Light at the end of the wind tunnel in Iowa

Iowa, America's number one producer of corn, soybeans and hogs, will soon be the number three state for wind farming. The crop, planted 15 years ago by Iowa's Alternate Energy Production law, is finally ready to harvest after years of litigation and legislative battles -- in the form of 240 MW of new wind capacity.

Like Minnesota, its sister state to the north, Iowa enjoys the powerful wind resource of Buffalo Ridge. A 1993 assessment by the Union of Concerned Scientists found that Iowa has the technical potential for over 450,000 MW of wind energy, making it one of the most promising regions of the country. And also like Minnesota, development of the resource would not have begun without a strong effort by advocates and legislators. There is strong political backing too, with an official goal for renewables of 5% of the state's total energy by 2005 and 10% by 2015. The wind projects underway now will amount to about 1.2%.

Three huge wind farms are in the works, including the single largest project in the world, a 112.5 MW plant in Buena Vista and Cherokee counties, near the towns of Alta and Storm Lake. Enron Wind is developing the project to sell power to MidAmerican Energy. Nearby, Enron is also developing 80 MW under contract to the other big utility, Alliant. Part of this will be developed by Northern Alternative Energy. The two projects will make the area home to over 250, Z-750 turbines. The third wind farm of the trio, for which ground was broken in late October, is being developed by FPL Energy in Cerro Gordo county, near Clear Lake. A 42 MW project of 750 kW NEG Micon machines, the output will be sold to Alliant.

Legislative long haul

Enron, FPL and NAE have all broken ground for their projects, and are in a race against the clock to get them on line before the July 1, 1999, retirement of the federal Production Tax Credit for wind power. All are confident they will have their projects up and running by April or May. Iowa Senator Charles Grassley, a strong proponent of the tax credit, was on hand for FPL's ground breaking ceremony on October 26. Grassley called wind "an environmentally sound source of energy with no downsides whatsoever."

Most wind activity stems from Iowa's Alternate Energy Production law of 1983 (AEP). The law was intended to encourage alternative energy in the wake of the Public Utility Regulatory Policy Act of 1978. PURPA required utilities to pay their "avoided cost" for power to any independent renewable or cogeneration company, but the avoided cost rates in Iowa were too low to create a market for renewables. According to John Pierce of the Iowa Utility Board, the prevailing interpretation of PURPA was that states could consider avoided cost as a floor and had discretion in setting higher rates. This interpretation later vanished with FERC's landmark ruling on California's Biennial Resource Plan Update in the early 1990s.

Meanwhile, the board set rates and policies that applied to all utilities in the state. It was not long before utilities took issue with the Iowa board's mandate and a case was lodged at the state court. Between 1983 and 1987 the case worked its way up the judicial ladder through appeals to the district court and state supreme court. Finally, the Iowa Supreme Court determined the law covered only investor owned utilities and that as written it did not allow the board to actually set rates for renewables.

At the urging of the Iowa Utility Board, the legislature revisited the issue in 1990 to clear things up. The revised law specified a fixed payment of $0.0602/kWh and required utilities to buy 105 MW average of renewables, but still set no implementation deadline.

By 1991, the board had set regulations to implement the law. After delaying for a few years, the utilities attempted to get the AEP repealed in 1995, but were opposed by a coalition of advocates including the Iowa SEED Coalition, Iowa Citizen Action Network, I-Renew, Izaak Walton League and the Union of Concerned Scientists. The repeal effort was defeated by a margin of one vote in a Senate committee. Additional repeal attempts were made in 1996, and were countered by pro-renewables legislation introduced by the activists.

By July 1996, with the opposing parties having fought to a draw, the Iowa board at last decided the time had come to set a deadline. It gave the utilities just seven months to sign contracts with wind developers. The fight was still not over, though. Once again the state's utilities, led by Iowa-Illinois Gas and Electric (now MidAmerican) took the case to the Feds. The utilities complained to the FERC that by setting a fixed price, the Iowa legislature was violating the avoided cost principle of PURPA. They argued that they could buy coal power for less than $0.06/kWh and requested that the law be overturned.

FERC agreed that the fixed price was a violation of PURPA, but supported the ability of the Iowa legislature to mandate renewable power. At last, 14 years after passage of the AEP law, utilities signed contracts with wind and biomass developers. The long delay had created some lost opportunities, however, with both Kenetech and Vestas opening and closing offices in the interim.

Net metering struggle

A similar battle continues to rage over "net metering" for small renewable generators, a system by which owners of private renewables plant subtract the power they supply to the grid from their consumption before paying their electricity bills. The Iowa Utility Board has had a policy supporting net billing since 1983 -- with no limit on the size of facilities that qualify. This makes net metering especially important for wind in Iowa. Most states cap projects eligible for net billing at 20-40 kW, which encourages PV but excludes most wind projects. But the Iowa scheme encourages schools, hospitals and businesses to install utility scales turbines in ones and twos.

