Wind Energy's Economic Impacts to Communities
Community members in Alaska review structural plans of their wind turbine. Photo from Intelligent Energy Systems
Wind energy projects provide many economic benefits to neighboring communities: jobs, a new source of revenue for farmers and ranchers in the form of land lease payments, and an increased local tax base. Wind energy can also reduce electricity rates for project neighbors, and in Texas, has even resulted in free electricity.
Wind projects can also attract tourists who want to see wind farms in person. Locally owned community wind projects create even more of an economic opportunity for those involved. The following sections describe some of the potential economic impacts of wind development.
Direct Employment
Wind energy projects result in jobs in rural communities in manufacturing, transportation, and project construction. Wind energy sector employment reached a new high of more than 116,800 full-time workers at the end of 2020. Employment in this sector fluctuates depending on the level of deployment, status of federal incentives, trade, and the value of the dollar.
Many people will be employed during a wind power plant’s development and construction, including local construction services and companies from outside of the community. This activity will provide a large amount of indirect economic impact (e.g., manufacturing and supply chain) and induced impacts (e.g., increased spending at hotels and restaurants) during the construction phase of a project.
Land Lease Payments
Wind turbines have a small footprint, so crops can be grown and livestock can be grazed close to the base of the turbine offering rural landowners a new cash crop. During 2019, wind energy projects on private land provided $706 million in land lease payments to rural landowners. Land lease agreement payments are typically structured in one of three ways: fixed payments, revenue-based payments, or a combination. Project developers might prefer to negotiate a certain payment structure with landowners based on the economic considerations of a particular wind energy project. Landowner compensation can vary among individual projects and landowners in a single project could have different agreed-upon terms.
Local Tax Revenue
Property tax payments from utility-scale wind projects provide much-needed revenue to rural communities for building new schools, roads, bridges, and other community infrastructure. Average annual payments of more than $7,000 per megawatt of installed capacity are common.
Wind Energy Tourism
In locations where tourism is an important part of the local economy, a wind farm may be perceived as an enhancement to tourism for those interested in the technology. Although detractors may raise questions about possible negative impacts to local tourism, real-life experience (e.g., in two rural Indiana counties and on Block Island, Rhode Island) supports the idea that wind projects are an opportunity for the community to build awareness and education around clean energy and capitalize on a “green” identity.
Community Wind Projects
Community wind projects are owned by local governmental organizations or a group of people who pool funds to invest in a clean energy project. They have multiple applications and can be used by schools, hospitals, businesses, farms, ranches, or community facilities to supply local electricity. Rural electric cooperatives or municipal utilities can also own community wind projects and use them to diversify electricity supplies and to engage stakeholders in their local energy projects.
Locally owned community wind projects create even more of an economic opportunity for those involved than conventional wind farms owned by companies with limited local ties. Community wind projects have a greater impact in terms of economic benefits because of two key factors: the local ownership and project profits remaining local.
Research indicates that “construction-period employment impacts are 1.1 to 1.3 times higher, and operations-period impacts are 1.1 to 2.8 times higher for community wind versus conventional wind power projects.”
More Information
- Land-Based Wind Energy Economic Development Guide
- Wind Energy Market Reports: 2022 Editions
- Small and Large Wind Energy Community Guides
- Wind Energy Economics and Incentives