South Dakota and Colorado Incentives Encourage Wind Energy Development

As of July 1, South Dakota has a more stable and consistent tax climate for the wind industry thanks to new legislation that will provide tax incentives for wind energy facilities and related transmission.

The legislation, called an alternate tax, has two parts, a nameplate capacity tax and a gross receipts tax. The nameplate tax is US $3 multiplied by the nameplate capacity of the total wind farm, in kilowatts (kW). The gross receipts tax is 2% of the wind farm’s actual production of electricity multiplied by an established 2008 electricity rate of 4.75 cents per kilowatt-hour (kWh). The established electricity rate will have a 2.5% annual rate of inflation.

From the collected taxes, the wind farm developer receives a rebate for up to 50% of the cost for transmission lines and collector systems for a wind farm to be installed. The rebate lasts up to 10 years, and cannot be more than 90% of their gross receipts tax for years 1-5, and 50% of the gross receipts tax for years 6-10.  

“We know we need additional transmission lines and infrastructure to get our wind energy to consumers and we are prepared to help offset some of those costs for new and expanding companies,” said South Dakota Governor Mike Rounds.

In a related story, The Colorado Governor’s Energy Office (GEO) has announced that four partners have been selected for its Small Wind Incentive Program: Highline Electric Association, Sangre De Cristo Electric Association Inc., Southeast Colorado Power Association and the Town of Estes Park.
The program works by giving rebates for up to 10 kilowatts (kW) of installed capacity per installation, including systems larger than 10 kW.  Incentives will be US $1/watt from the partner and US $1/watt from GEO, totaling US $2/watt. Rebates will not exceed 50% of the total cost of the project, or US $10,000.
“Small wind can be a great option for homes or small businesses that want to use renewable energy.  
Combined with energy efficiency, wind energy is an opportunity to control energy costs,” said Tom Plant, director of GEO. “This program will allow more Coloradans, especially those in rural areas, to participate in the New Energy Economy.”

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