Environment and Utilities and Government and Economic Development and Manufacturing & Technology and Technology

A renewed call for renewable energy mandate: State bucks trend by not forcing utilities to diversify

October 20, 2008

Indiana has become the lone state in the upper Midwest not requiring that utilities supply a certain percentage of their electricity from renewable resources, such as wind turbines and landfill gas.

Last month, Michigan's legislature mandated that at least 10 percent of electricity supplied in that state be generated from renewable sources by 2015.

Indiana's conspicuous lack of a standard, along with growing environmental concerns over coal, could improve prospects for passing a standard during the 2009 session of the Indiana General Assembly.

A handful of renewable bills fizzled in the last session early this year.

"Now we truly are the laggard in the region-the upper Midwest. We have the least-favorable conditions for attracting investment" from the renewable industry, said Jesse Kharbanda, executive director of the Hoosier Environmental Council.

Kharbanda said renewable bills were met with "complete hostility" during the last session, but he believes there's been a significant change in attitudes toward renewable energy.

So does State Sen. Tim Lanane, DAnderson, whose defeated measure would have required 25 percent of a utility's supply come from renewable sources by 2025.

"I'm going to propose the same format again this year," Lanane said of the upcoming session. "We're just not in the ballpark with other states."

Indiana has already gotten a taste of renewable electric generation despite lacking a so-called renewable energy standard.

The most-touted have been projects in Benton County, where renewable-energy companies are erecting wind turbines that could crank out as much as 880 megawatts by year-end. That's enough to power more than 250,000 homes.

Duke Energy, Indianapolis Power & Light and other utilities have contracted to buy relatively small amounts of electricity from the wind farms. The vast majority of electricity they sell is made by burning coal.

Another major renewable project to land in Indiana-despite the state's lack of a renewable energy standard-was announced Oct. 8. Italian company Brevini said it is moving its U.S. headquarters to Muncie and opening its first North American gear design and manufacturing center there.

The facility to make gearboxes used in wind farms could bring more than 450 jobs to the area by 2011, state officials said.

The Hoosier Environmental Council says luring such companies to the state could produce billions of dollars in economic development. It estimates that wind companies alone could have a $6 billion economic impact even with only a 10-percent share of the state's generating capacity.

Wind represents only a sliver of the renewable sources that can be tapped, said Grant Smith, executive director of Indianapolis-based Citizens Action Coalition.

Solar power and energy-efficiency technologies also have a role to play in reducing demand for coal-fired generation. Smith argues that having renewable-energy and efficiency programs account for 50 percent of the state's power consumption is not beyond the realm of possibility.

"It's just a matter of political will," he said.

The Indiana Energy Association, which represents utilities in the state, said making a sizable pullback from coal in short order is an "enormous undertaking."

"We are heavily dependent on coal. We are moving into renewables. We are not moving fast enough to suit those who want an arbitrary standard," said Ed Simcox, president of the IEA.

Utilities, most-notably Duke Energy, have been pushing so-called clean-coal technology. To the consternation of environmental groups, Duke is spending at least $2.3 billion on such a plant in Edwardsport. The plant will continue to use high-sulfur Indiana coal but will convert it into a gas that produces less emission than coal when burned.

CAC said Duke is obscuring the fact that the plant's price tag could easily double if the federal government enacts rules to limit carbon dioxide emissions. Duke has proposed injecting carbon deep into underground rock formations.

But Simcox said those aggressively pushing for renewable-energy mandates fail to mention key cost disadvantages inherent in wind power. One of wind's biggest shortcomings is the need for backup systems, such as natural-gas-fired generators, to meet the load when the wind isn't blowing.

IEA cites energy studies indicating that, on average, it costs 3 to 3.5 cents per kilowatt hour for coal versus 7 to 8 cents for wind power.
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