Wind Energy as an Export Commodity: The Case of South Dakota

Section Renewable Energy Sources & Clean Technologies WIND ENERGY AS AN EXPORT COMMODITY: THE CASE OF SOUTH DAKOTA Prof. Dr. George W. White1 Assis. Prof. Bruce Millett1 Instructor Kimberly Johnson Maier1 Lecturer Corina Tatar2 1 South Dakota State University, USA University of Oradea, Romania 2 ABSTRACT Wind energy has grown in popularity and concomitantly so has the installation of wind turbines. As both alternative and green sources of energy, many may assume that wind energy is replacing fossil fuels such petroleum and natural gas and leading us to a more sustainable future. While renewable energy is part of the sustainability equation, another common attribute of achieving sustainability is the localization of production and consumption. In many ways, this almost automatically occurs with wind turbines because electricity does not transport well over long distances. However, despite this characteristic of electricity, it does not mean that electricity cannot be exported, especially when political geographies are considered. Indeed, this research will examine the U.S. state of South Dakota to demonstrate that wind-generated electricity can be treated from an economic point of view as an export commodity despite any local benefits that it generates. By examining statistics for electricity generation, it will be seen that wind energy is doing much more than replacing local electricity generation by fossil fuels. Further examination will show that a significant amount of wind-generated electricity in South Dakota is exported outside the state. Keywords: wind, energy, economics, South Dakota INTRODUCTION Wind turbines are being installed at a rapid pace in a number of countries around the world. Subsequently, they have become a popular research topic, ranging from environmental impacts to economic issues [1] [2] [3]. In general, wind turbines are growing in number because wind-generated electricity is a green source of energy with a low carbon footprint and is seen as a substitute for highly carbon-emitting fossil fuels such petroleum and natural gas. However, the concept of substitution can have different meanings. At the global scale, statistics indicate that wind energy is growing aggregately while fossil fuels are declining aggregately, meaning that as wind turbines come online, an equivalent amount petroleum production decreases because it is no longer needed. The situation is more complicated because the world’s population is continuing to grow and economies are continuing to develop, in turn requiring more energy production to meet https://doi.org/10.5593/sgem2022V/4.2/s17.79 631 22nd International Multidisciplinary Scientific GeoConference SGEM 2022 the demands for more consumption. It then can be said that wind energy often substitutes increased energy demand rather than current energy demand and its concomitant production. Thus, in particular cases, petroleum production and consumption can remain at current levels or decrease at slower rates than the increases in wind power generation, in turn leaving fossil fuels with an ever-decreasing share of energy production and consumption in many places. However, aggregate statistics often do not provide a complete picture. At regional and local scales, wind energy can be exported and imported, meaning that wind energy can be valued and treated more like a commodity export and profit generator than as a green energy substitute though its very status as a green energy makes it a valuable commodity export and profit generator. The state of South Dakota in the United States of America serves as a case study to illustrate this situation. MATERIALS AND METHODS This research will examine the growth of commercial wind turbines, namely the megawatt (MW) capacities of these turbines, in the state of South Dakota. It will highlight how differing sources of energy used to generate electricity have steadily changed their contributions proportionally in regard to total electricity consumption since the rise of wind turbines. The years bracketed 2000 and 2022 serve as the period of this study because substantial investment in wind energy in South Dakota began in 2003. The research then turns to changes in population growth and electricity consumption. Finally, the research focuses on consumers of electricity produced by the wind turbine farms, in turn revealing where electricity is sent. The materials used for this study are primarily data from the EIA (U.S. Energy Information Administration) and the South Dakota Public Utilities Commission. Important information also was gathered from the websites of companies that consume wind turbine electricity in South Dakota. RESULTS AND DISCUSSION According to the U.S. Department of Energy, South Dakota first began producing small amounts of wind energy (less than a megawatt (MW)) in 2001 [4]. The capacity jumped to just over 40 MW in 2003 after South Dakota’s first major wind turbine farm, the South Dakota Wind Energy Center, was constructed with 27 wind turbines [5]. Since then, the number of wind turbines and their megawatt-generating capacities have grown at everincreasing rates. By 2021, megawatt capacity increased to 3,219 with an additional 454 MW under construction. From 2003 to the 2021, this increased MW capacity grew by 7,948%. When current “MW Under Construction” is completed, the growth will be 9,083% [4]. The growth of wind energy dramatically has changed the proportion of electricity consumption in South Dakota. In 2000, coal and hydroelectricity together generated over 95% of total electricity consumed [Table 1] [Graph 1]. By 2020, coal’s proportional contribution dropped from 37.6% to 14.4%, which reflects a numerical drop from 38.0 to 18.4 trillion BTUs (British Thermal Units) [6]. This means that coal-generated electricity generation dropped more than 50%. Noteworthy, South Dakota produces no significant amount of coal. Therefore, coal used to generate electricity is virtually all imported, 632 Section Renewable Energy Sources & Clean Technologies primarily from neighboring Wyoming, which, producing more than 40% of all coal in the United States, is the largest coal producer in the United States. The hydroelectricity story in South Dakota is different in that large quantities of hydroelectricity have been produced for decades though generating capacity has not increased since 1964. Nevertheless, hydroelectricity’s share of total electricity consumed has dropped, for example, from almost 58% in 2000 to 39% in 2020 [6]. In contrast to coal, the total amount of hydroelectricity has not declined, only its proportion of total electricity consumed [Table 1]. Notably, by 2021, wind-generated electricity consumption surpassed hydroelectricity consumption for the first time in South Dakota’s history when it reached 52% of total in-state net generation while hydroelectricity fell to 30% [4] [7]. Overall, electric power consumption in South Dakota totaled 127.9 trillion BTUs in 2020. This represents a 26.9% increase from 2000, the time when wind-generated electricity had zero consumption and hydroelectric consumption was abnormally high. The growth from 2001 to 2020 was 62.9%, the first year that consumption of wind-generated electricity became noticeable (maximum 0.05 trillion BTUs, 0.06% of total) and consumption of hydroelectricity was more typical of the subsequent eight years [6]. Whether 26.9% or 62.9% growth, or using some other average such as a five-year average (2000-2004) which yields just over 50%, these growth numbers stand in contrast to South Dakota’s population and household growths over the similar period. From 2000 to 2020, South Dakota’s population only grew 17.5% and the number of households grew 21.7% [8] [9] [10]. The actual number of households grew from 289,865 in 2000 to 354,617 in 2020, a net increase of 64,752 households. With the average household in South Dakota consuming 12,444 kWh (42,460,690 BTUs) annually [11], the expected total increase for households in South Dakota from 2000-2020 would be 2.7 trillion BTUs for the additional 64,752 households that were created, assuming consistent household energy use over the 20-year period. However, energy consumption increased by 27.1 trillion BTUs from 2000 to 2020 and 49.4 trillion BTUs from 2001 to 2020, 904% and 1,730% increases over 2000 and 2001 respectively. Of course, household electricity use only represents one sector of the economy. Therefore, if a 21.7% increase in the number of households accounts for 2.7 of the 27.1 trillion BTU-increase from 2000-2020, then the other economic sectors must have increased 24.4 trillion BTUs, or 27.7%. Similarly, if 21.7% increase in the number of households accounts for 2.7 of the 49.4 trillion BTU-increase from 2001-2020, then the other economic sectors increased 46.7 trillion BTUs, or 70.5%. In summary, while the number of households and presumably the concomitant electricity consumption increased 21.7% over a 20-year period, then the other economic sectors increased somewhere between 27.7% and 70.5%. However, South Dakota’s economic structure and sectors remained more or less the same over the 20-year period with consistent electricity consumption across economic sectors [12]. For example, residential consumers of electricity accounted for 41.3% of total annual sales in 2000 and still accounted for 39.9% of total annual sales in 2020 [12]. Therefore, with proportions remaining largely the same, a huge surplus of electricity was generated. More significantly, as noted, these numbers are based on the assumption that energy consumption per capita has remained constant over the last 20 years. In reality, it has declined. For example, “In the United States, total electricity consumption