October 2003

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A Newsletter of the Nebraska Energy Office

Wind Generators,
Springview, Nebraska at Sunset
Electricity from the Wind...

Powering the Prairie

The New Cash Crop

The events of 2002 proved that it's tough to make a living on the family farm. Net farm income was projected to be down 21 percent from 2001...

What Landowners Should Know

Although he didn’t know it at the time, Larry Widdel’s future in the world of wind energy development was secured years ago when his family bought some farmland near Minot, North Dakota...

Wind Energy and the Natural Gas Crisis

The words “energy crisis” may bring to mind images from the 1970s of gas rationing and long lines of cars at the gas pumps, but for farmers and ranchers in 2003, “energy crisis” means yet another item on the long list of problems...

Nebraska's Options...

Ways to Develop Windpower in the State

Although the wind energy resources in Nebraska are among the best in the country, very little recent wind development has occurred. There is one, pioneering commercial wind installation in the state...


Expect to Pay More this Winter...

Natural Gas Heating Bills Will be Bigger, But Supplies Are Okay

In June, it looked like natural gas could be in short supply this winter — and carry premium prices. With the onset of Fall, some of those predictions have changed...

Natural gas regulation...

Someone New is Watching the Utilities

In May, Nebraska joined the other states in the way natural gas utilities are regulated...

Building a New Home? Remodeling an Existing One?
Making the Best Resource Choices and Using Energy Wisely

Whether you are looking for or building a new home, or remodeling an existing home, there are a number of options for making improvements that will use fewer resources...

Questions and Answers...
5% Dollar and Energy Saving Loans

Is the interest paid on a Dollar and Energy Saving Loan tax deductible item on federal and state income tax returns?...

A New Series...
Electricity Data is a Click Away

Did you know the state has 909,346 electricity consumers who are supplied by 162 different utilities? That's just one information nugget...

A Factsheet on selecting...
Air Source Heat Pumps

This Factsheet provides information on two common types of heat pumps: air source and geothermal heat pumps. Either one can keep your home warm in the winter and cool in the summer.

News Bytes

The Energy Wiz !

The Energy Wiz !
Ask The Energy Wiz!

Special to the Nebraska Energy Quarterly

The New Cash Crop

Buffalo Ridge region and Nobles County, Minnesota
Buffalo Ridge region and
Nobles County, Minnesota

The events of 2002 proved that it's tough to make a living on the family farm. Net farm income was projected to be down 21 percent from 2001. Dry conditions in much of the country reduced the forecasted yields of corn, soybeans, and wheat. Lower returns were expected for livestock commodities. As unemployment rates rose, the 54 percent of farmers and ranchers who work off the farm for wages or salaries also suffered — and so did the tax bases of the rural counties where they live.

Minnesota's New Crop

But some rural landowners and the communities they live in are faring better by taking advantage of a new cash crop: electricity from the wind. Dave Benson, a farmer and county commissioner of Nobles County, Minnesota, understands the benefits that wind power can bring to a community. Minnesota has more than 300 megawatts of installed wind power and the opportunity to implement several thousand more over the next 20 years — and Minnesotans are taking full advantage of this cash windfall.

"This is one of the few bright spots in a rural landscape," Benson said. "Wind is homegrown energy that we can harvest right alongside our corn or soybeans or other crops. We can use the energy in our local communities, or we can export it to other markets. We need to look carefully at wind energy as a source of economic growth for our region."

Wind Turbines in Pecos County Texas
Wind Turbines in Pecos County Texas

Regional Growth

The outlook for regional economic growth from wind energy is promising. During the next 20 years, achieving the goals of the U.S. Department of Energy's Wind Powering America initiative will create $60 billion in capital investment in rural America, provide $1.2 billion in new income for farmers and rural landowners, and create 80,000 new jobs. Because wind projects are more capital intensive than conventional power plants, property taxes for wind projects are often two to three times higher per unit of energy than conventional plants. Thanks to wind energy, Pecos County, Texas, added $4.6 million to its property tax revenue in 2002 alone.

Wind projects also contribute to state business, sales and income taxes. The increased revenue benefits local services such as schools, health care facilities, and roads. Farmers and landowners in rural communities also benefit.

Continued in the next column

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The New Cash Crop continued...

Pecos County, Texas
Pecos County, Texas

Landowners in southern Minnesota and northern Iowa who lease their land to wind developers receive annual payments from $2,000 to more than $4,000 per turbine. The Union of Concerned Scientists estimates that typical farmers or ranchers with good wind resources could increase the economic yield of their land by 30 to 100 percent.

Wind projects also benefit rural economies by providing local jobs, from temporary construction jobs during the initial phases of a project to permanent wind turbine maintenance jobs. Because of these many benefits, rural community leaders across America are investigating whether wind energy can benefit their local economies — and they're finding many opportunities to site wind projects in their communities. According to the American Wind Energy Association, in 2001 nearly 1,700 megawatts of new wind-generating equipment worth $1.7 billion was installed in 16 states. The Wind Association projects that well over 2,000 megawatts of wind power will be installed in 2003.

Home-Grown Power Solution

Wind energy will benefit rural communities by contributing to a portfolio of energy options. Wind energy is "homegrown" energy. By contributing to utility-grade power generation, wind power can extend non-renewable energy sources, helping to secure our energy future, reduce energy costs, and reduce our dependence on foreign energy. For these reasons, rural utilities are looking for ways to diversify their energy portfolios and partner in utility-grade wind power generation. In the process, more of the revenue stays at home in the community. Wind energy generated in rural areas can be easily connected to the current utility grid system. In fact, rural leaders in the Minnesota Buffalo Ridge region where Benson lives are planning a new transmission line along I-90 that will bring energy to the Twin Cities. Benson's region currently generates about 360 MW, but the rural communities can only use 50-60 MW. "We need a line to export this new crop," Benson said. "And we're hoping to educate the community to be partners in owning the means of production. Our hope is that it really benefits the local communities."

Although integrating wind energy into the energy portfolio mix sounds like a futuristic concept, harnessing the power of the wind is hardly a new idea in the American West. Small turbines on individual farms and ranches were commonplace before the advent of rural electrification. Implementing wind projects in rural America may be a return to the past that could help preserve rural communities and the family farm. Making a living on the family farm has never been easy, but harnessing wind energy as the cash crop of the future is proving to be a viable way to ease the financial burdens of farmers, ranchers and rural communities and preserve the rural way of life.

On the Web

For more information on wind energy and its benefits to a rural community, including information on wind energy provisions in the 2002 Farm Bill, please visit the Wind Powering America Web site at: EERE Wind and Hydro Windpowering America

The U.S. Department of Energy contributed to this article.

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Special to the Nebraska Energy Quarterly

What Landowners Should Know

Wind turbine in North Dakota
Basin Electric Power Project
in the Dakotas

Although he didn’t know it at the time, Larry Widdel’s future in the world of wind energy development was secured years ago when his family bought some farmland near Minot, North Dakota. Widdel remembers hauling piles of rocks off the acreage, clearing it for the family’s cattle.

“It was the poorest land we owned,” Widdel laughed. “My uncle said, ‘Boy, this is awful. We don’t own mineral rights. We don’t own anything but the air above it.’ Who would have guessed that the air above our land might be worth money someday?”

No one could have predicted that Widdel’s rocky land, which has an outstanding wind resource and small hills that are perfect for siting wind turbines, would someday feature two 1.5-megawatt wind turbines. Thanks to Basin Electric Power Cooperative, Widell and his family have joined the ranks of rural landowners who are leasing their land and cultivating the cash crop of the future: electricity from the wind. And Widell couldn’t be happier about it.

