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Iowa's status as a renewable energy leader: How we got here, and what's next

Iowa's massive, decade-long increase in renewables comes with challenges, payoffs

    (Photo Illustration by Cliff Jette/The Gazette)
    Energy and Environment
    Jul 9, 2017 at 2:32 pm

    Chapters: How we got here | Connecting to the grid | Benefits | Challenges

    Betty Zeman walked among the rows of solar panels — more than 6,500 panels in all — in Cedar Falls Utilities’ Simple Solar garden.

    Spanning eight acres near Prairie Lakes Park and able to produce up to 1.5 megawatts (MW) of power, the garden serves about 1,250 customers and is the largest community solar array in the state. Yet it represents a mere half a percent of the utility’s total capacity.

    Zeman, the utility’s marketing manager, said the array may be a fraction of the utility’s overall portfolio, but the project’s true value gives the utility the ability to provide low-cost, accessible renewable energy to interested customers.

    “It’s a bright, shiny object, let’s be honest,” Zeman said. “It’s a small part of our overall energy capacity, but it’s an important part.”

     

    Cedar Falls Utilities’ community solar project is just one example in Iowa’s growing renewable energy portfolio. Solar panels and wind turbines are quickly becoming as ubiquitous statewide as corn and soybeans.

    But while solar still is a small part of the state’s overall power grid, decades of investment in turbines have made wind power Iowa’s top renewable energy source.

    Such investment in renewables not only has helped diversify the state energy portfolio, which helps stabilize energy costs, but industry growth has created jobs, provided economic growth and defined Iowa as a leader in renewable energy.

    Of all 50 states, Texas produces the most wind, with more than 20,000 MW in total capacity last year. Iowa came in second, with more than 6,300 MW.

    However, Iowa’s wind generation accounts for more than one-third of the state’s total energy production — ranking first in the nation in that category.

    “Iowa has been a historical leader in wind, and given what’s in the pipeline, it’s continuing to be a leader in that space,” said John Hensley, deputy director of industry data and analysis with the American Wind Energy Association, based in Washington, D.C.

    Slide over the map for annotations on Iowa's wind landscape. Story continues below.

    How we got here

    Iowa’s leadership in wind energy began more than 30 years ago, with the 1983 adoption of a renewable portfolio standard (RPS) — the first of its kind in the nation.

    The Iowa RPS required the state’s two main utilities — now called MidAmerican Energy and Alliant Energy — to own or contract a combined total of 105 megawatts of renewable generating capacity, according to the U.S. Department of Energy.

    At the time, wind power was one of the more established renewables available for commercial use, but for the most part turbines had been limited to the west coast, Hensley said.

     

    “That RPS not only sparked a whole movement at the state level ... but it also helped incentivize the broadening of the wind industry away from California, or at least move it outside California to the rest of the United States,” Hensley said.

    Josh Mandelbaum, staff attorney with the Environmental Law and Policy Center’s Des Moines office, said leaders such as then-Gov. Terry Branstad and U.S. Sen. Chuck Grassley played key roles in establishing state priorities for renewable energy.

    Iowa, with its relatively average wind and solar resources compared to all 50 states, was poised to be a renewable energy leader.

    “It was a combination of state and federal policy and leadership from both sides of the aisle, and consistency on that, that’s made Iowa a place where the renewable energy industry has grown. Other places that maybe have better renewable energy resources, but a much worse policy environment, have missed out,” Mandelbaum said.

    Created in 1992, the Federal Production Tax Credit — an inflation-adjusted, per-kilowatt-hour tax credit that provides credits for energy generated by qualified renewable sources such as wind — also has helped stimulate Iowa’s wind growth.

    In 1990, wind made up less than 1 percent of the power generated in Iowa. By 2016, that jumped to 37 percent of state generation, according to the U.S. Energy Information Administration, a federal entity that tracks nationwide energy use.

    Increased use of renewable power offsets the use of fossil fuels. In the same time frame, coal’s share of state generation dropped from 86 percent of the state’s electricity generation to 47 percent.

    By 2016, MidAmerican Energy’s installations generated more than 4,000 MW of wind power in Iowa, while Alliant Energy was generating an additional 300 MW from in-state turbines.

