Battling becalming influences
With energy prices and global warming on the national agenda, the executive director of the American Wind Energy Association should be coasting through this political season.
Instead Randall Swisher is lobbying Republicans and Democrats in Congress to reauthorize a $334 million tax credit set to expire at the end of this year.
“You would think it would be a slam dunk to get it done, given the fact that all these candidates are using wind turbines in their campaign ads,” said Swisher, who expects the bill to pass, though he said its delay has already derailed several wind-farm projects.
The tax credit is significant for Chicago, the North American headquarters for five wind-power companies. With the credits and federal mandates, wind, which accounts for 1 percent of the country’s electricity supply, could overcome criticism of its costs to provide as much as 20 percent of the country’s electricity, industry experts claim.
“Renewable energy makes sense, but because utilities and traditional fuel companies view it as a competitor, there are a lot of obstacles,” said Invenergy Chief Executive Michael Polsky, whose company runs eight wind farms with five more under construction.
At a conference on Chicago’s “clean tech” businesses held downtown this week, Polsky emphasized the importance of adopting a renewable energy mandate nationwide.
Illinois requires that 25 percent of generated electricity come from renewables by 2025.
But the Illinois mandate has a few catches.
The requirement is nullified if a renewable source increases electricity costs by more than 1 percent.
And it applies only to utilities such as ComEd, rather than municipalities or the alternative suppliers used by many industrial companies.
But without the mandate, wind power would be at a severe disadvantage against an energy grid designed around coal, oil, natural gas and nuclear power plants that were bought and paid for decades ago, industry experts said.
Thomas Casten, chairman of Recycled Energy Development, said that without the renewables mandate “we wouldn’t have any wind here because it can’t compete with a dirty old coal plant.”
Even with the mandates, not everyone considers wind the optimal choice in limiting greenhouse gas emissions.
Exelon Corp., operator of the country’s largest nuclear fleet and parent of ComEd, notes that a back-up energy source must kick in whenever the breeze stops.
Its calculations show nuclear to be more reliable and, thus, more cost effective.
Wind-power companies say the comparisons shift to their favor when they match up turbines under construction against future nuclear plants.
Midwest Wind Energy is spending more than $500 million to erect 104 turbines in Lee and Bureau Counties, about two hours west of Chicago.
That amounts to $2 million for each megawatt produced. A planned nuclear plant with an AP1000 Westinghouse reactor would be $6.7 million per megawatt, based on construction costs and federal filings.
About 7 percent of Exelon capacity comes from renewables.
The federal production tax credit of 2 cents per kilowatt hour of electricity generated further improves the return on wind projects, representing about 20 percent of the electricity’s wholesale price.
The tax credit helps smooth an expansion that might otherwise grow in fits and starts.
In the last three instances since 1999 when Congress failed to renew the tax credit immediately, investment in new wind power tumbled by more than 76 percent in the next year, according to the Union of Concerned Scientists.
Congress did not act with enough urgency to meet the extension deadlines, Swisher said.
A fundamental barrier potentially limiting turbines is that the wind blows best in Montana and the Dakotas, remote Plains States without enough of a population to justify the type of grid linking a city and its suburbs.
“Some consider them the Saudi Arabia of wind, but no one has been living there,” said Sanford Stein, a Chicago lawyer for Horizon Wind Energy. “They haven’t developed the infrastructure. That’s a problem.”
To spin wind into electricity for much of the country will take an ambitious network of transmission lines akin to oil and natural gas pipelines crossing the country.
But balancing proximity to customers with the availability of gale forces is a major factor in Chicago’s prominence in wind power, though other cities are vying to become hubs.
Chicago has the private equity needed to finance wind companies, a radius of manufacturers to build the turbines and enough of an electricity infrastructure to support the 300-foot windmills towering above the Illinois prairie.
One challenge is finding educated workers to fill the rush of jobs, a welcome change to the job losses plaguing much of the Rust Belt.
Suzlon Wind Energy opened its North American headquarters in 2005 with 10 employees.
The Pune, India-based company has 900 workers stateside and expects to add 100 more next year.
“What keeps me up at night?” said Andris Cukurs, CEO of Suzlon’s American division. “Workforce development is the single biggest issue we face.”
By Joshua Boak
Chicago Tribune reporter
6 September 2008
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