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United States

Green power mandate sets new standard in America -- Minnesota forges foundation for massive regional wind market

An aggressive mandate for green electricity just passed by the state of Minnesota in the American Midwest has kicked open the doors to a new market for wind power likely to need as much as 6000 MW of additional wind capacity by 2020. Coupled with regulatory requirements for renewable energy in other Midwest states, the dawning of a huge regional market for well in excess of 10,000 MW of turbines holds prospects for the creation of a major new manufacturing hub in Minnesota for the global wind industry. The mandate, which sailed through the legislature and was signed into law last month, is for 25% of state electricity to come from renewables.

With a population of five million, the same as that of wind leader Denmark which today gets 20% of its electricity from wind energy, Minnesota is no Texas or California, both major economies and the top US wind states. But as the twelfth largest state in the US, it is growing and in need of more electricity -- and Minnesota has the good luck to rank among the top ten states for wind energy potential. It is also flanked on two sides by Iowa and the Dakotas, strong existing or potentially strong wind markets that could benefit from a thriving turbine supply industry.

"Because we expect the Midwest to develop lots of megawatts, when you add up the states you quickly get ten to twenty thousand megawatts over the next decade and a half. It makes Minnesota an attractive place to have something centrally located," says Beth Soholt of local wind advocacy group, Wind on the Wires.

Toughest in US

Minnesota's green power mandate is one of the toughest anywhere and looks to be setting a new standard for the US too. "We were told by the Union of Concerned Scientists that ours is the most aggressive renewables policy in the country and that's what we were shooting for," says Ken Bradley of Fresh Energy, a Minnesota non-profit group that helped spearhead the bill. "Nobody here likes Iowa being ahead. Now other states can try to top us." The new renewable energy standard (RES) should accelerate Minnesota's long-standing race with nearby Iowa for third place in the US wind power installation derby. Iowa finished 2006 with 936 MW and Minnesota with 895 MW.

Passage of the measure was partly due to a shift to Democratic party control in the state's House of Representatives. "When the Republicans were in charge we couldn't even get a hearing," Bradley says. "But many of the people who won ran on renewable energy agendas."

Soholt says the law was designed with another successful wind state in mind. "It's basically the same as in Texas. We took the very same language, the same dollar amount for non-compliance. The Texas model is really what we were aiming at." Texas is approaching 3000 MW of wind capacity.

Minnesota was the first state after California to embrace utility scale wind farms nearly two decades ago and its citizens are generally familiar with the technology and receptive of it. Plenty of wind businesses are already in the region. Suzlon's US operation is based in Pipestone, Minnesota. CEO Andris Cukurs says the new RES "further solidifies" Minnesota's leading role. Tower manufacturer DMI Industries and LM Glasfiber's North American blade division are both based in nearby North Dakota. Iowa to the south is Clipper's manufacturing base and that state is in the running as a US base for yet another wind company, the turbine manufacturing division of Spain's Acciona (page 29).

Minnesota is also a vast state with good infrastructure to grease the wheels of a wind boom. It has an adequate network of highways for transportation and the Port of Duluth on Lake Superior is already used by Siemens to bring in wind components. "We'd rather be putting turbines on ships in Duluth and sending them east," says Bradley. Transmission constraints do exist, but the RES calls on utilities to act ahead of time to accommodate new generation.

Xcel's role

The law actually calls for utilities to reach 25% by 2025, with the exception of Minnesota-based Xcel Energy. It must reach 30% by 2020. Xcel supplies electricity to roughly half the state and will need to install 400 MW of wind a year through 2020. "But no one was excluded," Bradley says. The municipal and rural electric co-operatives, which supply the state load not met by Xcel, must also comply with the new mandate. "That was not the case before," he adds.

Hydro power over 100 MW does not count towards the RES mandate, so besides a few biomass projects, Soholt expects wind will satisfy as much as 98% of the requirement, or between 5500 and 6300 MW by 2025.

Xcel Energy, which like Minnesota has a long history in the wind business and is familiar with the technology and its potential, will be doing plenty of that work. The company's Rick Evans says it currently provides about 7% of Minnesota load with wind power. "Our resource people tell me the RES will be a stretch and that we'll have to work hard to get there, and some years we'll be ahead and some years we'll be behind." He says the law gives the company an achievable goal and enough flexibility so he does not see a circumstance where non-compliance penalties will be invoked. He also says Xcel will want to own some of the projects in addition to solely contracting wind power from independent power producers, its traditional approach.

Integration

Evans is not much concerned about how Minnesota can integrate all this wind after seeing the recent results of the state-sponsored Minnesota Wind Integration Study. "Minnesota, before they passed the law, said we could get to twenty-five percent wind without jeopardizing power availability. We felt comfortable with that study," he says.

If any large US utility is up for the challenge in Minnesota, it is Xcel, which is on track to meet a 10% by 2015 renewables requirement in Colorado seven years ahead of schedule. In response to that success story, a bill to double Colorado's requirement to 20% is gaining traction in the state capital, having been approved by the House of Representatives last month by a promising margin of 59 to five.

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