    However, uncertainty in the Production Tax Credit (PTC) renewal has caused wind investments to ebb and flow over the years.

    “We’ve kind of been plagued in previous years by a lot of policy uncertainly given pending expirations of the PTC and uncertain extensions. It never provided a long-term policy environment that worked to mitigate business risk,” said Hensley of the American Wind Energy Association.

    In late 2015, lawmakers signed a multiyear extension and phaseout of the credit through 2019 — at which point wind will be the only major power source without a federal incentive, according to the American Wind Energy Association.

    "We’ve kind of been plagued in previous years by a lot of policy uncertainly given pending expirations of the PTC and uncertain extensions. It never provided a long-term policy environment that worked to mitigate business risk."

    - John Hensley

    Deputy director of industry data and analysis with the American Wind Energy Association

     

    Announcement of the phaseout sparked a nearly $5 billion investment in wind projects by Alliant and MidAmerican as both utilities try to take advantage of the credit before it expires.

    The two utility companies last year proposed the addition of another 2,500 MW of collective wind generation.

    MidAmerican, the largest wind generation owner of any rate-regulated utility in the country, produces 55 percent of the annual power consumption of its customers with wind. By 2020, the utility will be at 90 percent and on its way to produce 100 percent of customer power consumption through wind power, Mike Fehr, MidAmerican Energy’s vice president of resource development, said in an email.

    “We are here for the long term,” Fehr said. “Production tax credits have been an important component in the economics of wind projects, but they are not the only reason we have pursued wind generation.

    “We investigate renewable project opportunities as environmental regulations, equipment prices, market prices for electricity, our retail customer load and other factors evolve.”

    Meanwhile, Alliant officials are discussing the possibility of adding another 400 MW of wind power to the grid.

    Connecting to the grid

    Western and northern portions of Iowa have the state’s strongest winds — a mean annual wind speed around 7.8 to 8.8 meters per second at 80 meters above ground — which are ideal for turbine generation.

    Naturally, as wind farms started to pop up in the mid-2000s, counties with the best wind resources were eyed first.

    But the biggest factor in where turbines end up is the placement of high-voltage transmission lines, which are needed to carry power from rural generation sites to the communities that need it.

    In the past, energy generation took place near the point of use. But as the grid becomes more regional, local power plants are retired and wind farms expand in rural areas, the need to install proper transmission lines becomes all the more pressing, said Krista Tanner, president of ITC Midwest, which operates more than 6,600 circuit miles of transmission lines in the state.

    “You need the interstate highway, just like our farmers have corn and soybeans that they need to get to market, we need to get our wind to market,” Tanner said.

    But the highway hasn’t always been there.

    In 2001, the Iowa lawmakers passed the state’s advanced ratemaking principles, which allowed utilities to own wind turbines, with shared benefits between customers and utilities, and kick-started heavy investment in wind production in the years that followed.

    “That really changed the landscape, and it really gave the utilities the go-ahead to build more wind. But the transmission wasn’t there because, again, we’re putting generation where generation has never been before,” Tanner said.

    By 2020, MidAmerican and Alliant projects look to bring the state’s wind total up to nearly 10,000 MW, from less than 1,000 MW in 2006, according to the Iowa Environmental Council.

    That rapid growth drove the need to connect renewable energy sources to the power grid, with the infrastructure built as needed, Tanner said.

     

    “When we had this onslaught of wind, this piecemeal approach — this Band-Aid approach of hooking up a wind farm here, hooking up a wind farm there — was not efficient, it was not cost-effective, and we could not build it fast enough,” Tanner said.

    Operating wind farms are connected to the grid but not always with the high-voltage transmission lines — called multi-value projects — necessary to capture the full energy output. Sometimes the power flow is bottlenecked, Tanner said.

    “Wind is being curtailed,” Tanner said. “Our wind farms are not operating at their full output because we don’t have the infrastructure in place. That’s even with the investments that we’ve made today.”

    But plans are in place to build the infrastructure needed to get the most out of existing wind turbines and handle proposed expansions.

