Wind at its back: Midwest leads nation in wind energy expansion

The Midwest continues to develop wind energy capacity at an impressive rate. According to a recent report by the American Wind Energy Association (AWEA), every state in the region is expanding its installed wind capacity, with Indiana seeing triple-digit growth in the last two years.

Iowa still leads the Midwest in installed wind capacity, and nationally is second only to Texas. Minnesota ranks fourth in the country, followed by Illinois.

Iowa also reached a major milestone in the second quarter of 2011, with 20 percent of its electricity generated by wind power. The Midwest holds the top five spots in this benchmark, with Iowa followed by North Dakota at 12 percent, Minnesota at 10 percent, South Dakota at 8 percent and Kansas at 7 percent.

The Midwest’s success is the result of both its wind-resource potential and the policy decisions states have made to attract the industry.

Elizabeth Salerno, director of industry data and analysis for AWEA, says that utilities and turbine manufacturers look for long-term stable policies in a state before deciding whether to locate a facility there. “Are you sending a clear and consistent signal that you want that investment?” is the question these firms ask, she says.

She notes that Iowa adopted a Renewable Portfolio Standard in 1983, well before most other states even considered an RPS. Iowa’s legislation required the state’s two investor-owned utilities to obtain at least 105 MW of power from renewable sources.

Iowa also provides production tax credits for wind energy facilities and exempts them from the excise tax on energy generation. In addition, it provides tax exemptions for the cost of equipment and materials as well as for increases in a property’s market value due to the addition of a wind energy system.

Nearly every state in the Midwest now has an RPS of some kind. Most of these standards are mandatory — for example, 25 percent of electricity must come from renewable sources by 2025 (25 x 25).

According to the U.S. Department of Energy and the Pew Center on Global Climate Change, Illinois, Minnesota and Ohio have a 25 x 25 standard; Kansas has a 20 x 20 requirement; and Michigan and Wisconsin have 10 x 15 mandates. Illinois also requires that 75 percent of renewable energy come from wind.

Indiana, North Dakota and South Dakota have opted for voluntary standards.

Along with the increase in wind production, states are also trying to tap in to the potential of wind-related manufacturing — motors, blades and the other components of wind turbines.

According to the AWEA, this sector is one of the few industries where “insourcing” is occurring: foreign firms are locating wind-related manufacturing plants in the U.S. The AWEA reports that domestic content in the industry reached 60 percent by the end of 2010.

Even states that don’t have the strongest wind resources can do well, Salerno says. Ohio, for example, is considered an up-and-coming state in wind energy, partly because of its large base of industrial users.