Wind Power City

Up until 1870, St. Paul looked like it would be the largest city in Minnesota, which had become a state right before the Civil War. As the region began exporting timber and grain, St. Paul was poised to become another St. Louis or Cincinnati, a regional center located near a waterway intersection.

During the 1870s, Minneapolis boomed, growing from 13,000 to 46,000, right past its neighbor to the east. While St. Paul had the proximity to the Minnesota/Mississippi intersection, Minneapolis had St. Anthony Falls, the largest waterfall on the Mississippi.

Because the Midwest is fairly flat, no other major city in the region is built on a fall line. Minneapolis' unique access to water power made it an 1870s boomtown, during a time when every other high growth city - Chicago, Pittsburgh, and Cleveland - was benefiting from access to rail lines.

The first hydroelectric plant in the world was built in 1870 in England, and the first such plant for electricity in the U.S. was built in Grand Rapids in the 1880s. With no large scale production of turbines, hydropower was extremely expensive, and Minneapolis' ability to produce such power for industrial use at a much lower cost than any other large city overwhelmed transport costs that otherwise would have sent everyone to St. Paul to exchange goods.

Once companies like GE were formed, and more R&D was put into turbine technology, the cost of producing hydropower dropped dramatically, and the milling business that established Minneapolis shifted to towns further east, most notably Buffalo, that were closer to consumer markets, because transport costs began to account for a higher share of total production and shipment.

Wind power today is a lot like hydro 140 years ago, a natural resource with a declining cost. While often lumped together with solar in feel good news stories about alt energy, wind's capital costs are under $2,000 per kilowatt, compared to over $4,000 for solar. As a result, it has grown from just three tenths of 1 percent of U.S. electricity generation four years ago to about 1.2 percent now.

One of the biggest users of industrial wind is Google, which recently built a massive data center in The Dalles, Oregon, which is to wind generation what Minneapolis was to hydropower in the 1870s. Accessing that wind at low prices overrode typical data center connection costs that put most facilities near major Internet POPs in large metro areas.

But The Dalles is in no position to become any kind of regional hub, because Google hired just 200 people to work there, while spending $600 million to build its facilities there. This is the reverse of the late 19th century, where projects like the Pillsbury Power Canal and Tower Mill were built in Minneapolis at capital costs of less than a million dollars, while requiring thousands of workers to operate the mills that took advantage of the nearby hydro power. 21st century employee productivity simply won't allow a renewable energy center like The Dalles to become another Minneapolis.