January 13, 2013
Wind farms in Illinois face a cloudy future in the short term because of economic concerns and competing energy costs. (Photo by Crystl/flickr)
By Eric Stock
HOPEDALE - Wind farm operators are struggling with a paradox that's causing their business to drift.
If wind is a permanent source of energy, unlike fossil fuels, why are developers struggling to secure long-term contracts to sell their energy commodity?
That's the snag that has caused some developments such as an expansion of the Twin Groves wind farm in McLean County to be put on hold.
The 240-turbine farm in southeast McLean County has been seeking to expand north of Illinois Route 9 for several years.
Developers, such as Houston-based EDP Renewables (formerly Horizon Wind Energy), look to secure contracts to sell their power before investing in the wind turbines.
Illinois has been fertile ground for a wind farm explosion in recent years, given its heavy supply of the commodity (thanks to its flat terrain), and an Illinois law signed in 2007 requiring that 25 percent of the state's power come from renewable energy sources by 2025.
Brian Dunneback, Development Project Manager for EDP Renewables, said the energy producer needs financial assurances before it builds more wind farms.
"We'd rather have a contract in place where we can count on those revenues for a longer time period. It's more beneficial to us that way," Dunneback said.
EDP Renewables also owns the Hopedale-based Rail Splitter wind farm in Tazewell and Logan counties and the Top Crop Wind Farm near Dwight.
Twin Groves sells to Constellation Energy, while Top Crop delivers its power to Ameren and Commonwealth Edison. The Rail Splitter is a so-called merchant facility, which operates without a long-term contract and is left to the whims of the energy market at a given time.
The Illinois Power Agency buys electricity on behalf of utility customers across the state, although the amount of power it has purchased in recent years has dropped considerably as more communities, including Normal and Heyworth, have joined a consortium of more than 50 other municipalities, that have secured lower energy rates through voter-approved municipal aggregation.
The head of the Illinois Energy Assocation, which represents the state’s investor-owned electric and natural gas utilities, President Jim Monk, said wind power needs to become cheaper for its use to grow.
"Even as many advances as they have made technologically in the wind industry, wind in still more expensive than conventional power because conventional power prices are so low," Monk said.
Monk said the wind farm industry also took a hit in Illinois when its in-state preference rule expired in 2011. It had required the IPA to buy energy from facilities in Illinois unless all in-state power had already been exhausted.
Tax credit extension
The tax credit, which Congress approved as part of the deal which averted the fiscal cliff, is worth 2.2 cents per kilowatt-hour of energy produced by new wind installations for the first 10 years of operation.
Monk said the extension will provide some stability to the market as long as developers have some certainty about how long the benefit will continue.
"Either it's made more or less permanent, or it goes away completely. Either way, that's going to at least let the wind developers and the other people who buy wind erengy know what the situation is going forward."
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