The Union of Concerned Scientists analyzed the potential economic benefits and costs of expanding wind power in Nebraska. We found that the total net benefits to the state economy of developing wind power instead of coal and natural gas are nearly $15 million per year over a 20-year period. We based our analysis on a policy goal of generating 10 percent of Nebraska's electricity from wind power by the year 2012. This policy goal is achieved through the implementation of a renewable portfolio standard (RPS). An RPS requires electricity suppliers to sell a set amount of renewable energy to their customers. Meeting the 10 percent goal would result in 800 megawatts of wind capacity installed in the state by 2012.

New jobs and economic activity would be created directly from building, operating, and maintaining wind facilities, as well as indirectly from local business supplying goods and services to support those activities. We found that developing 800 megawatts of wind capacity would, on net, create more jobs, earnings, and growth in gross state product than developing natural gas and coal facilities to produce an equivalent amount of electricity. For example, in 2012, the year the RPS goal is reached, there are 360 more jobs, $8 million more in earnings, and $35 million more in gross state product. We found that wind projects generate roughly 2.4 times more jobs during construction and 1.5 times more jobs from ongoing operation and maintenance than do coal and natural gas plants.

Making a long-term commitment to develop wind power could help spur development and expansion of businesses that manufacture wind turbines and related components in Nebraska. We found that if half of the turbines and related components and all of the towers that are needed to meet the 10 percent goal were manufactured in Nebraska, an additional 250 jobs, $15 million in earnings, and $44 million in gross state product would be supported each year over the 10-year period. Additional jobs and economic activity that could result from exporting equipment to other states are not included in these estimates.

The analysis shows that wind power could be an important source of rural economic development in Nebraska. We found that farmers and landowners would be receiving $2.2 million in lease payments by 2012, assuming $2,000 per year for each wind turbine installed on their land. Wind projects could also generate property tax revenues worth an estimated $5.2 million by 2012, assuming private developers own half of the projects.

These benefits are most likely to accrue to the areas of the state that need them the most. Median income levels in Nebraska's ten windiest counties are, on average, 21 percent below the state average, and poverty rates are higher than the state average in all but one of the windiest counties. Moreover, while the state's population is projected to grow 14 percent between 1990 and 2010, population in the ten windiest counties is projected to decline by 9 percent on average during the same period. This problem is particularly severe in Sheridan, Keya Paha, and Scotts Bluff counties, where the population is projected to decline by 20 to 25 percent. The economic opportunity that wind power development provides has the potential to offset this trend.

The two most important variables affecting the cost of wind power are ownership and the availability of federal incentives. Our base case scenario assumed that Nebraska's public utilities would own half of the projects and private developers would own the other half, and that federal incentives for wind power are available through 2006. Under this scenario, we estimated that generating 10 percent of the state's electricity with wind power instead of coal and natural gas would cost an additional $3.5 million per year over a 20-year period or roughly 7 cents per month on a typical household electric bill (using 500 kWh per month).

Under a high-cost scenario in which private developers own all of the projects and federal incentives are not available, the typical household would pay an extra 59 cents per month in 2012. Under a low-cost scenario in which Nebraska's public utilities owned all of the projects and federal incentives are available through 2006, the typical household would save about 20 cents per month in 2012.

By taking advantage of its as yet untapped wind resources, Nebraska will be taking an important step toward reducing its reliance on expensive, aging nuclear power plants and dirty coal plants that pollute the air and jeopardize the health of all Nebraskans. By starting on this path now, the people of Nebraska can prepare themselves for the expected shortfall in electricity generating capacity by relying on a clean source of power that is not subject to the volatility of fuel markets.

Nebraska has a powerful opportunity to become a national leader in wind energy development just as it has with ethanol production. States like Iowa, Minnesota, and Texas are demonstrating that progressive state policies are key to fostering the growth of wind power. This report shows that Nebraska can make a significant commitment to develop wind power and maintain its low electricity rates, while providing net benefits to the state's economy and environment. Implementing a renewable portfolio standard in Nebraska could help spur development of new industries, offer a new cash crop to farmers, and provide an important source of jobs and income to rural communities.