    Last year alone saw the announcement of nearly $5 billion in wind power investment between the state’s two main utilities — a $3.6 billion, 2,000 MW MidAmerican Energy proposal, dubbed Wind XI, and another $1 billion, 500 MW Alliant Energy project — in addition to hundreds of megawatts of other new wind projects planned by dozens of other developers.

    To cope with such growth, organizations such as ITC and MidAmerican Energy are looking to add more than 300 miles of multi-value project transmission lines in northern Iowa and southern Minnesota, likely at the end of 2018. Plans include the installation of another roughly 200 miles of lines in northeast Iowa and Wisconsin as well as southeast Iowa and Missouri.

    A stronger infrastructure not only helps keep up with a growing renewable industry, but it also bolsters the entire grid’s reliability, which is increasingly crucial, Tanner said.

    “The need for reliable energy has only increased, and our patience for outages is the length of our battery on our cellphones or our laptops,” she said. “All of these investments have benefits far beyond enabling renewables. It’s the reliability, it’s having diversity of energy production — it’s everything.”

    Benefits

    So more than one-third of Iowa’s energy portfolio comes from renewables, primarily wind. But what does that mean for Iowans?

    In short, several things.

    For consumers, industry officials point to renewable energy as a contributing factor to Iowa’s electricity prices, which are lower than the national average.

    “It really becomes a differentiator for Iowa compared to other industrialized states that compete with us on these kinds of projects. It absolutely becomes a unique calling card that Iowa has, and we not only promote it, but we lead with it.”

    - Debi Durham

    Director of Iowa Economic Development Authority

     

    A March Iowa Policy Project report found the cost per kilowatt-hour in Iowa not only has remained lower than the national average, but the gap has been increasing.

    According to the report, the cost of energy in Iowa for residential, commercial and industrial use went from 6.04 cents per kilowatt-hour in 1998 — before Iowa began connecting wind farms to the power grid — to 8.35 cents in 2015. Meanwhile, the national average increased from 6.74 cents per kilowatt-hour in 1998 to 10.33 cents in 2015.

    When adjusted for inflation, Iowans spent about .43 cents less per kilowatt-hour in 2015 than they did in 1998, the report states. In the same span, national energy costs increased by about .53 cents per kilowatt-hour, when adjusted for inflation.

    “As other fuel costs will rise and fall ... wind and solar, renewables in general, will allow for very competitive costs for our customers in the future,” said Ben Lipari, Alliant Energy’s director of resource development.

    Meanwhile, turbines translate to direct lease payments to property owners.

    In 2015, Iowa landowners received more than $17 million in lease payments from wind farms. That number is expected to more than double with the addition of MidAmerican’s 2,000 MW Wind XI project alone, according to the Iowa Environmental Council.

    Those wind installations also provide increased tax revenue for individual counties.

    In county-specific data from the Iowa Environmental Council, Pottawattamie County in southwest Iowa, which is home to 102 turbines, received more than $2 million in property tax revenue from turbines in fiscal year 2016. In the same span, Buena Vista County in northwest Iowa received $1.2 million in property taxes from the 262 turbines within its borders. The 133 turbines in Carroll County in west-central Iowa added $1.4 million in tax dollars to the county budget.

    “In counties that have a lot of wind development, they’re becoming a significant share of the county revenue and help pay for things like schools, roads, bridges, critical health services. Anything a county budget might need to cover, that wind turbine tax revenue can help cover,” said Nathaniel Baer, program director with the Iowa Environmental Council.

    In addition to property tax and land lease payments, Iowa’s growing number of wind farms and solar arrays also drive an increasing need for a stable workforce.

    Iowa’s wind industry supports up to 7,000 jobs, including service technicians, manufacturers and other related occupations, according to the American Wind Energy Association.

    Iowa’s solar industry supports another 600 jobs, according to Iowa Environmental Council data.

    Nationwide, a 2015 U.S. Bureau of Labor Statistics report of the fastest-growing occupations says wind turbine service technicians will see the highest rate of growth of any career in the nation. The report forecasts a 108 percent growth in the occupation over a 10-year span — from 4,400 jobs in 2014 to 9,200 jobs in 2024.

    Median pay for a wind turbine service technician in 2015 was $51,000 a year, according to the report.