“We’re very lucky that we were chosen,” he said. At a time when economic predictions for the family farm are anything but rosy, wind energy is a bright spot on the horizon. Rural landowners like Widdel who lease their land to wind developers typically receive about 2 percent – 4 percent of the gross annual turbine revenue — or $2,000 to $4,000 for each turbine — which can help compensate for a downturn in commodity prices. Annual farm income can be increased by $70 an acre.

But as with any business venture, rural landowners interested in leasing their land should do their homework.

Lease Agreements

Wind developers must take several preliminary steps before they can install turbines. First, they need to measure the wind resource on the site they’ve selected and assess its proximity to transmission lines. Next, they need to line up capital and commitment from energy buyers. Finally, they must complete any required environmental analyses and zoning and permitting processes.

Some wind developers will offer a landowner a “good faith” contract, which allows the developer to control the site while these preliminary steps are taken. Under this contract, the landowner may not enter into contracts with other wind developers. At the end of the time period outlined in the contract (usually 1 to 5 years), the developer must decide whether to install turbines or give up interest in the land.

Mapped location of Minot, North Dakota
Minot, North Dakota is where
Larry Widdel leases his land to
Basin Electric Power Cooperative
for wind power generation

If all goes well in the preliminary steps, the wind developer and landowner negotiate a lease. The arrangement is similar to a lease used to reserve mineral rights. The landowner assumes no financial responsibility for the project. The wind developer may offer the landowner a single up-front payment, a fixed annual payment, a share of the revenues from a wind project, or a combination of these payment methods. The rate of return for the landowner is proportional to the level of risk assumed.

The first option, a single up-front payment, may sound attractive. Even if the wind turbines fail to produce as expected, the landowner receives the guaranteed payment. But if the turbines produce more electricity than expected, the landowner won’t receive extra compensation. Also, the value of wind is expected to increase over time, in which case this payment arrangement would be a disadvantage.

Landowners should also know that any future sale of the property is likely to be complicated by this arrangement. Up-front payments are structured so that the developer receives a perpetual lease to the wind resource rights on the property. The landowner should consult with a tax adviser about the possible consequences of receiving one large payment.

The second option, a fixed annual payment, is less risky for the landowner, and it may have less impact on the landowner’s income taxes. But it may also result in a smaller share of the revenue. Still, some landowners prefer the relative security of an annual payment.

Basing the lease on a share of revenues is the third option. The compensation will vary according to the output of the turbines. This is probably the best option for a landowner who wants to ensure future compensation for increases in the value of wind power.

A leasing arrangement may include a combination of these payment options. For example, a landowner may request a fixed payment per acre along with a share of the revenue from each turbine.


Map showing location of Girvin, Texas
Girvin, Texas

Easements are another factor to consider in a leasing agreement with a wind developer. Although a wind turbine has a small “footprint,” which allows the landowner to continue normal farming and ranching operations on the land surrounding the turbine, developers also need access to the turbines and transmission lines for maintenance and repair.When developers from Cielo Wind Power approached Louis Woodward, a rancher in Girvin, Texas, he was concerned about the impacts such access would have on vegetation and the safety of his livestock.

Continued in the next column

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Special to the Nebraska Energy Quarterly
What Landowners Should Know... continued...

Cielo Wind Power approached Louis Woodward, a rancher in Girvin, Texas about leasing his land to build wind turbines. “Nobody likes a bunch of vehicles running over their property,” Woodward said. “We don’t get much rain out here, and needless to say, without rain, we don’t get much vegetation.”

Woodward finally signed a lease agreement after the developers agreed to install underground transmission lines and follow his recommendations when reseeding grass. Cielo also agreed to pay for any injuries to his livestock.

Today, Woodward has 242 turbines on his property.

Landowners should discuss all easement issues with their attorneys and the developers prior to signing a lease agreement.

More Factors to Consider

While leases, taxes and easements are major concerns, there are other factors to consider as well:

  • Heavy industrial equipment is used to erect wind turbines. New roads may be needed, transmission equipment may have to be installed, and equipment must be maintained. This can result in local jobs that benefit the local economy. In general, local communities have responded favorably to wind development projects.
  • Landowners should review their insurance policies before signing any contract. If a policy’s coverage would be affected by wind development on the land, a landowner can negotiate with the developer and add provisions to the contract to compensate.
  • Landowners should discuss taxes with the developer and with an attorney. Determine who will pay the property taxes, whether the developer will pay for increases in property tax caused by improvements (usually this is the case), and who will pay taxes on the sale of electricity. Discuss whether one party will pay taxes owed by the other party if non-payment would result in a lien or foreclosure on the property.
  • Wind turbines may be sited on Conservation Reserve Program and grassland easements. Some restrictions do apply.
  • Landowners should not feel pressured by developers to enter into a leasing arrangement. Developers should be willing to answer questions, and landowners should investigate a developer’s history. Remember the old adage, “If it sounds too good to be true, it probably is.”

One final word of advice: Landowners who install wind turbines on their land should expect a lot of attention. When Widdel goes to town, his neighbors are curious.

“The first two or three months, the only thing people wanted to talk to me about was wind. They didn’t even ask me how I was,” he said. “They just wanted to know about my wind power.”

The U.S. Department of Energy contributed to this article.

On the Web

For more information on wind energy and its benefits to a rural community, including information on wind energy provisions in the 2002 Farm Bill, please visit the Wind Powering America Web site at Windpowering America.

Learn More about Wind Development on Your Land

These organizations and resources are recommended if you need additional information on wind power development issues:

  • Windustry
    This organization partners with the Institute for Agriculture and Trade Policy to promote wind education and outreach. The organization’s web site at www.windustry.org features a section called Wind Farmers Network of America. You can also find out more about easements at Windustry.org Opportunities.

If you don’t have Internet access, write to Windustry, 2105 First Avenue South, Minneapolis, MN 55404; or call 800-946-3640.

American Wind Association logo
American Wind Association logo
  • American Wind Energy Association
    The American Wind Energy Association offers a fact sheet entitled “Wind Energy for Your Farm or Rural Land.” It is available online at Factsheets Windy Landowners.

You can also access a list of developers at AWEA Directory of Developers. Write to The American Wind Energy Association at 122 C Street NW, Suite 380, Washington, DC 20001; or call 202-383-2500.

  • American Corn Growers’ Foundation
    Learn more about the Foundation’s Wealth from the Wind program athttp://www.acga.org. Write to the foundation at P.O. Box 18157, Washington, DC 20036; or call 202-835-0330.
Wind Energy Resource Atlas of the United States
Wind Energy Resource Atlas
of the United States

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Special to the Nebraska Energy Quarterly

Wind Energy and the Natural Gas Crisis

The words “energy crisis” may bring to mind images from the 1970s of gas rationing and long lines of cars at the gas pumps, but for farmers and ranchers in 2003, “energy crisis” means yet another item on the long list of problems faced by rural communities. America is facing a shortage of natural gas — once thought to be so abundant that power plants burn it to produce electricity. Last winter, home-heating bills more than doubled in some areas, and they are expected to increase another 20 percent this winter. But farmers and ranchers have more to worry about than high heating costs.

Dan McGuire, American Corn Growers Foundation
Dan McGuire,
American Corn

According to Dan McGuire, Wealth from the Wind program director for the American Corn Growers Foundation, “Many farmers use irrigation wells with natural gas engines. Farmers use propane for space heating and grain drying, and propane's prices are tied to natural gas prices. Natural gas also accounts for 80 percent to 90 percent of the cost of producing nitrogen fertilizer (anhydrous ammonia). In March, prices for hydrous ammonia, which is typically derived from natural gas, jumped from $185 per ton a year earlier to $350 per ton and had only declined to $320 per ton by May. Farmers' cost of production is affected by both the fuel and the fertilizer variables.”

As Congress debates how to reduce our dependence on natural gas as well as foreign oil, the President's National Energy Policy recommends “examining the potential for greater electricity generation from sources other than natural gas.” McGuire knows that wind energy fits the bill.

