Utility launches $1.9B wind power expansion in Iowa

Source: Daniel Cusick, E&E reporter • Posted: Wednesday, December 18, 2013

More than 1,000 wind power manufacturing employees in Iowa and Kansas received an early Christmas gift yesterday as energy giant Siemens AG announced that its U.S. plants would supply 448 wind turbines to MidAmerican Energy Co. as part of the largest single order for onshore turbines in history.

At a ribbon-cutting at Siemens’ Fort Madison, Iowa, turbine blade manufacturing plant, executives from Siemens and MidAmerican, along with local, state and federal officials, marked the largest economic development project in Iowa history, as Des Moines-based MidAmerican embarks on a $1.9 billion expansion of wind power generation across the state.

“We are very excited that MidAmerican Energy has again selected us to partner with them on their latest wind expansion project in Iowa, allowing us to continue to supply U.S.-made blades and nacelles,” Mark Albenze, CEO of Siemens Wind Power Americas, told employees and dignitaries gathered at the Iowa plant. “When the new projects are completed in 2015, Siemens and MidAmerican Energy will have provided more than 2.2 gigawatts of clean, wind-generated electricity in Iowa since 2008.”

Siemens Energy Inc., the Florida-based subsidiary of German conglomerate Siemens AG, operates two large wind power manufacturing facilities in the United States: the Iowa turbine blade factory, which opened in 2007, and a nacelle and hub manufacturing facility in Hutchinson, Kan. The Kansas facility will provide all the nacelles for the 448 turbines. Broadwind Energy Inc., headquartered in Illinois, will supply towers for the projects from plants in Texas and Wisconsin, officials said.

Like other major wind energy companies operating in the United States, Siemens has weathered the boom-and-bust cycle of domestic wind energy production as the federal production tax credit (PTC) for the renewable energy resource has floundered time and again in Congress.

Catching the wind from Congress

The latest 12-month PTC extension came in January when Congress gave new life to several renewable energy provisions in the tax code as part of negotiations to avert a federal financial crisis. The wind energy tax credit is set to expire again at the end of this month unless Congress acts yet again to extend it.

Officials yesterday credited the PTC and other government policies promoting wind energy for helping to improve both Siemens and MidAmerican Energy’s wind power prospects. Just one year ago, companies like Siemens and its Danish rival Vestas Wind Systems A/S, with manufacturing operations in Colorado, were laying off hundreds of U.S. workers due to a dramatic slowdown in orders from wind developers as the PTC’s prospects languished in Congress.

The deep lag in activity continued into the first and second quarters of 2013 before picking up late last spring and summer as a number of large providers — including MidAmerican, American Electric Power Co., Duke Energy Corp. and Xcel Energy Inc. — announced a series of large new wind power developments and power purchase agreements.

The American Wind Energy Association said in October that during the third quarter of 2013, developers broke ground on 1,100 megawatts of new wind power projects, a significant uptick from the first half of the year but well off the pace from 2012, when developers put 13,000 MW of turbines in the ground in 12 months, accounting for 42 percent of all new electricity generation coming online for the year.

Of all the wind power expansions announced this year, the largest by far was MidAmerican Energy Holdings’ decision in May to add 1,050 MW of wind energy capacity in its home state of Iowa, with a price tag of $1.9 billion.

MidAmerican, a subsidiary of billionaire Warren Buffett’s investment arm, Berkshire Hathaway Inc., has remained bullish on renewable energy investment even in the face of uncertain federal policies, in part because it has been able to take advantage of overall lower development costs and abundant wind resources in its home territory of Iowa, Illinois, Nebraska and South Dakota.

Anticipating tougher power plant rules

MidAmerican executives have also been aggressive about preparing their energy business units and more than 714,000 utility customers for what many expect will be stringent new restrictions on coal-fired power generation over the next decade, including emissions of carbon dioxide.

Bill Fehrman, MidAmerican Energy’s president and CEO, said that in addition to generating roughly 1,000 construction jobs in Iowa over the coming two years, the new wind farms in five Iowa counties “will enhance MidAmerican Energy’s renewable energy portfolio — making additional affordable, environmentally responsible energy to benefit our customers.”

Other officials, including Iowa Gov. Terry Branstad (R), Rep. David Loebsack (D) and AWEA CEO Tom Kiernan, credited firms like Siemens and MidAmerican with helping to build on wind energy’s marked growth in Iowa, the Midwest and across the United States.

Today about 25 percent of Iowa’s electricity is generated from wind turbines, making it the third-largest wind energy producer in the United States.

On top of that, “we now have an Iowa-based energy company placing the world’s largest onshore order for wind turbines,” Branstad said. “And look at these blades. They are gigantic. It’s pretty impressive to see the size of the blades that are being built here in this plant.”

Kiernan also congratulated the two firms on a “precedent-setting” agreement. But he added that greater government certainty around tax credits will be key to maintaining future growth in the U.S. wind energy sector. “We must have the PTC extended for the benefit of electricity consumers across the country,” he said.