has risen slightly since the early 2000s, but electricity consumption per person decreased by nearly 7% between 2000 and 2017 because of improvements in energy efficiency and changes https://doi.org/10.5593/sgem2022V/4.2/s17.79 633 22nd International Multidisciplinary Scientific GeoConference SGEM 2022 in the economy that have resulted in less electricity use per unit of economic output” [13]. This declining trend in energy consumption makes it all the more remarkable that South Dakota’s energy consumption increased 27.7-70.5% (24.4-46.7 trillion BTUs) while household growth was only 21.7% and other sectors of the economy grew similarly and remained proportionally about the same. The implementation of energy efficiency practices met a sizeable proportion of the household growth without the need for more energy. The extra electricity generation can be explained by exportation, which in turn, is supported by an examination of the companies purchasing wind-generated electricity in South Dakota. By far, the purchaser of the largest amount of wind-generated electricity is XcelEnergy, which purchases 41% percent of electricity produced by the windfarms list on the website of the South Dakota Public Utilities Commission [5] (Table 2). Though XcelEnergy serves customers in several U.S. states, a map of the company’s aboveground transmission lines illustrates that XcelEnergy has a network that connects South Dakota’s wind turbines to customers in Minnesota and Wisconsin (Map 1) [14]. Other notable companies that purchase and export South Dakota, wind-generated electricity are Northern Indiana Public Service Company and Dairyland Power Cooperative. The former, as its name indicates, serves northern Indiana and the latter supplies customers in southeastern Minnesota, western Wisconsin, northwestern Illinois, and northeastern Iowa. Google Energy LLC provides electricity to a Google service center in Minnesota [5]. In short, these companies purchase approximately 50% of South Dakota’s windgenerated electricity and send it outside of South Dakota. This percentage and the quantity that it represents is noteworthy and would explain why electricity generation has grown much more quickly than the households and businesses in South Dakota. The remaining companies purchasing wind-generated electricity are part of state networks, mostly in the Midwest with one including the Canadian province of Manitoba. Presumably this companies are providing electricity to their customers within South Dakota. However, because they are part of networks connecting other states, it would be very easy for them to export electricity to other states. If they do and even if to a limited extent, then well over 50% of South Dakota’s wind-generated electricity is exported. TABLES AND GRAPHS Table 1. Electric Power Sector Consumption Estimates (Trillion Btu) [6] Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 634 Natural Gas Coal Total % Total % 38.0 37.8 34.8 36.8 39.5 32.3 35.0 28.6 39.6 37.6 48.2 43.2 44.3 49.9 47.1 47.6 44.7 53.9 3.7 4.6 1.2 2.2 1.6 3.6 3.4 4.3 2.6 3.7 5.9 1.5 2.7 2.0 5.2 4.6 6.7 3.5 Petroleum: Distillate Fuel Oil Total 0.8 0.6 0.1 0.3 0.3 0.3 0.1 0.8 0.3 % 0.8 0.8 0.1 0.4 0.4 0.4 0.1 0.1 0.4 Hydroelectric Total 58.3 35.5 44.3 43.3 36.0 30.7 33.7 28.8 29.5 % Wind Total % Total Total % 57.8 0.0 0.0 100.8 100.0 45.2 0.05 0.06 78.5 100.0 55.0 0.1 0.1 80.5 100.0 52.2 0.4 0.5 83.0 100.0 45.5 1.6 2.0 79.1 100.0 44.8 1.6 2.0 68.6 100.0 45.8 1.5 2.0 73.6 100.0 45.0 1.5 2.3 64.0 100.0 40.1 1.4 1.9 73.5 100.0 Section Renewable Energy Sources & Clean Technologies 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 35.2 36.2 29.0 32.2 30.8 29.5 16.3 23.2 22.4 24.6 27.7 18.4 42.1 35.4 24.0 28.2 31.0 27.3 17.8 21.1 21.5 21.0 20.8 14.4 0.9 1.6 1.6 2.5 4.2 4.0 6.5 7.9 8.1 9.8 9.9 9.5 1.1 1.6 1.3 2.2 4.2 3.7 7.1 7.2 7.8 8.3 7.4 7.4 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.1 0.1 0.1 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.1 0.1 0.1 0.1 0.1 43.3 51.1 64.2 56.9 38.8 52.3 45.2 44.4 48.4 57.0 70.5 51.2 51.7 49.9 53.1 49.9 39.0 48.4 49.5 40.4 46.4 48.6 52.8 39.0 4.1 13.4 25.9 22.4 25.6 22.2 23.3 34.3 27.3 25.8 24.8 48.6 4.9 13.1 21.4 19.6 25.7 20.5 25.5 31.2 26.2 22.0 18.6 38.0 83.7 102.4 120.8 114.1 99.5 108.1 91.4 109.8 104.2 117.4 133.2 127.9 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Energy Type: Percentage Coal Natural Gas Hydroelectric 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Wind Graph 1. Electric Power Sector Consumption Estimates (Trillion Btu) [6] Table 2. Consumers of South Dakota’s wind-generated electricity [5] Consumer Xcel Energy Dairyland Power Cooperative & Google Northern Indiana Public Service Company Google Energy LLC Basin Electric Heartland Consumers Power District MW 1220.0 155.0 % of total Service Area 41% Minnesota, Wisconsin SE Minnesota, western Wisconsin, NE 5% Iowa, NW Illinois 50.4 