Wind Turbine Sites in the Midwest Region

Midwestern Wind Turbine Sites
Midwestern Wind Turbine Sites

“The impact of higher natural gas prices in 2003 had a tremendously negative impact on corn farmers,” McGuire said. “The key is to move the wind energy agenda at both the state and national levels, including state and federal energy incentives, just as fast as possible.”

The American Wind Energy Association predicts implementing policies that encourage the growth of wind energy would create thousands of jobs and millions of dollars in royalty income for hard-pressed farming and ranching states. Wind projects also contribute to state business, sales, property and income taxes. Thanks to wind energy, Pecos County, Texas, added $4.6 million to its property tax revenue in 2002 alone. The increased revenue benefits local services such as schools, health care facilities and roads. Farmers and landowners in rural communities also benefit. Landowners in southern Minnesota and northern Iowa who lease their land to wind developers receive annual payments from $2,000 to more than $4,000 per turbine. Wind projects also benefit rural economies by providing local jobs, from temporary construction jobs during the initial phases of a project to permanent wind turbine maintenance jobs.

In areas of the country where wind farms generate electricity, they are directly helping to conserve natural gas supplies. And unlike natural gas prices, which are subject to market fluctuations, wind energy costs are predictable over time. Once a plant is built, the cost of producing electricity is stable and the fuel source is free. This means that wind energy works well in tandem with natural gas production. For example, smart investors know that they should diversify their investment portfolios and balance potentially high-risk stocks with more-conservative bonds and mutual funds. Utilities devise a similar strategy to mitigate natural gas price fluctuations and risks — they plan ways to use other energy sources when natural gas prices soar. The fixed cost of wind energy helps mitigate the rapidly fluctuating cost of natural gas in a utility's “portfolio.”

Soaring Natural Gas Prices Are Here to Stay

“The days of $2 gas are gone,” Randall Swisher, executive director of American Wind Energy Association, said, referring to the historical market price for natural gas of just above $2 per 1,000 cubic feet prior to the California electricity crisis of 2001. Instead, a price range of $4 to $5 per 1,000 cubic feet is expected, with regional shortages and occasional spikes to $6-$10. Federal Reserve Board Chairman Alan Greenspan recently testified to a U.S. Senate committee hearing on natural gas that no one should expect a return of low prices in the near future.

Randall Swisher
Randall Swisher, Executive Director,
American Wind Energy Association

Why are natural gas prices so high? First, domestic natural gas wells are becoming “tapped out,” and even new, improved technologies can't significantly increase production levels. Oil & Gas Journal reported that Texas, which produces one-third of the nation's gas, must drill 6,400 new wells per year, or 17 wells per day, to keep its production from plummeting.

Natural gas well
Natural gas wells are
becoming “tapped out”

Proposed natural gas pipelines through Alaska and Canada are several years away, and some question whether Canada, also faced with dwindling reserves and rising natural gas prices, will continue to export increasing quantities to meet the demand of its neighbor to the south. Importing liquefied natural gas via tankers requires special port facilities, and only 1 percent of America's natural gas is imported this way anyway. Many have voiced concerns about security issues surrounding liquefied natural gas facilities near metropolitan areas. These proposed solutions obviously cannot make a significant dent in the present demand, and according to U.S. Secretary of Energy Spencer Abraham, demand for natural gas is expected to rise by as much as 50 percent over the next 25 years.

Second, natural gas reserves are lower than past inventories because last winter was cooler than normal. Analysts worry that if this summer's heat and consumer use of air conditioning increases, natural gas prices will follow suit. Abraham said this year's challenge is to ensure adequate natural gas supplies at prices consumers can afford.

“America's natural gas shortage affects everyone — from senior citizens living on fixed incomes to small business owners trying to keep the lights on,” Abraham said.

And that's where wind energy enters the picture. Electricity from the wind can keep the lights on — and benefit rural communities at the same time.

Wind turbines planted along with corn
Southern Minnesota and
Northern Iowa farmers
lease their land to wind
developers to receive
annual payments

The Wind Energy Solution

Energy experts estimate the current natural gas supply shortage amounts to 3-4 billion cubic feet per day, and they cite the increasing use of gas for electricity generation as one of the major causes of the shortfall. According to Swisher, rapid expansion of the nation's wind turbine fleet could sharply boost wind generation over the next four years, increasing its output to the equivalent of 3 billion cubic feet per day, or about as much natural gas as the states of Colorado and Alaska produce today.

“Wind plants can be permitted and built relatively quickly — typically, within one to two years,” Swisher said. This presents a much more immediate solution to the energy crisis than waiting for pipelines to be built or ports to be retrofitted to handle liquefied natural gas.

And building wind plants makes good economic sense as well. In 2001, the Colorado Public Utilities Commission ordered Xcel Energy, a regulated Colorado utility company, to engage in good faith negotiations for a wind power plant because the commission found that new wind generation would cost less than new gas-fired power plants.

The American Wind Energy Association has proposed transmission plans for 30,000 megawatts of wind in the Midwest and West, which the group believes is feasible in the near future. The wind industry has proposed a national policy agenda to help avoid future power generation problems, including:

  • A five-year extension of the wind energy production tax credit, which expires December 31, 2003, under current law
  • Tariff reform to increase effective transmission capacity on the current grid
  • Enactment of a national renewable portfolio standard to diversify the national utility generating portfolio.

According to the American Wind Energy Association, in addition to the new jobs and royalty income generated, implementing these policies would also provide energy stability — and American businesses and farms desperately need that stability. Time magazine reported that businesses including Coors Brewery, Dow Chemical and Owens Corning have urged President Bush to declare war on natural gas prices by “maximizing use of other energy sources for power generation.” American corn growers concur.

“Higher production costs combined with low commodity prices paid to farmers spells economic trouble for rural America,” McGuire said. “That's why the American Corn Growers Foundation and the American Corn Growers Association are promoting wind energy. It's why we developed the Wealth from the Wind program and work with the Wind Powering America program of the National Renewable Energy Laboratory and the U.S. Department of Energy. We support wind farming as both an alternative income stream for farmers and landowners and an economic development opportunity for rural communities.”

In the 1970s, wind energy technology could not be considered a viable alternative to conventional fuels, and it certainly could not provide an answer to the energy crisis. In 2003, rural America is poised to take advantage of new, advanced wind technology to harvest the crop of the future.

On the Web

For more information on wind energy please visit the Wind Powering America Web site at: Wind Powering America

This article was prepared with information provided by the Department of Energy's Wind Powering America Program.

Learn More about Wind Energy's Benefits to the Rural Community

  • American Corn Growers’ Foundation
    Learn more about the Foundation’s Wealth from the Wind program at American Corn Growers’ Foundation. Write to the foundation at P.O. Box 18157, Washington, DC 20036; or call (202) 835-0330.
  • Windustry
    Windustry This organization partners with the Institute of Agriculture and Trade Policy to promote wind educationand outreach. At the organization's web site, under the section, "About Windustry", you may join the Wind Farmers Network of America. You may write Windustry at 2105 First Ave. South, Minneapolis, MN or call 800-946-3640.
  • American Wind Energy Association
    AWEA offers information on policies that promote wind energy and provide benefits to rural communities. Visit American Wind Energy Association; write to The American Wind Energy Association at 122 C Street NW, Suite 380, Washington, DC 20001; or call 202-383-2500.
  • Wind Energy Resource Atlas
    To find out whether you have a strong wind resource in your area, visit NREL Wind Atlas.

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Nebraska's Options...

Ways to Develop Windpower in the State

Map of wind capacity in the U.S.
Map of wind capacity in the U.S.

