By Amanda Durish Cook
2020 is shaping up to be a seminal period in the Midwest’s transition to renewable energy if new initiatives and state legislation are any indication.
“The trends are largely positive,” James Gignac, lead Midwest energy analyst with the Union of Concerned Scientists (UCS), told RTO Insider.
“We’re hoping to hear some plans for additional climate and energy action,” Gignac said, adding that the region’s state utility commissions are particular hotspots of clean energy activity.
Global research nonprofit World Resources Institute predicts 2020 will be a watershed year for clean energy goals in the U.S., with cities signing “unprecedented utility-scale clean energy deals.” (See related story, US Renewable Investment Hits Record $55.5B.)
The Sierra Club notes that nearly 160 cities have committed to 100% renewable energy. Fifteen states plus D.C. and Puerto Rico have recently made commitments to get more than 50% of their energy from clean resources by 2050 or earlier. In the Midwest, Wisconsin is so far the only state to have finalized a 100% target by that year — but its days of being a regional outlier in clean energy targets are dwindling.
Last year, lawmakers in Illinois, Iowa, Michigan and Minnesota introduced bills containing new renewable energy targets.
In Minnesota, the Senate last year demurred on Gov. Tim Walz’s proposal to transition to 100% zero-carbon energy by 2050. But senators are now considering the Clean Energy First Act, which would direct utilities to prioritize carbon-free resources in their planning and require the Public Utilities Commission to consider whether utilities’ proposed generation is in the public interest.
The Illinois legislature is considering the Clean Energy Jobs Act, a possible successor to 2016’s Future Energy Jobs Act. The new bill requires 100% carbon-free electricity by 2030 and 100% renewable energy by 2050. Gignac said the bill recognizes the existing nuclear generation in the state.
“One of the key factors as states are considering 100% energy goals is including interim goals, like 2030 and 2040 targets, to ensure progress is being made toward the long-term goal,” Gignac said.
Illinois Gov. J.B. Pritzker and Michigan Gov. Gretchen Whitmer both delivered State of the State addresses Wednesday that emphasized environmental issues.
Pritzker said “clean energy legislation that reduces carbon pollution, promotes renewable energy and accelerates electrification of our transportation sector” would be a priority of his administration in 2020.
In October, Whitmer and the Michigan Public Service Commission launched MI Power Grid, a multiyear effort to help guide the state through its transition to more clean and distributed energy solutions.
The state goals may be born of necessity.
A recent Moody’s Investors Service report on climate risk concluded that Midwestern generators are the most susceptible to intense heat waves and flooding, while Southeastern generators will be more at-risk from hurricanes. Western operators could grapple with water shortages.
The report drilled down to specifics: AES subsidiary Dayton Power and Light will be particularly subject to flooding; Ameren territories across Illinois and Missouri are most vulnerable to rising temperatures; and Xcel Energy’s territories in Colorado, New Mexico and Texas most susceptible to water shortages. NextEra Energy, Dominion Energy and Duke Energy were called out for significant hurricane risk.
Ameren has said it will cut its emissions to 80% below 2005 levels by 2050 and will counteract effects of climate change on its equipment by improving its flood mitigation infrastructure, burying some transmission lines and installing more insulation on lines.
UCS last year also predicted increasingly frequent extreme heat events in the Midwest. “Even with aggressive action, the number of days per year with a heat index above 90 degrees F would more than double for both the Midwest and Northern Great Plains, to an average of 56 and 32 days per year, respectively. The number of days with a heat index above 100 degrees F would triple or more to an average of 22 and eight days per year, respectively, for each region.”
But Gignac says the flurry of activity in the Midwest so far has been driven by economics, not climate hazards.
In October, Wisconsin Gov. Tony Evers created a task force on climate change. However, state regulators recently approved Dairyland Power Cooperative and Minnesota Power’s controversial 625-MW gas-fired Nemadji Trail Energy Center in Superior. The $700 million generator, which will serve customers in Minnesota and Wisconsin, was authorized for construction despite concerns about its environmental impact. The Minnesota PUC likewise approved the plant in 2018, but in December, a state appeals court ordered the commission to conduct a further environmental impact assessment.
Closer Look at Natural Gas
Gignac said the replacement of aging coal plants with large gas-fired units remains a cause for worry for UCS in Midwestern states.
“It’s a big concern as many utilities are phasing out their coal plants. Utilities are approaching that issue in different ways,” he said.
Consumers Energy, for example, plans to use a combination of solar, demand response and energy efficiency to avoid new gas plants.
Gignac urged that state commissions and other stakeholders take “a careful look at the economics of natural gas in this transition,” instead of “locking in” long-term investments in fossil fuels.
“That’s the risk with natural gas plants. They could become stranded costs. The fuel cost is a variable, and renewable energy is continuing to get cheaper,” Gignac said.
He also pointed to DTE Energy’s integrated resource plan pending before Michigan regulators. In December, Administrative Law Judge Sally Wallace issued a proposed decision against the IRP, saying it relied on outdated data and modeling that understated the benefits of renewable energy and energy efficiency. The plan relied too heavily on gas generation and failed to solicit bids for new renewable generation, Wallace ruled, adding that DTE should alter its plan even if the Michigan PSC approves the original version. (See DTE IRP Draws Fire from Renewable Proponents.)
“The next step is to see how the commission handles the proposed order,” Gignac said. “We’re hopeful that the commission would largely agree with the order and ask for a number of changes in a revised plan.”