2% northern Indiana 97.0 3% Google service center in Minnesota 615.4 Colorado, Iowa, Minnesota, Montana, 20% Nebraska, New Mexico, North Dakota, South Dakota, and Wyoming 51.0 https://doi.org/10.5593/sgem2022V/4.2/s17.79 2% South Dakota, Minnesota, Iowa and Nebraska 635 22nd International Multidisciplinary Scientific GeoConference SGEM 2022 MISO (Midcontinent Independent System Operator) SPP (Southwest Power Pool) Walmart and Boston University NorthWestern Energy South Dakota, 14 states (mostly mid10% western) and the Canadian province of Manitoba South Dakota and 13 other mostly 103.0 3% mid-western states 250.0 8% "Midwest consumers" 164.5 5% South Dakota, Nebraska, Wyoming 3004.5 100% 298.5 Map 1. Above-Ground Transmissions lines for XcelEnergy. Derived from [14] CONCLUSION Sustainability advocates not only advocate green energy, they usually also advocate localized production and consumption. In terms of energy such as wind and solar, certainly the option exists for individual consumers to erect their own wind turbines and solar panels to provide for their own needs. Businesses, institutions, and municipalities have the same opportunities. However, the case of South Dakota illustrates that energy projects like wind farms, though green, are not necessarily localized in that they exclusively provide energy for the communities in which they operate. Instead of conforming to the sustainability ideal of “locally produced-locally consumed”, South Dakota’s wind farms exist as a hybrid manifestation of the interbreeding of the sustainability concept and modern capitalism. On the one hand, the immediate advantage is that capitalism’s profit-oriented motivations and incentives combined with large sums of investment cash can more quickly launch large-scale green projects than local communities. On the other hand, will capitalist practices prevent the development of more sustainable societies over the long run? The answer to these questions requires further investigation into the impact of these wind farms on the local communities that host them. 636 Section Renewable Energy Sources & Clean Technologies REFERENCES [1] Dai, Kaoshan, Anthony Bergot, Chao Liang, Wei-Ning Xiang, and Zheng Huang. Environmental issues associated with wind energy—A review, Renewable Energy, vol. 75, pp 911-921, 2015. [2] Hao, Siqi, Adrian T.H. Kuah, Christopher D. Rudd, Kok Hoong Wong, Nai Yeen Gavin Lai, Jianan Mao, and Xiaoling Liu. A circular approach to green energy: Wind turbine, waste and material recovery, Science of the Total Environment, vol. 72, pp 1-10, 2020. [3] Bórawski, Piotr, Aneta Bełducka-Bórawska, Krzysztof Jóżef Jankowski, Bogdan Dubis, and James W. Dunn. Development of wind energy market in the European Union. Renewable Energy, vol. 161, pp 691-700, 2020. [4] Energy.gov: Windexchange. Wind https://windexchange.energy.gov/states/sd energy in South Dakota. 2022. [5] South Dakota Public Utilities Commission. South Dakota wind energy projects. 2022, January. https://puc.sd.gov/energy/wind/project.aspx [6] U.S. Energy Information Administration. Table CT8. Electric Power Sector Consumption Estimates, Selected Years, 1960-2020, South Dakota. 2020. https://www.eia.gov/state/seds/sep_use/eu/pdf/use_eu_SD.pdf; Table CT8. Electric Power Sector Consumption Estimates, Selected Years, 1960-2018, South Dakota. https://www.eia.gov/state/seds/archive/seds2018.pdf [7] U.S. Energy Information Administration. South Dakota: State profile and energy analysis. 2020, June 16. https://www.eia.gov/state/analysis.php?sid=SD [8] United States Census Bureau. Quick Facts: South Dakota. 2022. 2022. https://www.census.gov/quickfacts/SD [9] United States Census Bureau. South Dakota 2000: Summary Social, Economic, and Housing Characteristics: 2000 Census of Population and Housing. 2022. https://www2.census.gov/library/publications/2003/dec/phc-2-43.pdf [10] IndyStar. 2020 Decennial Census: How many people live in South Dakota. 2022. https://data.indystar.com/census/total-population/total-population-change/southdakota/040-46/ [11] Ritchie, Caitlin. Energy rankings: Which states use the most electricity: per household. Choose Energy. 2021, December 10. https://www.chooseenergy.com/news/article/the-states-that-use-the-most-and-leastamount-of-energy-per-household/ [12] U.S. Energy Information Administration. EIA-861 Annual Electric Power Industry Report. 2021, August 11. https://www.eia.gov/electricity/data/state/ [13] U.S. Energy Information Administration. Global electricity consumption to rise faster than population. 2020, June 15. https://www.eia.gov/todayinenergy/detail.php?id=44095 [14] XcelEnergy. 10-year plan for major generation and transmission facilities. 2020, July, p 32. https://puc.sd.gov/commission/commissionaction/10yearplan/Xcel2020.pdf https://doi.org/10.5593/sgem2022V/4.2/s17.79 637 22nd International Multidisciplinary Scientific GeoConference SGEM 2022 638