Although the wind energy resources in Nebraska are among the best in the country, very little recent wind development has occurred. There is one, pioneering commercial wind installation in the state: a 10.5 MW plant in Kimball built by the Municipal Energy Agency of Nebraska. But over the past several years in the states surrounding Nebraska, wind plants sized in the hundreds of megawatts have been built or are now in the construction phase. The primary reasons for this difference are that:

  • unlike other nearby states, Nebraska has not enacted any policies to encourage wind development; and
  • public ownership of the electric power system in the state precludes access to a federal wind incentive — the wind energy Production Tax Credit — that is available throughout the country.

While wind power costs have progressed to the point where some prospective projects are cost effective without any incentives, wind project developers have focused their attention in states that present a more favorable business climate for their activities.

That is a part of the findings of a study commissioned by the Energy Office, with funds from the U.S. Department of Energy, to foster wind energy development in the state. An excerpted portion of the study's conclusions appears below.

Four Development Models

As requested by the Nebraska Energy Office, wind development was considered in the context of four different types of electric utility entities:

  1. Large public power district,
  2. One or more smaller municipal utility systems,
  3. Rural electric district, and
  4. Native-American jurisdiction.
Nebraska has areas of excellent wind resource potential
Nebraska has areas of excellent wind resource potential

The objectives were to recommend approaches that could be taken within the existing framework to move wind forward, and then to develop recommendations on measures the state could pursue to accelerate wind development in the state.

Wind in the Current Electric Power Framework:

The large public power districts will evaluate prospective wind projects on the basis of cost comparisons with conventional alternatives. The aim is to select the least cost option, with costs measured in conventional, direct terms. Non-monetized benefits and impacts, or externalities, are not considered. By statute, this is the procedure required for approval by the state's Power Review Board, which must approve any electric power project in the state before construction can proceed. Fortuitously, the Omaha Public Power District has just conducted an evaluation of this type, which provides a credible base case for wind plant consideration. Reasonable variations from the base case used in the study can result in selection of wind as the least cost alternative today for a number of projects. There are indications that this is beginning to occur. If one or more of the acceleration measures summarized below comes into play, then considerably more wind generation can be incorporated into the large public power district generation mix.

The smaller municipal systems and rural electric districts will find it more difficult than the larger utilities to satisfy the current least-cost criterion that the Power Review Board must apply (The Legislature modified the least cost provisions during the session in 2003). This is so because the size of wind projects appropriate to their needs would generally be smaller, leading to higher wind energy costs.

Kimball Nebraska Wind Farm
Rural electric systems would benefit from joint projects
(photo: Kimball, NE)

These smaller utility entities could move forward by pursuing joint projects, thereby aggregating electrical load and pooling assets such as attractive plant sites, power plant operating experience and financing capability. The rural electric districts are not likely to pursue a wind project independently, because these entities have no history of power plant ownership and operation. Instead they are much more likely to participate in joint projects. Tribal entities may also benefit from joint pursuit of wind projects with a wholesale electricity provider or one of the smaller utility entities.

A number of smaller municipalities would prefer to start small with wind in order to minimize their risk exposure — even though higher wind energy costs would result.

Policy Options for Consideration:

Several policy options for Nebraska are presented that would accelerate the introduction and use of wind power in the state. All but one of these options are likely to be revenue neutral with respect to the state's budget. The first option is to generalize the least cost statute that governs the Power Review Board's decision process. This would allow consideration of currently non-monetized benefits of clean renewables like wind power; including, for example:

  • cleaner air and water resulting from emissions reductions,
  • reduced health risks and costs,
  • fuel diversity and energy security, and
  • economic benefits from developing and utilizing an indigenous resource as opposed to exporting dollars to import fuels.
Springview, Nebraska
Springview, Nebraska

While these benefits are difficult to quantify, even a very small allowance for them would often be sufficient to tip the scales in favor of wind. With respect to budget impacts, this measure would have no impact on state or local revenues. Initially, it might result in a small but nearly imperceptible increase in local electricity rates; but in the longer run the net economic impacts are likely to be positive as the expected benefits materialize. (The Legislature exempted wind projects of 10 megawatts or less from least cost compliance provisions).

The second option is to allocate transmission costs for new wind plants over the entire transmission network in the state. This would reduce the effective capital cost of wind plants when comparing with conventional alternatives — perhaps by about 5 percent — and is similar to a provision already operating in Texas. This measure would have no impact on state or local revenues, and would have a negligible impact on electricity rates throughout the state.

A third option is to enact a sales tax exemption for renewable generation. This also would reduce the effective capital cost of a wind plant by about 5 percent and ease the least-cost burden. Electricity rates would not be affected, but there would be a resulting loss in state revenue. If 600 megawatts of wind generation were built over a ten-year period — which is about 10 percent of the state's generation — then the revenue loss would average approximately $3 million per year.

A fourth option is to institute a state production incentive for wind power. At a level of 1¢ a kilowatthour over a 30-year plant life, this would compensate for the inapplicability of the federal Production Tax Credit in Nebraska. If 600 megawatts of wind were then installed in the state, this would require revenue at peak of about $18 million per year. However, several options exist for reducing and even eliminating this impact on state revenues. First, any payments received from the federal Renewable Energy Production Incentive, or as a result of tradable federal tax credits that might materialize in the future, could be applied to offset the proposed Nebraska incentive. These measures are highly uncertain, however. A more attractive and reliable option would be for the state to offer green tags to those wishing to purchase the environmental attributes of wind energy. Markets for these tags are being established today, and green tags are being sold at prices in the range of 1 to 2¢ a kilowatthour of generated electricity. Hence it is likely that Nebraska can finance a production incentive entirely through the sale of green tags, thus avoiding any negative impact on state revenues.

Accelerating Wind-Power Development in Nebraska
Accelerating Wind-Power
Development in Nebraska

It is important to remember that some wind projects are likely to make economic sense in Nebraska today without any incentives. Therefore, those wishing to pursue projects on their own without participating in, or waiting for, any incentive program should be allowed the flexibility to operate outside of the framework of any incentive program that might be enacted.

One other incentive program that has been highly successful in other states is the Renewables Portfolio Standard, which stipulates that a specific portion of retail electricity supply must come directly or indirectly from renewable sources in conformance with a specified time schedule. It is likely that a Renewable Portfolio Standard could work well for Nebraska, but there is clearly a strong distaste for mandated programs in the state. Consequently the chances of legislative success are lower for this incentive option than for the others discussed.

On the Web

A complete text of Accelerating Wind-Power Development in Nebraska: Status, Recommendations and Perspective can be found at Accelerating Wind-Power.

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Definitive Wind Speed Study...

Nebraska Has Commercial Wind Farm Potential

Four Year Average Nebraska Wind Speeds in Miles Per Hour at 40 Meters Height

Nebraska 4 year average wind map at 40 meters high
Source: Global Energy Concepts, 1999

The most definitive wind energy study is now online. This four-year study done in Nebraska of the most promising wind energy sites has been added to the Energy Office's web site.

The Nebraska Wind Energy Site Data Study evaluated eight sites around the state for four years. An initial group of more than 30 locations was identified, visited and evaluated before the final eight were chosen.

Another aspect of the study reviewed previously gathered wind data.

At the conclusion of the study in 1999, the data suggested that wind speeds at all eight sites were technically sufficient for commercial wind farm development.

The Nebraska Wind Energy Site Data Study is located here.

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What is a "nacelle?"

Wind turbine nacelle
A nacelle is prepared for
mounting on a tower

When people start discussing wind turbines and generating electricity from wind, terms may be used that might be unfamiliar. In addition to typical terms used in electricity generation, words such as capacity factor, nacelle, net metering and wind power density are commonly used.

Wind turbine nacelle being placed on top of a tower
A nacelle is placed on
top of a tower
with a crane

To navigate this new terminology terrain, the folks at the Plains Organization for Wind Energy Resources assembled a mini-glossary of wind words that can help. This glossary is available at Wind Glossary.

