A long-term commitment to energy policy in the Midwest is transforming the region’s energy system, economy, and environment. By tapping into its enormous renewable energy potential and manufacturing know-how, the Midwest is poised to become a world leader in renewable energy.
The roots of this growth were planted more than 20 years ago. In 1993, the Union of Concerned Scientists released Powering the Midwest, a study that laid out a vision for wind, biomass, and distributed generation. At the time, three-quarters of global wind capacity was in California, with most of the rest in Denmark — and none at all in the Midwest.
Big parts of that vision have come true, and with smart, stable policies the Midwest can lead the U.S. — and set a standard for other countries — in building huge, new clean energy markets.
Wind Picks Up Speed
The first Midwestern wind farm was built in Minnesota in 1994. Since then, wind has expanded to 21,390 megawatts (MW) in the 12 Midwestern states stretching from North Dakota and Kansas in the west to Ohio and Michigan in the east. This capacity constitutes an investment of over $30 billion in the region’s economy.
Wind now supplies as much as 25 percent of the power demand in Iowa and South Dakota. In fact, the top five states in terms of wind market share are in the Midwest, with North Dakota, Minnesota, and Kansas all exceeding 12 percent.
This number keeps growing. MidAmerican Energy, owned in part by billionaire Warren Buffett, recently announced plans to add 1,000 MW of new wind in Iowa, raising the share of wind energy in the company’s portfolio to 39 percent. This $1.9 billion investment “will be the largest economic development investment in the history of the state,” according to Governor Terry Branstad. “As wind energy goes, so does Iowa’s economy.”
Companies have invested nearly $10 billion in Iowa wind, employing more than 6,000 people and paying $16 million per year to landowners. At the end of 2012, the U.S. wind industry supported 80,700 such jobs, 30,000 of which were in the Midwest. In fact Iowa, Illinois and Kansas are among the top fives states in terms of wind-related employment.
The massive deployment of wind has spurred a vibrant manufacturing sector, all along the component supply chain. Building on a traditional strength of the Great Lakes region, small manufacturers of mechanical equipment have retooled to supply wind components, from ball bearings to cables and towers. The Ohio Department of Development has cataloged over 600 firms in the wind energy supply chain, including machine shops, foundries, and gear makers. “Ohio’s long history of manufacturing excellence?and the continued transformation of its industrial base,” the agency writes, “makes Ohio the ideal location for global leadership in the wind energy industry.”
Remarkably, this growth has happened without a significant net cost to the region. Wind went from zero to a quarter of Iowa’s demand, yet MidAmerican, the state’s largest utility, hasn’t increased rates in 18 years. The next build-out of wind, the company says, will help reduce rates by $10 million per year by 2017. This is corroborated by official reports from the Michigan utility commission, which determined last year that new wind power is one-third cheaper than new coal. And more wind means more savings. Synapse Energy Economics looked at scenarios involving an additional 50,000 MW of wind in the Midwest, and concluded it would create a net savings of as much as $4 billion a year.
Strong energy policy has triggered and sustained this growth. Every state in the region has a renewable electricity standard (RES), which requires or encourages utility companies to produce a portion of their electricity from solar, wind, and other renewable resources. All but one were adopted with bipartisan support through legislation; Missouri’s RES was approved by voters.
The Governors’ Wind Energy Coalition, a bipartisan group of 23 governors working to promote wind power, has described the RES as “a market based policy, using competition to drive down technology prices and move technologies to maturity — all at the lowest cost. It motivates action by the private sector, by creating a market opportunity for project developers to pursue. The government’s role is to set the standard that will be met by utilities and project developers.”
Thanks largely to effective energy policies, Midwestern wind energy capacity has surged in the last 10 years. Credit: Energy Foundation.
More than 35 U.S. states have used a mandatory or voluntary RES as a way to achieve a suite of policy goals, such as:
An RES sets a long-term direction for energy development, giving guidance to regulators, utilities and power plant developers, transmission line developers, investors, manufacturers, economic developers, job training programs, and even university researchers. The Ohio Department of Development acknowledges the benefits of these policies when it touts the state’s “easy access to profitable markets” and its “close proximity to 46,104 MW of new renewable energy capacity required by (RES policies) in neighborhood states,” including 4,457 MW in the Ohio standard.
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