Ownership and Regional Economic Impact: The Case of Wind Development in Minnesota

The Upper Midwest is poised for a major investment boom in wind-powered electricity generation. Public policy currently favors corporate ownership structures for new investment in this field, but when wind development takes place under the aegis of an external corporate ownership group the local economic participation will generally be limited to a minor role. This study attempts to quantify the regional value-added and employment consequences of local- versus outside-ownership of wind-powered electricity generation. We employ a realistic pro forma model of a “flip” structure -- i.e. a local equity “community wind” group partnered with an external tax-motivated equity group -- for a modestly sized (9.9 MW) wind farm, using recent vendor-certified capital costs combined with additional financial estimates from industry participants, assuming a class four wind resource. The present value of the residuals (after tax profits) as well as the other O&M expenditures are annuitized and entered into a Minnesota state-level input-output model. We find that, respectively, under pessimistic and optimistic parameter assumptions in the community-wind group’s pro forma, the impact on state-level value added is 3.1 and 4.5 times larger than the impact would be under an external ownership structure. The impact on employment is respectively 2.5 and 3.5 times larger than that generated by an external ownership structure.