And what does "nacelle" mean?

It is the structure at the top of the turbine that is separate from the blades and comprises the rotor shaft, gearbox and generator.

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From A Landowner’s Perspective…...

Harvesting the Wind

Harvesting the wind
Harvesting the Wind guidebook

As interest in electricity generated from wind rises, many who own land in windy regions are asking very basic questions.

To answer those some of those questions, federal and regional officials developed “Harvesting the Wind – A Landowners’ Guide to Wind Energy Development in the Great Plains.”

The brief guidebook addresses key points such as:

  • How developers are attracted to certain parcels of land
  • How wind turbines work
  • How wind developers operate
  • How to know if your land might be suitable
  • Examples of typical development agreements
  • Examples of the quantity and size of wind turbine installations

The guide also lists contacts throughout the Great Plains regions, organizational contacts and web sites that have landowner information. A table also provides an overview of wind resources and development incentives each state in the Plains region offers.

The guidebook was developed by the Energy and Environmental Research Center at the University of North Dakota, the Plains Organization for Wind Energy Resources and the U.S. Department of Energy.

On the Web

A copy of “Harvesting the Wind – A Landowners’ Guide to Wind Energy Development in the Great Plains” can be found at Wind Brochure.

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A Consumer's Guide...

Small Wind Electric Systems
Small Wind Systems

This new guide for consumers helps people living in rural areas determine if small wind electric systems will work for them based on an analysis of wind resources, the type and size of the site and economics. The Guide examines a number of issues in detail:

  • Is there enough wind where you live?
  • Are tall towers allowed in your rural area?
  • Do you have enough space?
  • Can you determine how much electricity you will need or want?
  • Does it work financially?

Wind energy systems are one of the most cost-effective home-based renewable energy systems, and may help some avoid the high costs of having utility power lines extended to remote locations and prevent power interruptions. Wind turbine systems are also non-polluting sources of energy. The complete guide can be found at here.

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Links and Contact Information

  • Wind Powering America Wind Powering America
  • The American Wind Energy Association fact sheet “Wind Energy for Your Farm or Rural Land” Windy Landowners
    You may write the Wind Energy Association at 122 C Street NW, Suite 380, Washington, DC 20001; or call 202-383-2500.
  • Windustry Windustry
    At the organization's web site, you may view Wind Energy Easements Legal Issues.
    You may write Windustry at
    2105 First Ave. South, Minneapolis, MN or call 800-946-3640.
  • List of wind power plant developers at
    AWEA Developers
  • American Corn Growers’ Foundation, “Wealth from the Wind” American Corn Growers’ Foundation
    You may write the American Corn Growers Foundation at P.O. Box 18157, Washington, DC 20036; or call 202-835-0330.
  • Do you have a strong wind resource in your area? NREL Wind Atlas
  • Non-polluting sources of energy–the complete guide to wind turbine systems
    Small Wind Electric Systems

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Natural gas regulation...

Someone New is Watching the Utilities

In May, Nebraska joined the other states in the way natural gas utilities are regulated. The state's Public Service Commission's jurisdiction was extended to include regulatory authority over investor-owned natural gas systems.

Nebraska Public Service Commission logo
Nebraska Public Service Commission logo

Historically in the state, cities and villages regulated the rates for investor-owned utilities that provided natural gas to people within the town's boundaries. There was no local or state regulatory authority for rural natural gas users. Municipally-owned natural gas systems were regulated the same as locally-owned electric utilities: by city councils and village boards.

If you have complaints about your natural gas service or have questions about service or rate issues, contact Miles Halcomb at the Public Service Commission at 402.471.3101 or 800.526.0017. The Commission's web site, Nebraska Public Service Commission, is also a source for information on natural gas issues.

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Expect to Pay More this Winter...

Natural Gas Heating Bills Will be Bigger, But Supplies Are Okay

bills overflowing a mailbox
Heating costs are rising

In June, it looked like natural gas could be in short supply this winter - and carry premium prices. With the onset of Fall, some of those predictions have changed: supplies are adequate to meet the needs, but prices will definitely be higher than last year. At this point, weather is the biggest "unknown" factor which could impact both supplies and prices. Whether prices top the peak period of winter 2001-2002, remains to be seen.

This winter's residential natural gas prices are expected to be 10 to 15 percent higher than last year. At the end of August, the East Region, which includes Nebraska, had an inventory of 1,418 billion cubic feet which is only seven percent below the five-year average for the region. Eastern Nebraskans served by Aquila will be paying even more because the utility has also increased rates, which are being reviewed. For those who want to monitor natural gas supply and price information, the Energy Office web site provides updates every month.

According to experts at the Energy Information Administration, the long-range view for natural gas is volatility, both on prices and supplies.

Need Help or Can't Pay?

Citizens with
limited incomes
can receive

If you — or someone you know — has struggled in the past with winter heating bills, there may be a solution before the bills get out of hand. There are several alternatives for those Nebraskans who have had difficulty paying for heating bills:

  • The Low-Income Home Energy Assistance Program is available to those with limited incomes. Grants to help pay for the cost of heating may be available from the state's Department of Health and Human Services. To find out more about grants to pay utility bills can be found at DHHS Energy Assistance
  • The Low-Income Weatherization Assistance Program makes improvements in homes so that less energy is used and utility bills are reduced. These services cannot help with unpaid utility bills, but could be effective in reducing the heating bills for next winter. While weatherization services are free, access to services is based on income. Current income limits are listed at Weatherization Income Guidelines
    • The types of improvements typically made on most homes are listed at Weatherization Improvements
    • To find out the weatherization services provider closest to you, click on Weatherization Local Contacts which will take you to an interactive map of the state. Simply click on the county where you live to locate the nearest office where you can apply for weatherization services.
  • If your income level is greater than the program allows, you can find energy saving, utility billing shaving ideas at the U.S. Department of Energy's Energy Savers web site Consumer Info

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New construction
New Construction
Building a New Home? Remodeling an Existing One?

Making the Best Resource Choices and Using Energy Wisely

Whether you are looking for or building a new home, or remodeling an existing home, there are a number of options for making improvements that will use fewer resources, improve comfort and create a healthful environment.

The “New Construction” section at the Energy Office's web site is a “one stop shop” that contains an ever-expanding array of products, techniques and information on how homes and other buildings can be made more energy and resource efficient when they are first built.

At the “New Construction” section, you will find the following categories:

Resource Efficient Construction — Design Details

Dozens of methods for utilizing resource efficient building techniques are listed in this section. Diagrams of the construction details are available in either HTM, PDF or DWF formats.

Home Construction — Design Details

Design/Build Issues

A number of issues related to new home construction are addressed in this section. The information is available in HTM or PDF format.

Home Construction — Design/Building Issues

Recycled Content Products

This section contains nearly 200 products used in building construction that contain recycled content or utilize sustainable resources. Below is a list of types of building materials, systems and interior products that have varying percentages of recycled content.

Click on the items in the list below or at the web site to find sub-classifications of construction materials with links to specific product literature. When available, the amount and types of recycled materials in each product is identified with numbered symbols so that those products with higher percentages of recycled content can be easily located.

(Note: Some categories are incomplete)

Building Materials

  • Concrete
  • Masonry
  • Metals
  • Wood and Plastic
  • Thermal and Moisture Protection
  • Doors and Windows
  • Site Construction
  • Special Construction


  • Mechanical
  • Electrical
  • Plumbing
  • Air Quality
  • Conveying

Interior Products

  • Flooring, Finishes and Adhesives
  • Specialties
  • Equipment and Appliances
  • Furnishings

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money background
The Nebraska Energy Quarterly features questions asked about 5% Dollar and Energy Saving Loans

Loan forms may be obtained from participating enders or the Energy Office, or the agency's web site by clicking here.

