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 With this expiration
looming, the future of the industry in Illinois -- one of the top
producers of wind energy in the nation -- could leave the state
struggling to meet its renewable energy requirements, even as the
state exports more wind energy than it uses.
With 1,500 turbines in operation and about the same number in
permitting stages, Illinois' wind industry also has thrived because
of an electric grid ideal for carrying power into Chicago and
exporting it to Midwestern and Eastern states and the state's
renewable-energy requirements.
Illinois is one of 33 states that has passed renewable energy
requirements. By 2025, 25 percent of Illinois's electricity has to
come from sources such as solar, wind and biomass; 75 percent of
that must come from wind.
In 2011, Illinois became the fourth-largest wind-producing state in
the country, according to a January report from the American Wind
Energy Association, a national trade group. In 1992, Congress offered wind companies a federal tax credit
-- now
worth 2.2 cents per kilowatt hour of electricity generated -- that lasts
for 10 years. Illinois' wind generators can produce as much as 2.4
million kilowatts, worth as much as $52,000 a day.
But Matt Aldeman, senior energy analyst with Illinois State
University's Center for Renewable Energy, which studies new sources
of energy and the markets to sell them, said it is not "that often"
that Illinois' wind farms generate the maximum 2.4 million
kilowatts.
"It might be windy in one part of the state but not windy in
another part," Aldeman said. Which is why, he added, it is difficult
to come up with average energy production and tax credit figures.
For Stefan Noe, wind energy is a worthy investment
"It does make up a good percentage of the economics of a wind
projects," said Noe, president of Midwest Wind Energy, a
Chicago-based wind
developer that is building the Big Sky wind farm in
Bureau and Lee counties, which is expected to generate enough
electricity to power 125,000 houses.
But Illinois is just one state where Midwest Wind Energy has wind
farms. The company also has wind farms in Wisconsin, Iowa and
Nebraska and sells power throughout the Midwest.
"The wind industry has become able to compete even with coal, thanks
to the tax credit and falling turbine prices," Noe said.
More companies are producing wind turbines, which leads to lower
prices, as does a drop in the price for many of the parts used to
make the giant blades and generators.
Noe said he's "cautiously optimistic" that the tax credit will be
renewed, as it has been almost every year since 1993. And as long as
wind turbines are in the ground before the end of the year, the
companies will qualify for the credit.
Even so, the industry is lobbying hard for renewal of
the tax credit. The American
Renewable Energy Production Tax Credit Extension Act, a bill in the
U.S. House of Representatives, would extend it for four years.
"We're not asking to be a permanent part of the tax code," said
Ellen Carey, a spokeswoman for the American Wind Energy Association.
"Wind is on track (to) contribute 20 percent of the nation's
electricity by 2030. We're just saying, let us finish the job."
Kevin Borgia, executive director of the Illinois Wind Energy
Association, a nonprofit industry trade group, said he is optimistic
that the credit will be renewed.
But without the credit,
Borgia said, "investment isn't attractive, new development will
grind to a halt, and the thousands of American manufacturing jobs the
industry supports will wane."
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In Illinois, dozens of
companies, many of them headquartered in Europe or Asia, manufacture
parts such as turbines and gearboxes for the state's and country's
wind industry. Aside from the manufacturing jobs in the supply
chain, the industry has created more than 13,000 temporary
construction jobs and about 600 long-term maintenance jobs,
according to the Illinois State University Center for Renewable
Energy, a research and outreach nonprofit.
NTN Bearings, a Japanese
company that makes bearings for heavy machinery, including wind
turbines, has considered expanding its McComb plant to serve U.S.
markets, said spokesman Joe Kahn.
"With the uncertainty over the production tax, it's difficult to
make a business case for capital expansion," Kahn said of the McComb
plant, which employs about 400 people and primarily makes bearings
for agricultural and construction machinery.
A study released in December by the economic research firm Navigant
projected that an end to the tax credit would likely lead to loss of
37,000 wind industry jobs nationwide. Extending the credit,
according to Navigant, would create 17,000 jobs over the next
several years.
More than jobs, though,
Borgia and Noe said the
expiration of the tax credit could make it hard for Illinois to meet
its renewable energy regulations of getting 18.75 percent of its
electricity from wind by 2025.
"With the federal tax credit, the cost of compliance with the
(requirement) is low. Without (it), the cost increases dramatically,
raising rates for consumers," Borgia said.
Only a few Illinois wind
farms have long-term agreements to sell to Illinois' major
electricity providers, Ameren Illinois and Commonwealth Edison LLC,
said Borgia.
Between September 2010 and 2011, 4 percent of Ameren's electricity
came from wind, said Ameren spokesman Leigh Morris. During that same period, only 1 percent of ComEd's electricity
came from wind, according to the company's most recent disclosures.
Wind generates about 7 percent of the state's electricity, enough to
power about 500,000 to 1 million homes, said David Loomis, director
of the Center for Renewable Energy, a nonprofit that does research
and outreach on renewable energy. That's projected to double over
the next five to 10 years, Loomis said.
Most of the wind electricity generated in Illinois is exported to
states on the East Coast, such as New York and Massachusetts, to help
meet their renewable energy requirements. Or wind farms sell to the
"merchant" market to any utility that needs to buy power on any
given day, whether in Illinois or elsewhere. The specific amounts of
those exports aren't public information.
Arlene Juracek, acting director of the Illinois Power Agency, which
buys contracts for ComEd and Ameren, is optimistic Illinois will
meet its renewable energy requirements, while also allowing
companies to continue exporting most of that wind energy.
"Wind has proven to be a cost-effective resource, and we're on track
to grow the industry," said Juracek.
[Illinois
Statehouse News; By ANTHONY BRINO]
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