US Investment & Development Guide - Lower Midwest

UNITED STATES: The growth of wind energy in the Lower Midwest has been relatively recent but explosive - and that trend looks set to continue. So far, growth has been centred on the north of the region, closest to the burgeoning Upper Midwest.

Illinois has seen the most development, with an installed capacity of 1.85GW giving it a national rank of eighth. Its projected pipeline is a remarkable 5.8GW, a growth rate that is boosted by the fact that Chicago is the nation’s third most populous city. Indiana is a distant second to Illinois, in 11th place nationally, with an installed capacity of almost 1.04GW and a projected pipeline of around 1.5GW.

Kansas is a close third regionally, with an installed capacity of over 1.03GW that puts it 13th in the country. In fact Kansas and its neighbour Nebraska rank second and third nationally in terms of wind potential, with 3,646.6TWh and 3,540.4TWh respectively. It is not surprising, therefore, that Nebraska’s development pipeline is an impressive 2.5GW, although it has an installed capacity of just 153MW and a population of fewer than 1.8 million.

Development of wind projects in western Kansas, Texas and Oklahoma has been held back by poor transmission infrastructure, but that should be remedied by the Southwest Power Pool’s proposed transmission backbone to connect areas of expanded generation to its load centres.

The Lower Midwest is also one of the country’s burgeoning regions in terms of supply chain manufacturing, especially Ohio, in the heart of the old US manufacturing belt, and Kansas. Both states are actively marketing themselves as manufacturing hubs for the wind industry and look set to develop their supply chain base through favourable investment policies.

Developers flock to ‘best’ wind resources

The Lower Midwest has no shortage of major projects in the pipeline, with several of the nation’s largest new wind projects set to be built in the region. Illinois stands out as one of the country’s hotspots, as do Nebraska, with its windy High Plains geography, and Indiana.

The region’s largest project is set to be Wildcat Ridge in Banner County, in the far west of Nebraska near the Wyoming border. Midwest Wind Energy has acquired development rights to land for a build-out of 1.5 to 3GW. Midwest says the area has among the best wind resources in the US, with average annual wind speeds exceeding 9m/s across the entire project area. Also planned in Nebraska is the Grande Prairie project, in Holt County in the north of the state near South Dakota. It is due to be built out at up to 500MW by 2013, again by Midwest Wind Energy.

The lion’s share of Indiana’s pipeline consists of future phases of developer Horizon’s Meadow Lake project, expected to total 800MW by 2013 in White and Benton Counties, in the northeast of the state bordering Illinois. Developer TradeWind Energy is also planning the 200MW Clinton Farms in Clinton Country, scheduled for completion by 2013. BP Alternative Energy plans further phases of its Fowler Ridge plant, to take capacity up to 750MW.

Illinois thinks big

Illinois is home to a number of large planned projects. Green River, a 467MW behemoth by Mainstream Renewable Power, in the north of the state, is set to be completed in 2011. Meanwhile, Horizon Wind Energy’s Black Prairie project will be built out at 400MW on land near Bloomington in the central state, with estimated completion in 2012. Planning permission has been granted but as of July, construction had not yet started. With the same installed capacity is the planned K4 project in the north of the state by Vision Energy of Cincinnati.

Elsewhere in Illinois, Midwest Wind Energy has begun work on the 315MW Walnut Ridge project, to consist of Suzlon S88 2.1MW turbines. Walnut Ridge is a companion project to the Big Sky wind farm, to the northeast and along the same basic ridgeline, and is already under construction with completion slated for 2010. Almost equal in size is the Top Crop expansion, a 300MW development by Horizon Wind Energy and EDP Renewables in the north-central state, projected to be online in 2011. The turbines used will be GE 1.5MWs.

Activity across the region

Three more 300MW projects — Bright Stalk, Prairie Fork and Twin Groves expansion — will be in Illinois. Bright Stalk is by Horizon Wind Energy in the central state; Horizon has acquired land but not yet secured the necessary permits but says the project could even top 400MW. Prairie Fork, by Virginia-based Dominion, will be near Springfield in the central state and due online in 2013. And the Twin Groves expansion, developed by Horizon in central Illinois, is likely to be completed in 2011.

In Missouri, Tradewind Energy is planning two 300MW projects — Shuteye Creek and Rock Creek. In Kansas, the same company is progressing the 600MW Cimarron Bend project and the 200MW Caney River scheme, while Westar’s 500MW Ironwood project has won approval.

Historic strengths boost supply chain

The Lower Midwest is the nation’s predominant region for wind energy supply chain manufacturing because of its central location and long history of heavy manufacturing. The old ‘rust belt’ cuts a swathe from northern Illinois eastwards through southern Michigan, Ohio and Pennsylvania to New Jersey and parts of upstate New York. Its skilled labour, concentration of firms with machining expertise — plus a high number of jobless manufacturing workers — mean it has all the right conditions to cement and build its status as a crucial supply chain hub. The support infrastructure for heavy industry is of vital importance. Machinists can quickly access machine tool manufacturers, or foundries can access pattern makers without incurring major freight bills.