As of June 30, 2003 ...

... 20,608 loans for $176.9 million

Questions and Answers...

5% Dollar and Energy Saving Loans

Is the interest paid on a Dollar and Energy Saving Loan tax deductible item on federal and state income tax returns?

There are no provisions in federal or state tax codes which allows a taxpayer to claim interest paid on a Dollar and Energy Saving Loan as a deduction on a return.

However, the interest may be deductible depending on how the Dollar and Energy Saving Loan is secured by the lender, e.g. by the borrower's home, or type of borrower or operation, such as business or agriculture. Borrowers should check with their tax accountant, the Internal Revenue Service, or the Nebraska Department of Revenue, to make a determination as to whether the interest paid on a Dollar and Energy Saving Loan is deductible.

Does the Energy Office still have funds available for reduced rate mortgages on new homes that are built at or above current national energy codes levels?
home under construction
Building Green provides many
savings options

The Energy Office no longer provides incentive funding for reduced rate mortgages.

The Energy Office's Dollar and Energy Saving Loans are available for low interest loans for energy efficiency improvements and specific waste minimization projects in existing homes, dwelling units, businesses, agricultural operations and local governments, excluding public school districts. Construction of new homes, which substantially exceed current national energy codes and incorporate a number of green building techniques, are being promoted through the Nebraska Green Building Council. This Council certifies the homes which qualify under their guidelines as a Nebraska Certified Green Built Home. The council also certifies home builders who meet the required criteria as Nebraska Certified Green Builders.

Continued in the next column

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How is a lender who makes Dollar and Energy Saving Loans found if my lender does not offer these loans?

You may contact the Energy Office loan staff directly for names of lenders in your area who offer Dollar and Energy Saving loans. Inquiries for participating lenders may be directed to John Osterman.

However, keep in mind that whether you are a new customer or an existing customer of a participating lender, when you apply for a Dollar and Energy Saving Loan you must meet their credit underwriting requirements in addition to meeting the Nebraska Energy Office's eligibility requirements for residency and improvements. A participating lender must also follow Energy Office guidelines on term, rate, loan amount, and fees on the Dollar and Energy Saving Loans. Lenders are responsible for determining the creditworthiness of a borrower and whether the borrower meets the requirements of their particular loan policies, which will vary from lender to lender.

I do not understand why the interest rate of a Dollar and Energy Saving Loan can be higher than 5 percent?

There is a difference between the maximum rate of interest which a lender can charge on a Dollar and Energy Saving Loan, currently 5 percent, and the Annual Percentage Rate, or A.P.R., which is disclosed on the loan.

The rate a lender uses to compute interest on the principal you borrow for a Dollar and Energy Saving Loan is 5 percent, or less, if the lender offers a lower rate of interest on the loans. If the lender charges you no loan fees which federal regulations deem to be "finance charges," then the A.P.R. is the same as the interest rate. However, if a lender charges certain fees which are deemed "finance charges" such as an application or origination fees, then these charges are added into the interest you will be paying over the term of your loan to arrive at an A.P.R. which takes both into account. Thus, "finance charges," if paid at the time of the loan, result in the A.P.R disclosed for your loan being higher than the interest charge on the loan.

The loan document will state an interest rate, say 5 percent, but the A.P.R. appearing on the loan contract will show a higher percentage if finance charges are factored in with the interest to be paid.

The Energy Office recommends borrowers check with lenders as to what their A.P.R. is on the Dollar and Energy Saving Loans they make and whether disclosure of an A.P.R. is required for the type of loan being sought. The Energy Office does limit the dollar amount of indirect loan fees a lender may charge on a Dollar and Energy Saving Loan to make sure that the low rate of interest offered on the loans is not negated by other finance charges.

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A Factsheet on selecting...
A Series of Factsheets on New Construction Issues

This fact sheet provides an overview of air-source heat pumps for home heating and cooling. More publications on related topics can be found in the Resources section.

Air Source Heat Pumps

Installed heat pump
Installed heat pump

There are two common types of heat pumps: air-source heat pumps and geothermal heat pumps. Either one can keep your home warm in the winter and cool in the summer. An air-source heat pump pulls its heat indoors from the outdoor air in the winter and from the indoor air in the summer. A geothermal heat pump extracts heat from the indoor air when it's hot outside, but when it's cold outside, it draws heat into a home from the ground, which maintains a nearly constant temperature of 50° to 60°F.

An air-source heat pump can provide efficient heating and cooling for your home, especially if you live in a warm climate. When properly installed, an air-source heat pump can deliver one-and-a-half to three times more heat energy to a home compared to the electrical energy it consumes. This is possible because a heat pump moves heat rather than converting it from a fuel, like in combustion heating systems.

How They Work

You might be wondering how an air-source heat pump uses the outdoor winter air to heat a home. Believe it or not: heat can be harvested from cold outdoor air down to about 40°F. And this can be accomplished through a process you're probably already familiar with — refrigeration.

Cut-away diagram of a heat pump
Cut-away diagram
of a heat pump

Basically, a heat pump's refrigeration system consists of a compressor and two coils made of copper tubing, which are surrounded by aluminum fins to aid heat transfer. The coils look much like the radiator in your car. Like in a refrigerator or air-conditioner, refrigerant flows continuously through pipes, back and forth from the outdoor coils.

In the heating mode, liquid refrigerant extracts heat from the outside coils and air, and moves it inside as it evaporates into a gas. The indoor coils transfer heat from the refrigerant as it condenses back into a liquid. A reversing valve, near the compressor, can change the direction of the refrigerant flow for cooling as well as for defrosting the outdoor coils in winter.

When outdoor temperatures fall below 40°F, a less efficient panel of electric resistance coils, similar to those in your toaster, kicks in to provide indoor heating. This is why air-source heat pumps aren't always very efficient for heating in areas with cold winters. Fuel-burning furnaces generally can provide a more economical way to heat homes in cooler U.S. climates.

The efficiency and performance of today's air-source heat pumps is one-and-a-half to two times greater than those available 30 years ago. This improvement in efficiency has resulted from technical advances and options such as:

  • Thermostatic expansion valves for more precise control of the refrigerant flow to the indoor coil
  • Variable speed blowers, which are more efficient and can compensate for some of the adverse effects of restricted ducts, dirty filters and dirty coils
  • Improved coil design
  • Improved electric motor and two-speed compressor designs
  • Copper tubing, grooved inside to increase surface area.

Types of Air-Source Heat Pumps

You can use a central heat pump to heat and cool a whole house. Most central heat pumps are split-systems — that is, they each have one coil indoors and one outdoors. Supply and return ducts connect to a central fan, which is located indoors. The fan, often called an air handler or blower, circulates air throughout the house. The fan also usually contains electric resistance coils (some units now have a gas-fired furnace option). The heated or cooled air circulates from the fan to the supply ducts, and openings in the home called supply registers. Return registers and ductwork return the air to the fan to be heated.

heat pump
Heat pump

Some heat pumps are packaged systems. These usually have both coils and the fan outdoors. Heated or cooled air is delivered to the interior from ductwork that protrudes through a wall or roof. Another packaged system is the ductless room heat pump. These pumps will efficiently heat or cool a room or small house with an open floor plan. They are much more common for apartments and motel rooms than homes. They can be installed in a window or through a hole in the wall — wall installations being preferable for appearances sake. Through-the-wall installations, however, sometimes aren't well insulated from inside to outside and can have infiltration problems. When used, mini-split systems can solve these problems.

Selecting a Heat Pump

When selecting an air-source heat pump, consider the following three characteristics carefully: the energy efficiency rating, sizing and the system's components.

Energy Efficiency Rating

In the United States, a heat pump's energy efficiency is rated by how many British thermal units (Btu) of heat it moves for each watt-hour of electrical energy it consumes.