    Debi Durham, director of Iowa Economic Development Authority, said the state’s energy portfolio also has economic development benefits in its ability to draw employers to the state. Large businesses, such as Google and Microsoft, seek to locate data centers in states with an emphasis on renewable energy to meet their sustainability goals.

    “It really becomes a differentiator for Iowa compared to other industrialized states that compete with us on these kinds of projects,” Durham said. “It absolutely becomes a unique calling card that Iowa has, and we not only promote it, but we lead with it.”

    D.K. Hirner, the Midwest state policy director for the American Wind Energy Association, said wind turbines and other renewables also come with a level of guarantee that businesses find attractive.

    “When they enter into an agreement with a renewable, like a wind company, that turbine spins for at least 20 years and, once that turbine is installed, the fuel for it, in essence, is free. It doesn’t fluctuate,” she said. “That company knows for 20 years how much of its bottom line it’s going to have to dedicate to paying utilities.”

    Challenges

    While Iowa is a clear leader in wind generation, the state’s solar potential is even greater, according to Baer of the Iowa Environmental Council.

    According to organization’s data, Iowa’s total wind potential reaches about 276,000 MW of wind, or 23 times the state’s current power needs.

    But Iowa holds the potential for more than 4,000 gigawatts of solar cells, or more than 150 times the state’s current needs.

    So why is Iowa’s total solar generation — just over 10 MW in 2014 — a sliver of the overall grid?

    Baer said it’s a combination of things, one of which is that solar technology still is catching up.

    “So I think we are somewhere on the front end of solar, but we have the potential for solar to exceed wind, our resource potential is very large,” Baer said.

     

    “We could meet our needs with solar many times over.”

    In Dubuque, Alliant Energy plans to next year begin building two solar array projects to add 6 MW of power to the local grid.

    “That really presents what I’d consider our first significant step into solar installation in Iowa, and we’re certainly evaluating other areas for solar installations,” Alliant’s Lipari said.

    Another challenge with solar is the space needed to achieve significant energy generation.

    The Cedar Falls Utilities’ array, for example, takes eight acres to generate 1.5 MW of power. A 2.5 MW wind turbine can sit on less than one acre.

    In addition, utility representatives and industry experts have mixed opinions on the plausibility of shifting the state’s entire grid over to a single renewable fuel source.

    Iowa is not an island in regard to its power consumption. It’s one of more than a dozen states — plus the Canadian province of Manitoba — in the Midcontinent Independent System Operator. The system is a not-for-profit, member-based organization that regulates what power sources are deployed and when. The cheapest and most reliable options typically deploy first.

    So, in short, not all power used in Iowa is generated in-state.

    “It’s fairly conceivable that you could have all of the power generating resources within Iowa be just wind, but it’s important to note it would be part of a larger portfolio mix across that entire footprint, that contains other resources like solar, natural gas, coal, nuclear, etc., and they all sort of work together to meet demand in the most efficient way possible,” said Hensley, of the American Wind Energy Association.

    Another challenge with a 100 percent renewable portfolio is that wind and solar resources remain an intermittent source of power. Looking back at the Cedar Falls Utilities’ array, for example, the panels provide low-cost power but only when the sun is shining. The sun never sets on customer demand.

    “The wind doesn’t always blow and the sun doesn’t always shine, so it’s critical that we maintain proper baseload capacity ... so that when those conditions exist, when the wind isn’t blowing and the sun isn’t shining, that the lights don’t go out,” said Steve Bernard, director of customer service and business development with Cedar Falls Utilities.

    Advances in energy storage technology, such as batteries, could prove pivotal in making that 100 percent wind and solar portfolio more attainable, Bernard said.

    “The biggest challenge is the ability to store that energy and have it available when you need it, not just when the sun is shining or the wind is blowing. ... To really ramp this up, you’ve got to have the ability to use that energy when we need to use it,” Bernard said.

    But as Iowa has shown in the past, it’s not afraid to delve into those new technologies, the Environmental Law and Policy Center’s Mandelbaum said.

    “I think, at least in the short term, the key is going to be a state that signals it’s open for business and open for innovation and open for continued renewable energy growth, “ he said. “I think we’re well-positioned to be that type of state.”

    l Comments: (319) 339-3175; mitchell.schmidt@thegazette.com

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