Youngstown Daily Legal News

Lawmakers say more wind power in Ohio will help lure computer data centers

TIFFANY L. PARKS
Special to the Legal News
Published: June 18, 2015

The sponsors of wind energy-based legislation have said the proposed bill is fundamentally about economic development, attracting investment to the state and job creation.

In stumping for House Bill 190, Rep. Tony Burkley, R-Payne, noted that Ohio is trying to convince several large, west coast technology companies to locate data centers within the state.

“As online communication and cloud computing continues to expand, the need for these massive data warehouses continues to expand,” he said.

“Seeking to capitalize on this trend, in 2011 the state created a data center tax credit in House Bill 153 to lure those companies to Ohio as they considered siting data centers in the Midwest. Because the data centers need to be geographically dispersed, the intent was to make Ohio stand out when they need a Midwest location.”

The good news, Burkley said, is that the plan is working.

“While many of the conversations are not yet public, we know that the state is under serious consideration in the site selection process for several companies,” he said.

“We are particularly excited in northwest Ohio about these prospects because we know data centers use a tremendous amount of electricity, and the technology companies siting them have made some of the strongest commitments to clean, renewable energy of any business sector in the country.”

Burkley said these companies take their corporate sustainability plans seriously and are demanding renewable energy, procured from projects built in the state in which they do business.

“As renewable energy prices have fallen, these deals have become more attractive financially and of course, with no fuel costs, the power price is guaranteed not to change for the duration of the contract — often 20 years — an enormous benefit to business that like long term predictability.”

While Ohio is home to wind, solar, biomass, waste energy recovery and co-generation technologies and developers are interested in the chance to sell power directly to the data centers, Burkley said he’s learned Ohio has two policy barriers that could place the state at a competitive disadvantage in the data center market.

“Tax policy and wind farm setbacks. Fortunately, both are easily resolved at no cost to the state,” he said.

HB 190, jointly sponsored by Burkley and Rep. Tim Brown, R-Bowling Green, addresses two policy barriers to wind farm development in Ohio.

In 2010, Brown noted that legislation was updated to address alternative energy projects and established a payment in lieu of taxes initiative known as PILOT.

“As non-traditional energy sources like wind, solar, clean coal and on-site combined heat and power proliferated, the industry realized that Ohio law considered those project owners to be a “public utility,” capturing all renewable and alternative energy projects in the definition,” he said.

As “public utilities,” those projects would pay the tangible personal property tax.

In the instance of a wind farm, Brown said that would have amounted to more than $40,000 per megawatt, where the range in surrounding states was $3,000-10,000 per megawatt.

“The impact on other forms of on-site generation was just as dramatic, with the tax rates significantly driving up energy costs and making projects infeasible,” he said, adding that PILOT set a per megawatt amount of $9,000.

“When created, the PILOT had a two-year sunset date, which has subsequently been extended for two additional years in each of the previous two biennial budgets. The current sunset requires a renewable energy project to be under construction by the end of 2015 and to be placed in service by the end of 2016, with slightly longer time frames for advanced energy projects such as clean coal, nuclear and cogeneration.”

House Bill 190 would extend PILOT for another five years for counties choosing to participate.

The proposal also would permit a board of county commissioners to adopt an alternative setback requirement for a wind farm under which a turbine must be 1,125 feet in horizontal distance from the tip of the turbine’s nearest blade at 90 degrees to the exterior of the nearest, habitable, residential structure on adjacent property.

The measure would allow the board to revoke the resolution, but allows that the resolution may still apply to a wind farm if the person seeking to build the wind farm files notice before the revocation.

HB 190 would authorize the power siting board to increase the alternative setback for any specific wind turbine in order to preserve the health, safety and welfare of neighboring property owners.

“Our bill would maintain the current law’s setback as the default, but allow the local county commissioners the option to waive the new setback and re-establish the prior setback,” Brown said.

Just like the PILOT structure, the setback provisions would be permissive.

“So if counties would like to see additional wind development, they can make the choice to do so. But in any case, the setback remains a minimum setback, and the state power siting board can always increase a setback distance if it finds doing so is in the public interest,” Brown said.

With the changes outlined in HB 190, Brown said he and Burkley believe Ohio has the chance to reassert itself as a leader in attracting the sorts of companies to the state that have expressed a strong desire to purchase power from renewable energy sources.

“The opportunity is very real,” he said.

HB 190 is before the House Public Utilities Committee.

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