Every residential heat pump sold in this country has an EnergyGuide Label, which features the heat pump's heating and cooling efficiency performance rating, comparing it to other available makes and models.

The Heating Seasonal Performance Factor (HSPF) rates both the efficiency of the compressor and the electric resistance elements. The HSPF gives the number of Btu harvested per watt-hour used. The most efficient heat pumps have an HSPF of between 8 and 10.

The Seasonal Energy Efficiency Ratio (SEER) rates a heat pump's cooling efficiency. In general, the higher the SEER, the higher the cost. However, the energy savings can return the higher initial investment several times during the heat pump's life. Replacing a 1970s vintage, central heat pump (SEER = 6) with a new unit (SEER=12) will use half the energy to provide the same amount of cooling, cutting air-conditioning costs in half. The most efficient heat pumps have SEERs of between 14 and 18.

You'll find the Energy Star® label — sponsored by the U.S Department of Energy and the U.S. Environmental Protection Agency — on heat pumps with an HSPF of at least 7 and a SEER of at least 12. Many new heat pumps exceed these ratings, but looking for this label is a good way to start shopping for one.


When selecting a new heat pump, it's important that you determine the proper size needed for your home. Bigger is not better. Oversizing causes the heat pump to start and stop more frequently, which is less efficient and harder on the components than letting it run for longer cycles. A properly sized heat pump also will provide you with better comfort and humidity control than an oversized one.

The heating and cooling capacity of heat pumps is measured in Btu per hour. The cooling capacity is commonly expressed in "tons" of cooling capacity — each ton equaling 12,000 Btu per hour. Correct sizing procedures involve complex calculations, which are best performed by an experienced contractor, who uses sizing methods accepted by the heat pump industry.

Don't employ a contractor who guesses the size of the heat pump needed.

Rule-of-thumb sizing techniques are generally inaccurate, often resulting in higher than necessary purchase and annual energy costs.

System Components

You and your contractor should discuss options that will help improve your home's comfort and the economy of your heat pump. Regarding ducts, for example, it's important to carefully consider their design and materials, as well as the proper amount of space they require. Check your home's blueprints to see if the architect and builder have planned adequate space for ducts and fans. Heating and cooling contractors complain that they often have to squeeze heating and cooling systems into spaces that are too small, resulting in constricted ducts and inadequate airflow.

Except for packaged systems, you'll also need to select the proper type of indoor coil for adequate summer moisture removal.

Installing a New Heat Pump

A heat pump's performance and energy efficiency not only depend on the selection and planning of the equipment but also on careful installation.

heat pump installed by technician
Heat pump installed
by technician

Consumers and home builders alike tend to accept the lowest bid for heating and air-conditioning work. This unfortunate choice can often leave a system lacking 10 to 30 percent in the materials and labor necessary to optimize heat pump performance. Rather than just accepting the lowest bid, it's best to research the performance records of local contractors, and get involved in the planning and decision-making about your new heat pump system.

You can avoid most of the common comfort and performance problems from improper installation by following these guidelines:

  • Make your home as energy-efficient as you can with proper insulation, energy-efficient windows and an effective air barrier. Then your contractor can install a smaller pump system with shorter duct lengths. In an energy-efficient home, it isn't necessary to run ducts all the way out to exterior walls to install registers near the exterior walls.
  • Install the ducts inside your home's insulation and air barrier, if possible. Research shows that this strategy is a major energy saver.
  • Insulate your ducts to R-8 if they must be located in an attic or crawl space beyond the home's air barrier and insulation.
  • Locate the outdoor unit on the north side of your home if possible. If not, pick a shady spot. There should be no obstructions within 10 feet of the sides with openings and the top.
  • Specify that the measured air leakage through your new ducts be less than 10 percent of your system's airflow. Air leakage of 5 percent or less is possible with careful workmanship.
  • Tell your contractor that you want a return register in every room.
  • Don't use building cavities as ducts. Building-cavity return ducts are notoriously leaky and often cause comfort, energy and moisture problems.
  • Pull on ductwork after installation to make sure it is fastened and sealed well. (Seal duct joints with mastic.)

Continued in the next column

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A Factsheet on selecting... continued...

Improving Performance

Poor installation, duct losses and inadequate maintenance are more of a problem for heat pumps than for combustion furnaces. A growing body of evidence suggests that most heat pumps have significant installation or service problems that reduce performance and efficiency.

According to a report on research funded by Energy Star®‚ more than 50 percent of all heat pumps have significant problems with low airflow, leaky ducts and incorrect refrigerant charge.

Increasing Airflow in Central Heat Pumps

The capacity and the efficiency of a heat pump depend upon adequate airflow. There should be about 400 to 500 cubic feet per minute (cfm) airflow for each ton of the heat pump's air conditioning capacity. Efficiency and performance deteriorate if airflow is much less than 350 cfm per ton.

An ideal duct system has both a supply register and a return register for every room. Most homes, however, have only one or two return registers for the entire house. Air from other rooms must find its way back to these registers to be reheated or re-cooled. Obstructions in return air are a common air circulation problem, particularly from closed interior doors to rooms with no return-air register.

Blockage of supply or return air ducts and registers can pressurize or depressurize portions of the home, resulting in poor performance and increased air leakage through the building envelope. Restrictions to airflow have the greatest impact on the return-air side of the system, so repairs should start with the return ducts.

Air from every supply register must have an unobstructed pathway back to a return register. You can install louvered grilles through walls or doors, ducts between rooms and/or additional return ducts and registers to improve air circulation.

Technicians can increase the airflow by cleaning the evaporator coil, increasing fan speed, or enlarging the ducts — especially return ducts. Enlarging ducts may seem drastic but in some cases, might be the only remedy for poor comfort and high energy costs.

Air-sealing Ducts

Measurements of heat pump performance indicate that duct leakage wastes 10 to 30 percent of the heating and/or cooling energy in a typical home. It's one of the most severe energy problems commonly found in homes because the leaking air is 20° to 70°F warmer than indoor air in winter and 15° to 30°F cooler in the summer.

Duct leakage may cause some minor comfort problems when ducts are located in conditioned areas. But when leaky ducts are located in an attic or crawl space, the energy loss is often large. Some of the worst duct leakage occurs at joints between the air handler and the main supply and return air ducts.

Some main return ducts use plywood or fiberglass ductboard boxes. These boxes frequently leak because their joints are exposed to the duct system's highest air pressures. Heating and air-conditioning contractors often use wall, floor and ceiling cavities as return ducts. These building-cavity return ducts are often accidentally connected to an attic, crawl space, or even the outdoors, creating serious air leakage. Fiberglass ducts and flex ducts are often installed improperly. These ducts may also deteriorate with age, leading to significant supply-duct leakage.

The best heating and cooling contractors have equipment to test for duct leakage. Testing helps locate duct leaks and indicates how much duct sealing is necessary. Do not use duct tape for sealing — its life span is very short, often less than 6 months.

Adjusting Refrigerant Charge

Room heat pumps and packaged heat pumps are charged with refrigerant at the factory. They are seldom incorrectly charged. Split-system heat pumps, on the other hand, are charged in the field, which can sometimes result in either too much or too little refrigerant.

Split-system heat pumps that have the correct refrigerant charge and airflow usually perform very close to manufacturer's listed SEER and HSPF. Too much or too little refrigerant, however, reduces heat pump performance and efficiency.

For satisfactory performance and efficiency, a split-system heat pump should be within a few ounces of the correct charge, specified by the manufacturer. When the charge is correct, specific refrigerant temperatures and pressures listed by the manufacturer will match temperatures and pressures measured by your service technician.

Verify these measurements with the technician. If the manufacturer's temperatures and pressures don't match the measured ones, refrigerant should be added or withdrawn, according to standards specified by the EPA.