Suppliers able to stay local

Ohio has more supply chain manufacturers than any other state – a startling 173, according to data from manufacturing umbrella group the Great Lakes Wind Network. Illinois has 32 and Indiana 29, while Missouri, Kansas and Nebraska have a combined total of 22.

Some of the major suppliers based or operating in the Lower Midwest are: Timken Company, of Canton, Ohio, which makes highly engineered bearings, alloy steels and related components; Owens Corning, of Toledo, Ohio, which makes composites and polymers that are used in turbine blades; Parker Hannifin, an expert in hydraulics with operations in Ohio and Illinois; ATI Casting Service of LaPorte, Indiana, a major foundry; and Kocsis Brothers of Chicago, an important machine shop.

There are numerous opportunities for investment, given that wind turbine size is growing so much and fewer and fewer suppliers can now manufacture the giant-sized components. ‘Buy locally’ is increasingly the mantra for turbine manufacturers, more of which are setting up US assembly plants. For example Siemens plans to open an assembly plant in Kansas in December 2010. In addition, several more overseas wind manufacturers are currently considering establishing wind plants in the US and the Midwest is expected to attract some of them.

The best investment opportunities, says Ed Weston of the Great Lakes Wind Network, include large bearings, castings, composites for blades and nacelle housings, generators and turbine-control systems. On the services side, he cites demand for operations and maintenance, logistics companies and turnkey contractors that cover engineering, procurement, and construction.

A number of states are actively positioning themselves as wind industry manufacturing centres. Kansas, for example, offers financial incentives to support companies wanting to undertake a wind-related research, manufacturing or development project. Up to $5 million of financing is available per project. At the end of last year, the Kansas Department of Commerce also instigated a survey of local supply chain companies to establish the extent of the industry in the state and to understand how best to support its future development.

Financial incentives

Meanwhile, Ohio, with an unemployment rate of 10.7% in May 2010 and a solid manufacturing base, has some robust incentives for supply chain manufacturers. The Ohio Energy Office offers grants for non-residential renewable energy projects in the service territories of four participating major electric distribution companies, AEP-Ohio, Dayton Power & Light, Duke Energy, and FirstEnergy. A wide range of other financial incentives and bonds may be available to businesses choosing Ohio, including assistance for training. That is in addition to nationally available federal stimulus grants.

 

River ports keep components flowing

None of the Lower Midwest’s ports is among the top ten nationally for the import of wind energy components, according to figures published by the US Census Bureau. Those leading ports are all on the Pacific, Atlantic or Gulf of Mexico. Even so, ocean- and river-going vessels can access several ports in the region, making it an important part of the US wind market’s logistics chain.

Ports in the north of the Lower Midwest offer access to the Atlantic via the Great Lakes/St. Lawrence Seaway. In the south, smaller ships can access the US’s inland waterways via the Mississippi and Illinois Rivers, or the Ohio River from the Gulf of Mexico.

Avoiding congested city ports

The predominant port for wind components in the Lower Midwest is Burns Harbour, in Indiana on Lake Michigan. The port is less congested than Chicago’s or Cleveland’s and Rail access is easier too. In addition, large components such as nacelles and towers should preferably not be transported through a major city. The port of Toledo, on Lake Erie in the state of Ohio, is important for similar reasons.

Heading north

The little-known river port of Lemont, a small facility on the Illinois River, a tributary of the Mississippi, is the farthest port north that is accessible on the river system for ‘double stacked’ cargo vessels. That means the port is accessible to loads that include nacelles and towers.  And Lemont itself is in the heartland of wind development, being located in the ‘wind belt’ that runs from Texas north to the Canadian border, and near some of the largest projects in the Midwest’s pipeline, in Illinois, Wisconsin, Indiana and Missouri.

 

Stronghold of wind research

The Lower Midwest has a solid base of research expertise. It is home to the Midwest Research Institute, a co-manager and operator of the US Department of Energy’s National Renewable Energy Laboratory in Golden, Colorado since it was founded in 1977. The institute also conducts some wind research of its own in St. Louis, Missouri and in Manhattan, Kansas.

Cutting-edge testing facilities

In Ohio, the NASA Glenn Research Center and Air Force Research Laboratory is evaluating several wind demonstration projects, to test and advance institutional applications of wind turbines, while Case Western Reserve University in Cleveland recently founded the Great Lakes Institute for Energy Innovation in its School of Engineering. Also in Ohio, the University of Dayton Research Institute, which has a close relationship with the state’s Wright Patterson Air Force Base, conducts research into structures and materials for composite turbine towers.

The Illinois Institute of Technology is leading a national wind energy research consortium that has been awarded up to $8 million in federal stimulus funding to support university research and development programmes. Consortium members will perform focused research on hurdles identified in meeting the Department of Energy’s goal of sourcing 20% of US electricity from wind by 2030. Meanwhile Illinois State University’s Center for Renewable Energy, which conducts applied research, is home to the Illinois Wind Working Group.

Focus on turbine advances

At Purdue University in Indiana, the Energy Center has areas of expertise that include the structural health monitoring of wind turbines; unsteady aerodynamics and control of rotors; and alternative transmissions for wind turbine drive trains. And Japan’s Nikko Company, is collaborating with the University of Nebraska, Kearney, on the development of a small 1kW turbine.

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