Wind energy lessons from Illinois: Q&A with AWEA’s Rob Gramlich

Source: by Kari Lydersen, Midwest Energy News • Posted: Thursday, March 7, 2013

Gramlich

AWEA CEO Rob Gramlich

Last year, wind power accounted for more new generating capacity than any other energy source in the U.S., which topped the 60,000 MW mark for installed capacity for the first time.

Illinois ranked fifth among states for most new capacity installed in 2012, according to state rankings by the American Wind Energy Association (AWEA). Illinois now has 3,568 MW of wind power in place, powering the equivalent of 1.1 million homes and ranking the state fourth in total capacity behind Texas, California and Iowa.

Meanwhile Illinois is also a leader in wind energy manufacturing. At least 33 businesses statewide manufacture wind turbine components, accounting for about 1,000 manufacturing jobs, according to AWEA. Between 6,000 and 7,000 indirect and direct jobs are attributed to the wind industry in Illinois, and annual lease payments to landowners total more than $8 million.

In Illinois as nationwide, new wind installations will benefit from the extension of the federal production tax credit for another year. The credit can now be applied to any wind farm that begins construction in 2013, but won’t be collected until the wind farm starts generating power.

On May 5-8, AWEA will host its annual WINDPOWER conference in Chicago. Midwest Energy News talked with AWEA CEO Rob Gramlich on his recent swing through Chicago to prepare for that global wind industry gathering.

Midwest Energy News: Illinois is among the top states in wind turbine installation, even though it is only ranked 14th in quality of wind resources. What does that tell us?

Gramlich: Illinois was competing right up there with states with the best wind resources. Illinois has a great balance of proximity to load, wind resources and developable areas for projects – namely farmland. Farmers love it. And the RPS (state Renewable Portfolio Standard) has been good, though that’s facing some challenges now.

 You said it’s just been in the past few years that wind development really took off here?

Illinois and Indiana are great wind stories. The old wind maps didn’t have anything here. But with wind turbines getting larger and towers taller, there’s a lot more wind energy available than people thought there was. Illinois’s gone from zero to more than 3,500 MW (since its first installation in 2003). Illinois came out of nowhere.

Nationwide transmission is a limiting factor for wind development; is that a serious issue in Illinois or other Midwestern states?

There are limitations getting into Illinois, within Illinois and getting (Illinois wind power) to higher-priced markets on the East Coast. Even within the Midwest there are still a lot of constraints on the grid. Sometimes there’s congestion going one way, sometimes another.

But there’s been a fair amount of progress, for example with MISO’s Multi Value Project. And there’s been some progress with DC lines that now are having very good economics. That market started picking up two or three years ago; before people were just looking at AC. (Nationwide) there’s been a lot of progress on the transmission front. There’s enough being built right now for another 50,000 MW (of wind power). We passed the 50,000 MW mark last year, so the new transmission means we can double that.

How did the uncertainty around the future of the Production Tax Credit (PTC) last year impact wind development?

A lot of the (high 2012 installation) numbers were driven by the deadline for the PTC expiration. With a deadlocked Congress and no assurance anything would get done, utilities who buy power from wind farms wanted to make sure they got a good deal by doing it while the credit was still in place.

How important is the one-year PTC extension?

We got a little breathing room but not a long-term extension. We asked for more predictability. We got a little. We passed something in Washington, D.C. even with all the gridlock. Congress will need to take it up again.

You also got the change in the tax credit where projects are eligible as long as they start construction in 2013; that’s a really big deal, right?

Yes, that was a huge improvement. Otherwise companies wouldn’t have planned anything. In the past companies would make significant investments before the tax credit was passed, expecting that it would be. That doesn’t happen now. They want to make sure Congress renews it before they put any capital at risk. It was one of the only or maybe the only tax credit to be changed (last year).

How are things looking for another extension of the PTC?

We got a great policy accomplished last year and everyone’s thankful. The companies who make up our board are focused now on building projects, signing power purchase agreements and contracts with utilities and manufacturers (rather than policy issues).

Especially with all the new wind installed last year, has there been increased pushback or opposition?

There’s been disappointing opposition. Exelon was lobbying hard against the PTC extension. And ComEd is lobbying hard in Illinois on the RPS. We got the PTC put to bed for the time being. But there are different issues in every state. The opinion polling November 6 (in the 2012 elections) was favorable to clean energy – if you look at all the candidates who won. Obama campaign manager Jim Messina said (Obama’s support of the) PTC made a difference in Iowa and Colorado, those were important states. In general if you were a candidate you came out better at the ballot box if you were in favor of clean energy.

Is the fact that Illinois is a hub for wind energy manufacturing closely linked to the number of turbine installations in Illinois, or is it partly a coincidence that the state is a leader in both wind generation and manufacturing?

Wind manufacturing is driven by two main things – proximity to development; and workers and companies experienced in sectors (that relate to wind energy) – gears, towers and other sectors. The Midwest in general is very strong in wind manufacturing – Ohio and Michigan have a lot too. It’s driven by the auto industry: the community college training courses and the auto supply companies that can also be wind supply companies.

Does the closing of coal-fired power plants in the Midwest have any impact on wind energy?

Indirectly. Wind, gas and energy efficiency can replace any voids created by retiring coal plants. Some coal plants are low capacity, they don’t run much, so there’s not always a significant demand for new energy (when they close). And there are still so many ancient plants on the grid; there’s a need to modernize both transmission and generation.

Experts say that as things stand now, municipal aggregation in Chicago and other communities can actually hurt wind development unless the RPS is fixed. (See more on that issue here). What do you think?

There are ways to fix the undiagnosed problem of load migration and to (continue to) accomplish the original goals of the RPS…There is a problem with load migration with municipalization. Utilities aren’t sure who will be buying from them in the future. If they were sure they would be more willing to make commitments.

Do you expect wind growth to be slower in 2013 than 2012?

It probably will be lower. Because (of the PTC deadline), a lot of what would have been done in 2013 was done in 2012. And there’s softer energy demand, low prices, cheap shale gas. We expect 2014 to be better than 2013.

What factors will continue to drive new wind construction?

We’re seeing a lot of growth in non-traditional customers. Now 66 utilities are buying wind power – those are the traditional customers. But we’re also seeing more industries, municipalities, schools, corporate customers buying wind power (directly from producers).

For example, corporate customers like data centers might have environmental goals they need to meet – they can do wind onsite or buy directly from the project rather than from a utility. They’re making sure they get wind instead of getting the vanilla power mix. (According to AWEA, non-traditional wind customers include the city of San Antonio and other municipalities; schools and universities; aggregate and quarry operations and companies including Google, Walmart and SC Johnson.)

Are utilities increasingly willing to sign long-term contracts with wind producers?

There are long-term contracts, but some utilities don’t do them as much as we would like. They are great for ratepayers (and they help drive new wind construction). We really want to spread that model everywhere. It’s not being used enough now, especially in restructured states, like Illinois and a lot of the Midwest, where you have access to competition.

What can you say about the WINDPOWER conference in Chicago in May?

It’s the world’s largest wind energy conference. Anyone who wonders whether clean energy is a vibrant industry, all you have to do is walk out on that show floor.

The title is Solutions for Success, and we’ll have a variety of perspectives and new innovations from all sectors. We’ll be trying to be good international hosts, and we expect we’ll have a lot of energy and excitement just like we had the last time we were here in Chicago in 2009.