Refrigeration systems should be leak-checked at installation and during each service call. Manufacturers say that a technician must measure airflow prior to checking refrigerant charge because the refrigerant measurements aren't accurate unless airflow is correct.

Operating a Heat Pump

Like combustion heating systems, you control heat pumps using thermostats. If you leave and return at regular times everyday, you'll save money by using automatic thermostats, which minimize energy use during the times the home is unoccupied. However, choosing an automatic thermostat's reactivation time requires considering the duration of heat-pump operation necessary to restore a comfortable temperature. During the heating season, some homeowners also set their thermostats back 10°F, manually or automatically, when they leave home or go to bed.

A two-stage thermostat controls the heating. The first stage activates the refrigeration system. If it's too cold outside for the refrigeration system to counteract the home's heat loss, then the thermostat's second stage activates the electric resistance coils. An outdoor thermostat will prevent the less efficient electric resistance heat from coming on until the outdoor temperature falls below 40°F. An outdoor thermostat also will prevent auxiliary heat from activating when an automatic thermostat is warming the house after a set-back period. Use setback thermostats that are only for heat pumps.

A defrost control tells the reversing valve when to send hot refrigerant outdoors to thaw the outdoor coil during the winter. During the 2-to-10-minute defrost cycle, auxiliary heat takes over, reducing the heat pump's overall efficiency up to 10 percent. The two most common types of defrost controls are time-temperature and demand-defrost. Time-temperature defrost controls activate defrost at regular time intervals for set time periods, whether there is ice on the outdoor coil or not.

A demand-defrost control senses coil temperature or airflow through the coil and only activates defrost if it detects the presence of ice. Obviously, choosing a heat pump with demand-defrost will pay a significant efficiency dividend.

For greater efficiency, don't locate a thermostat near a heat source or cold draft because they can cause a heat pump to operate erratically. This includes shading thermostats from direct sunlight. Also, do not turn the thermostat beyond the desired temperature. It will not make the heat pump heat or cool your home any faster. It will only waste energy. Residents who duel one another over the thermostat settings, moving it up and down to suit their different comfort levels, cause heat pumps to operate erratically and inefficiently.

Maintaining and Servicing

Heat pump performance will deteriorate without regular maintenance and service. The difference between the energy consumption of a well-maintained heat pump and a severely neglected one ranges from 10 to 25 percent.

Regular Maintenance

Either the homeowner or service technician can perform the following routine maintenance tasks:

  • Clean or replace filters regularly (every 2 to 6 months, depending on operating time and amount of dust in the environment)
  • Clean outdoor coils as often as necessary (when dirt is visible on the outside of the coil)
  • Remove plant life and debris from around the outdoor unit
  • Clean evaporator coil and condensate pan every 2 to 4 years
  • Clean the blower's fan blades
  • Clean supply and return registers and straighten their fins

Professional Service

You should have a professional technician service your heat pump at least every year. The technician can:

  • Inspect ducts, filters, blower and indoor coil for dirt and other obstructions
  • Diagnose and seal duct leakage
  • Verify adequate airflow by measurement
  • Verify correct refrigerant charge by measurement
  • Check for refrigerant leaks
  • Inspect electric terminals and if necessary, clean and tighten connections and apply nonconductive coating
  • Lubricate motors and inspect belts for tightness and wear
  • Verify correct electric control, making sure that heating is locked out when the thermostat calls for cooling and vice versa.
  • Verify correct thermostat operation


The following are sources of additional information on heat pumps. This list is not exhaustive, nor does the mention of any resource constitute a recommendation or endorsement.

Related Information

EERE home page

Produced by the
Nebraska Energy Office
1111 "O" Street, Suite 223
P.O. Box 95085
Lincoln, NE 68509
Phone: (402) 471-2867
Fax: (402) 471-3064
Email: energy@nebraska.gov
Website: Nebraska Energy Office

This fact sheet was partially financed through the
Nebraska Department of Environmental Quality
Litter Reduction and Recycling Program

This document is based on DOE/GO-102001-1113, produced June 2002 for the U.S. Department of Energy by the National Renewable Energy Laboratory.

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A New Series...

Electricity Data is a Click Away

rural electric lines
Nebraska has 162 separate utilities who serve
almost one million consumers

Did you know the state has 909,346 electricity consumers who are supplied by 162 different utilities? That's just one information nugget buried in a newly created database at the Energy Office's growing web-based Energy Statistics section.

A wealth of new data on consumers' use of electricity can be found at Electricity Providers and Their Consumers in Nebraska 2002.

The series provides the total number of consumers in each sector and totals for the state. The number and type of consumers for each utility is listed as well as the type of organization — there are five types — for each utility. A link to each electric utility is also provided, if available.

Overall, 81 percent of Nebraska's customers are residential, 13 percent are utility that sells both gas and electric to its customers.

Under the statute that created the Energy Office, the agency is required to maintain a database on energy consumption and production for use by consumers and others.

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Tidbits from Nebraska and Beyond...

News Bytes

UNO campus commons, Omaha
UNO campus commons, Omaha

University of Nebraska at Omaha Gets Federal Energy Technology Grant

In September, the U.S. Department of Energy announced the University of Nebraska at Omaha was one of 21 research projects selected to advance energy efficiency and fossil energy technologies.

The UNO project will design, implement and validate a prototype monitor that tracks occupancy and control indoor environment services in buildings. Emphasis of the research is on:

  • evaluating feasibility, performance and economics associated with occupancy detection and indoor environment control based on multiple distributed occupancy detectors;
  • developing new algorithms based on network analysis; and
  • developing a prototype-control system based on the first two phases.

The prototype will be field-tested in a private office, an open-plan office and a classroom. The grant from the U.S. Department of Energy totaled $321,440. The University will provide $107,340 in matching funds.

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America's Houses Are Growing Bigger

supersized house

According to the National Association of Home Builders and the Census Bureau, houses in America are getting ever larger. In the past 100 years, typical homes have grown from 800 square feet to more than 2,300 in 2002, a near quadrupling.

Continued in the next column

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Supersized... continued...

Even bigger...

In 1900, a standard home measured just 40 feet x 20 feet, and families were a lot larger then. Over the next five decades, the typical home only increased to 983 square feet. Just 20 years later, typical homes added 500 square feet more. The next 20 years — in 1990 — yet another 500 square feet had been added. A typical home in 1990 now totaled nearly 2,100 square feet.

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Solar Energy...
The Energy Wiz answers your questions

Ask the Energy Wiz!

Dear Energy Wiz,

The Energy Wiz !
The Energy Wiz!

I will be constructing a storage unit and am considering solar energy as the source of electricity. What are the pros and cons of using renewable energy in this application? Are there incentives for installing solar energy?


The research that I've read indicates that wind energy has about half the installation costs of solar. Of the two, wind and solar are about even with regard to reliability; the wind blows only some of the time, and the sun shines only some of the time. On the other hand, solar is less maintenance intensive. In either case, you may want to consider a battery backup system for those times when the sun is not shining, or the wind is not blowing.

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Ask the Energy Wiz !... continued...

With regard to maintenance, while wind turbines are becoming more and more common, and the technology has improved over the years, wind turbines have moving parts, and any machine with moving parts will require maintenance. Just what that maintenance would be, and how often it would occur, I do not know. I would suggest contacting a wind turbine representative for those details.

With regard to incentives, please contact Mr. Michael Crisco, who is working with the federal government's Million Solar Roofs program. Mr. Crisco will probably best know of any incentive programs that are available. Mr. Crisco's phone number is 402-435-0483. Mr. Crisco will probably be able to help you with contacting a solar panel representative in your area.

Editor's Note:

The staff at the Energy Office respond to many inquiries on a variety of topics from Nebraskans. From time to time, the Quarterly will share some questions — and the answers — with readers.

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