not typically as straight of roads going in and out. The fire danger, you know. You go into the tourism aspect of coming in up there. I know Mr. Bethel was with the PSC whenever they tried to put a transmission line through Eureka Springs over there.
And he was not invited to be the grand marshal at the St Patrick’s Day parade over there after going through that. But so anyway, I’m typically at my hour and a half limit, total limit. And so what I was going to do is be fair is like I said, I tried to do this a year ago to start the discussion and it just never happened down here. So anybody knows me is I’m just going to go ahead and do what I can where. So we’re going to work on–. I’ve talked to different people in other states about having the other side of the argument to this and then once it does turn it over to the big guy over here, Chairman Johnson, to let his Energy Committee, which I’m a member now, I will be a member of it.
So anyway, do you guys have any– Well, the contracts with the individuals out there, are they 30 year contracts, 10 year contracts, 8 year contracts or what are they?
01:28:09
Brad Lila
It really depends on the project. The one that we purchased in Cross County, I think that was a 50 year contract, which is what? It’s usually 30 years minimum with two 10 year extensions is pretty standard around the United States. And that’s just in the event that you were to repower a project. But you know, turbines typically are only going to be good for about 30 years before you’re going to have to repower them.
01:28:33
Senator King
Okay. And just remember in Carroll County, I think the Christ of the Ozarks statue in Eureka, I think is only about 65ft tall. So you’re going to be much taller than Jesus there in Carroll County when you’re putting these up. So anyway, but I mean, and I don’t know where the project’s at up there right now. Like I said, my brother’s on the quorum court and it’s still being resolved and will continue to be a monthly issue at the quorum court up there as I think. So anyway, do you guys have anything else you want to add? And we’re going to get the staff back there with the attorney to try and figure out the tax issue. I’m really curious about that and funding our schools and our roads and all that. So do you have anything else you want to add?
01:29:15
Brad Lila
I’d just like to say that if you have any additional questions or if we can help you out with a tax issue at all, please feel free to reach out to Mr. McSpadden, reach out to us, and we’ll do all that we can to help out.
01:29:28
Senator King
Okay. Do you care if I share your contact information with the chairman over here? And he can, because he’s going to be jumping at the head here in about a month and a half, so. So anyway. All right. Anybody else got anything? Oh, Senator Caldwell, you’re recognized.
01:29:49
Senator Caldwell
Punch me on.
01:29:50
Senator M Johnson
Sure.
01:29:50
Senator Caldwell
Okay. Thank you. I wanted to add one thing about the contract, Senator King, that they have. Basically, they have a base rate pay, annual pay, plus production. So the more wind that they produce, the more they get paid. I just, when you asked about the 30 year contract. So just to throw that in, let you know how that works.
01:30:09
Brad Lila
Thank you. Yes, sir.
01:30:10
Senator Caldwell
And again, I’m disappointed I don’t have eight or ten of them.
01:30:14
Senator King
Well, just know that windmills, solar was not an issue, certainly when I got elected back almost 20 years ago. And so cryptomine. No, I mean prisons were talked about up there. There’s some places up there that want them. It’s just people don’t like it popped on them up there, Senator Caldwell. So us hill folk, we like to operate a little differently up there. Yeah. So anyway, if nobody has any questions, we will stand adjourned and Mr. Gillam here will get in touch with you and we’ll try–. And I’m still curious, like I said, about this tax issue. We’ll share contact information with Chairman Johnson and we’ll just go from there. All right, thank you.
01:30:52
Brad Lila
Thank you.
