Gone with the wind? Messages mixed on nearby Lafayette, Indiana energy projects September 17, 2012Posted by Laura Arnold in Uncategorized.
Tags: American Wind Energy Association (AWEA), Andy Melka-E-on Climate & Renewables, Laura Arnold-Board member Indiana Renewable Energy Association, Scott Zigmond-VP Performance Services, wind energy projects
Renewable energy experts aren’t holding their breath as they try to nail down what the future holds for Indiana’s wind energy projects.
Between anxiety over the fate of an expiring production tax credit in the heat of a presidential election and uncertainty over the appetite for the power source, they said it’s anyone’s best guess whether the sector resumes growth with the gusto it had before the recession.
The wind farm projects historically have contributed to economic growth in the rural areas they enter, typically bringing an influx of temporary construction jobs and millions or billions in capital investment.
Messages about the status of known nearby projects are mixed.
Talks are starting to get serious again between players involved in the once-stalled wind energy park on Purdue University land, developer Performance Services said, but the Indianapolis firm still hasn’t nailed down a power purchase agreement with a utility company. The project was first planned to be up and running by this winter.
Expansions to the once rapidly growing 303-turbine, 500-megawatt capacity Meadow Lake Wind Farm in White County — and two smaller projects there — are stalled on a federal tax credit set to expire Dec. 31.
In Tipton and Madison counties, the first phase of a 200-megawatt and 125-turbine project is under construction and planned to be complete by the end of the year, but developer E-on Climate & Renewables said growth beyond that is uncertain.
“There’s such uncertainty in the market right now, it just causes these people to go berserk,” said Laura Arnold, who is on the board of directors of the Indiana Renewable Energy Association. “Uncertainty is not a positive stimulus for the growth of the industry.”
Indiana once was one of the fastest growing states for wind energy. In 2009, Indiana added the second highest power capacity for new wind of any state, according to the American Wind Energy Association. But that hit a snag when the recession blew in.
There are 799 turbines producing 1,339.2 megawatts of power in the state, according to the Indiana Office of Energy Development.
“We had projects hit the ground very quickly, but the economy stalled and that’s been the reason we’ve had some stalling out of the projects,” said Purdue Extension renewable energy expert Chris Martin.
Indiana is comparatively soft on its renewable energy portfolio policy. Most of the state’s energy comes from coal, and in 2010 it was second to Texas in coal consumption for electric power, according to the U.S. Energy Information Administration.
But Indiana in 2011 enacted a voluntary clean energy goal of 10 percent by 2025. By 2009, it was one of three Midwestern states lacking a renewable portfolio standard requirement or goal, according to the Database of State Incentives for Renewable Energy.
“Indiana is more or less operating with a carrot as opposed to a stick compared with other states around us,” Martin said. “Now that Indiana has a clean energy goal, it’s going to incentivize projects to move forward, but we haven’t seen any indication that we’ll be going to a mandate, so it may not happen as quickly.”
One fact that Arnold is sure won’t speed up the process: The federal tax credit’s expiration date falls during the upcoming lame duck session of Congress.
She said she doubts the matter will be taken up before the election. The credit, which is worth 2.2 cents per kilowatt hour produced or a payment of 30 percent of the project’s eligible costs, became a hotbed issue on the campaign trail this summer.
Both President Barack Obama and Republican presidential candidate Mitt Romney addressed the issue on their Iowa campaign stops in August. The expiration threatens 37,000 jobs nationally.
During a three-day bus tour through Iowa, Obama went out of his way to highlight Romney’s opposition to the renewal of the credits, which have been in place for 20 years.
“My opponent wants to end tax credits for wind energy producers. He’s said that new sources of energy like wind are ‘imaginary,’ ” Obama said. “His running mate calls them a ‘fad.’ ”
In Des Moines, Romney promoted “renewables, wind, solar, ethanol — you name it; we’ve got to take advantage of all of them.” But he stayed away from discussing the wind energy tax credits during the trip, the Associated Press reported.
Romney spokesman Ryan Williams said in August that the former Massachusetts governor would help wind production by “promoting policies that remove regulatory barriers, support free enterprise and market-based competition and reward technological innovation.”
Sen. Richard Lugar, R-Ind., said Friday at the fourth annual Collegiate Energy Summit at Purdue University that he supports the extension of the credit but recognized that wind farms “are not everyone’s cup of tea.”
If the tax credit goes away, Arnold said the sector likely will cool off.
“It’s not completely over, but it’s going to be on life support until we have another policy in its place to give the right inducement to the industry,” she said. “If our goal is to eventually remove (the tax credit), we need a gradual phase-out so the industry can adjust.”
E-on Climate & Renewables product manager Andy Melka said the tax credit’s expiration could hinder Tipton and Madison county E-on Wind Farm’s growth. Construction on its first phase started this summer.
“The expiring tax credit does not affect phase one, but it could affect the expansion phases we had planned,” Melka said.
Indianapolis-based Performance Services, the developer on the Purdue wind farm project, said his project will move forward without a tax credit.
“That’s clearly out of our control so if it happens, it happens,” said Scott Zigmond, the company’s vice president of sales and marketing. “We’ve invested a great amount of money and time. We’re not going anywhere. We’re still trying to find a way to make this project happen.”
However, he said it’s hard to get much done without a power purchase agreement from a utility company, which the project is still awaiting.
At an update meeting on the park last year, Zigmond pushed for about a dozen of Greater Lafayette’s largest energy users to ask their energy suppliers to buy in. At that time, he said, the company wanted “four or five companies to take 25 or 30 watts each.”
He said there have been a handful of promising recent talks with one company.
“We’re in a better position today than we were six months ago because we’re starting to have more serious talks now, and they seem to be more serious about getting involved,” Zigmond said. “I think the utility company is starting to realize this is a fantastic project.”
Zigmond said if the agreement is made soon, construction could be finished by the end of 2013.
Ken Sandel, Purdue’s director of physical and capital planning, said the university is interested in the project as the landowner. Its students and faculty would conduct research on commercial wind farm activity. The university has interest in adding some of the power produced into its portfolio, but “it would have to make sense from an economic standpoint.”
“It’s a great test bed for us, but the economics of it is really out of our control,” Sandel said. “The bottom line is wind blows here.”
While things seem to be looking up for the Purdue farm, the future of a project on Tippecanoe County’s southside still is in question. In April, the Journal & Courier reported the county had not heard from project developer Invenergy Wind LLC of Chicago for several months.
Tippecanoe County Commissioner Tom Murtaugh said he still has not heard about the 133 turbines proposed for Tippecanoe, Montgomery and Fountain counties.
Despite the uncertainty, Martin, the Purdue Extension renewable energy expert, said interest remains across the state.
“At the end of the day, we’re going to have a demand for power and electricity, and the way things are headed, there’s likely a chance that increased power capacity will come from clean resources like wind energy,” Martin said. “We feel like there’s a good chance we’ll have more in the future.”