Late last year, however, at the urging of the utilities, the utility board decided to reconsider its net metering scheme. An outcry from activists, this time including the America Wind Energy Association and the solar industry, resulted in a pro-net metering bill passing the Senate by a unanimous vote. Though the bill was not introduced in the House, it caused the board to drop its review.

Now, however, the utilities have appealed to the FERC, complaining that net metering constitutes a violation of PURPA, since it requires them to buy power from what they consider to be an independent power producer at a rate higher than the avoided cost. MidAmerican, the state's largest and most recalcitrant utility, is leading this latest round of legal manoeuvring. If the FERC upholds the complaint, net metering in Iowa could be a thing of the past, with important consequences for small wind development in other states.

The Iowa board sharply disagrees with the utility arguments, saying that net metering as practised in Iowa is more like a trade of power than a buy and sell arrangement. Since customers need only one meter that spins in both directions, the power they generate offsets their consumption, essentially giving it the value of the retail rate. If there is any excess power generated after a year -- that is, if the meter reads negative -- the utility pays them the avoided cost of a few cents a kilowatt hour for the excess. Comments on the case were accepted in November and FERC is expected to hear the case soon.

Net metering has resulted in a few trail blazing projects for wind. An early effort by Vestas American resulted in sales of turbines to the City of Nevada and to Schafer Systems, a factory near Adair. The Schafer turbine was the first US Vestas sold outside of California. Also, the Spirit Lake school district owns a single 225 kW Wind World turbine sited right next to an elementary school.

Pioneering farmer

Another early pioneer in wind generated electricity in Iowa is George Braaksma, a farmer with land on the southern end of Buffalo Ridge. In 1992, NAE installed five reconditioned Windmatic turbines on his land, bought used from California. In 1996, NAE added a 600 kW Micon turbine, at the time the largest turbine in North America. More recently, the smaller machines were replaced by a second Micon. NAE has development rights for the land and may expand the project in the future.

Municipal utilities have taken an interest in wind power also. A coalition of seven municipal utilities is sharing a three turbine project near the small town of Algona. The majority of the power will go to Cedar Falls Utilities. The project is being supported by a $2.8 million grant from the Turbine Verification Project (TVP) of the National Renewable Energy Lab and the Electric Power Research Institute.

The state government has shown a strong commitment to renewable energy, though with utility restructuring picking up speed, new rules may apply in the future. The official 5% and 10% goals for renewables were set by the state energy office. An economic analysis by the state found that meeting the goals with a split of wind and biomass would result in an additional 17,000 job years between now and 2015, increased disposable income of over $300 million, and avoidance of 63 million tons of CO2. While most of the economic benefits come from labour-intensive biomass, a majority of the environmental benefits come from wind.

The Iowa Energy Center, a non-profit agency funded by utility ratepayers, has supported wind resource monitoring around the state, and has posted detailed maps and data sets to its web site. The centre also implements a $5.5 million Alternative Energy Revolving Loan Fund, 20% of which is set aside for large wind projects and 10% for small turbines of 20 kW or less. Loans are interest free.

Little green pricing

So far utilities have shown little interest in green pricing programs, where customers can opt to pay a premium for electricity from a renewable source. Alliant has plans for a green pricing program, which it may introduce in the next six months across its whole system. In addition to the wind and biomass capacity being built in Iowa to meet the AEP law, Alliant is building new renewables in Wisconsin to meet the requirements of Wisconsin's "Reliability Act" of 1998. Alliant is obliged to build about 10 MW of renewables in Wisconsin by 2000. To offer a green power product to all of its customers, the utility will have to seek approval from utility commissions in four states.

Cedar Falls Utility surveyed its customers to gauge attitudes towards green power and found strong support. It is getting most of its green output from the Algona project, though has not announced whether it will seek a green rate or simply fold the power into the normal rate.

Green pricing has a staunch opponent in Iowa in Glenn Cannon, manager of the municipal utility in Waverly. Cannon disagrees in principle with the idea of green pricing. "All customers should share in costs and benefits of wind turbines," he argues. "We don't set peak prices, a red rate or a brown rate. We have never separated resources by price. It's not a responsible way to handle green energy."

As a municipally owned utility, Waverly has direct involvement of its customer owners in its decision making process. Their commitment to wind came from a unanimous recommendation from the Customer Advisory Panel to include wind as a generating option. Waverly was the first utility in the region to own a wind turbine, an 80 kW unit erected near the town in 1993. More recently, Waverly bought two Zond 750 kW turbines that will be installed on the site of Enron's Storm Lake project. Because of the better wind resource there, Cannon expects 70% greater output per kW from the machines than from the single turbine at Waverly. Wind will constitute 6% of the small town's power demand.

Other utilities have a less philosophical take on green pricing. Jeff Gust, manager of bulk power marketing for MidAmerican says: "The reason we haven't pushed for a green rate is that we have one -- the AEP law. It has encouraged renewable energy in lieu of a green rate."