The PSC will meet Feb. 20 to consider the IRP.
Scrutiny on Self-scheduling
UCS has also criticized DTE’s IRP for its reliance on self-scheduled coal generation.
“Traditionally, coal plants were built and designed to run year-round. However, as lower-cost resources such as wind and solar have come onto the market, there are periods during the year where it doesn’t make sense to operate coal plants. That’s what driving the re-evaluation into self-scheduling,” Gignac said. (See Enviros, States Question Coal Self-commitments.)
Xcel filed a petition in December to convert two of its four coal-fired units to seasonal and economic use instead of self-scheduling them. The utility said it would idle its Allen S. King and Sherco Unit 2 generators during the spring and fall, and only offer them into the MISO markets when they are profitable, saving ratepayers up to $55 million in fuel, operations and capital costs between 2020 and 2023.
“That’s a key recognition of the changing market and re-evaluation of how coal plants are running … so that customers aren’t facing unnecessary costs,” Gignac said of Xcel’s proposal.
Minnesota and Missouri regulators have opened dockets to investigate coal plants’ self-scheduling practices. (See Missouri Investigating Self-Scheduling in MISO, SPP.)
“This is getting a lot of attention in a lot of states,” Gignac said.
It’s “key” that utilities continue to examine supply solutions for peak demand days, he said. “We want to continue to use renewables, demand response and energy efficiency to replace dirty fossil fuels during those periods.”
The Economics
Speaking last week in Des Moines, Iowa, on a panel focusing on climate change and wind generation’s enduring popularity, Jeff Danielson, the American Wind Energy Association’s Central States director, said clean energy transitions can occur even absent state policy.
“I think what’s really cool about Iowa’s leadership in wind energy is that there was never really a mandate. … A lot of this growth has been without mandates,” said Danielson, calling Iowa’s first 105-MW renewable energy goal in 1983 a “mini RPS.”
Iowa has a sparse history of obligatory clean energy rules. That first renewable portfolio standard didn’t have a clear enforcement provision and wasn’t required until 1996 by the Iowa Utilities Board. Iowa’s governor in 2001 established a voluntary 1,000-MW goal for wind capacity by 2010. Today, Iowa is second to Texas in wind generation, with nearly 9 GW of installed wind capacity at the end of 2019.
Danielson said Kansas, North Dakota and other Midwest states are primed to follow in Iowa’s footsteps of voluntary wind buildout.
“We have an opportunity to take lessons learned from Iowa, to export them, if you will, politically and policy-wise to those other states,” Danielson said.
But Gignac said energy policy at the state level ensures that renewable transitions continue and provides market certainty to investors and developers.
“It’s true that market forces are helping drive a transition to clean energy, so that’s a good thing, And I think it will continue. But we should also recognize that state clean energy policies have helped increase deployment of renewables and brought them to scale to reduce costs,” Gignac said. “State renewable energy policies are an important backstop and can also provide market certainty to developers. They help chart the long-term growth of renewables.”
Danielson said it’s no longer a question of wind energy doubling in capacity.
“The real question is will it triple and quadruple,” he said, noting that wind energy is becoming economic even without subsidies.
“Almost all forms of energy are subsidized in some way. Wind energy is prepared to go without subsidies,” Danielson said. “Regardless of your local culture or your local politics — red state, blue state — what we know is that there is a unifying factor around wind energy and that is local economic development.”
He said that while the Midwest saw a decline in manufacturing, there’s a regional “revival in jobs, innovation and investment” with wind and solar development. Solar installer and wind turbine technician are the No. 1 and 2 fastest growing jobs in the U.S., he pointed out.
“This has really fueled an American revival, in particular because of the resources in the Midwest. Regardless of what your politics is for the state, they all want that economic development and that investment. … If you just focus on climate change and the conflict around it, you miss a whole bunch of ways in which people are working together,” Danielson said.
Conservative circles are now forming their own clean energy groups, Danielson said. He also said Republicans deserve some credit for energy transitions, calling Sen. Chuck Grassley “the grandfather of wind” because he helped to create the production tax credit.
Daniel Lutat, director of sustainable energy resources and technologies for Iowa Lakes Community College, said his students look at wind generation as a bridge technology to discover “the next best idea” in utility-scale renewable energy.
“When you talk about the industry having just over 100,000 people supporting wind right now, that’s more than coal, nuclear and natural gas combined,” Lutat said, referencing the statistic that about 114,000 Americans have jobs in the wind industry.
Iowa Utility Association Executive Director Chaz Allen also appeared at the Iowa panel to recount his time as mayor of the city of Newton, as a Maytag manufacturing facility closed its doors in 2007. Newton, dubbed the “Washing Machine Capital of the World,” had been producing washers since 1893.
Newton has since then reinvented itself as a wind turbine blade producer.
“I’ve seen the impact it’s had on the community that was in dire need of employment. … I’ve become an energy person because of that,” Allen said.
He said sustainable targets from major companies like John Deere or Facebook are driving an appetite for renewable generation.
“In years past, it needed to be affordable and reliable. Now it needs to affordable, reliable, sustainable and renewable. Because everyone is expecting that they’re getting green energy,” Allen said.
Iowa Rural Development Council Executive Director Bill Menner also pointed to the impact of wind on the agricultural sector. He said he interviewed several farmers this year whose farms would have been in the red because of rising tariffs but were kept in the black by the guaranteed income from their wind turbine land leases.
