State's Utilities Are Turning To
A Technology Once Dismissed

reprinted with the permission of the Milwaukee Journal-Sentinel



By Lee Bergquist
of the Journal Sentinel staff
July 25, 1999

North of Milwaukee off Highway 41 atop a pair of gusty ridges stand the perils and promise of wind power.

In northern Washington County, a trio of towers resembling oversized farm windmills rise from just off the highway.  Of the three, only one is working and the blades on top of one of the towers are badly crumpled.

It's another story 15 miles up the road, where two gleaming-white wind turbines churn in  rhythmic cadence in the soft summer breezes.  Owned by Wisconsin Electric Power Co., the turbines rise from 200-foot-high towers and dwarf everything else amid the undulating farm fields of southern Fond du Lac County.

Wisconsin Electric's generators are part of a new crop of wind farms -- with more coming -- that are literally raising the profile of renewable energy in Wisconsin. Investor-owned utilities are beginning to embrace a technology -- long the domain of small-scale users -- they once pooh-poohed because of high start-up costs and the undependable nature of wind.

"The renewable energy picture has never looked as bright as it does now," said Michael Vickerman, executive director of RENEW Wisconsin, a Madison-based group devoted to promoting renewable power.

Harnessing wind as a new power source in Wisconsin is being driven by an array of factors that includes government policies and an acknowledgment from utilities that green power is a way to market something as generic as electricity in an industry moving toward deregulation.

"As a consumer, I want to vote with my dollars," said Madison resident Mark McFadden, who runs an Internet business called 21st Century Texts.  "I want to use my energy dollars that support a utility that is willing to invest in renewables."

McFadden is participating in Madison Gas & Electric Co.'s new renewable power program, which sells residential customers blocks of green power in $5-per-month blocks.  McFadden bought five $5 blocks so that $25 of his monthly bill will pay for renewable resources -- in this case from a wind farm owned by MG&E.  The utility has signed up 5,000 customers in four months.

With more than 11,000 customers, Wisconsin Electric's "Energy for Tomorrow" has the biggest green power program in the country, using renewable sources that include power from its new wind farm that started generating electricity this spring.

Wisconsin utilities have built 35 wind turbines since April 1998.  Thirty-one of the turbines are along a blustery outcropping of hills in northern Kewaunee County that benefit from winds blowing from the west across Green Bay.

MG&E says its 17 wind turbines near Dyckesville represent the largest wind farm east of the Mississippi River -- enough to power more than 2,200 homes.

But Wisconsin Electric of Milwaukee and Alliant Energy Corp. of Madison have even bigger plans: The companies are in final contract negotiations with Florida-based FPL Energy Group Inc. to build and operate a 22.5- to 30-megawatt wind farm in eastern Wisconsin.  While plans are still being put together, the FPL wind farm would easily double Wisconsin's electric output from wind and bring dozens of turbines to a community in eastern Wisconsin.

With a big green power program, Wisconsin Electric wants to add more wind to a program that now taps a sizable chunk of its renewable resources from outside of the state.

"Our goal is to get the best possible renewable energy value for our customers -- in both price and product mix," said Chris Schoenherr, who oversees Wisconsin Electric's renewable energy strategy.

Wisconsin now ranks seventh in the country in the amount of electricity it churns out from wind power.

The state's growing interest in wind power mirrors a national trend in renewable resources.  Last month, the U.S. Energy Department announced an initiative to power 5% of the nation's electric needs with wind energy by 2020 and install 5,000 megawatts of new wind machines within five years -- enough to power 1 million homes.

For the year ending June 30, the U.S. wind industry installed more than $1 billion worth of new generating equipment, according to the American Wind Energy Association of Washington, D.C.  That's more than double the previous record year of 1985.

The past year's building boom was driven by the expiration of a federal wind production tax credit June 30 that helps utilities price wind power more economically.  The credit is 1.5 cents per kilowatt hour, adjusted for inflation, and is in effect for the first 10 years of a new plant.

But there are other factors:

Stricter limits on air pollution, driven by tougher federal clean air standards and the 1998 Kyoto Protocol, aimed at reduced emissions worldwide.

In Wisconsin, legislation approved last summer forced utilities to generate 50 megawatts from renewable sources by the end of next year.

"And because industry restructuring has been talked about and hotly debate for years in this state, utilities have had to think about ways to keep their customers and position themselves to attract new ones," said RENEW's Vickerman.  "Wind power is highly visible -- in a way, it's like free advertising."

In California, which has opened its electricity markets to competition, 90% of customers who have switched providers are receiving some kind of renewable power, according to the Center for Resource Solutions, a San Francisco organization that is tracking green power programs.

Another big factor in wind's favor is falling prices.

Federal tax credits and better technology are driving down the price of wind power, which cost as much as 25 cents per kilowatt hour in the early 1980s when oil price shocks started the first generation of large-scale wind farms -- mostly in California.

Exact prices vary widely, mostly because of the variability of the wind from location to location.  But on average, wind farms are being installed in the Upper Midwest with contracts in which utilities pay about 4.5 cents per kilowatt hour, factoring in the production tax credit, said Wisconsin Electric's Schoenherr.

By comparison, the cost of generating electricity from coal is 4.8 cents to 5.5 cents, natural gas is 3.9 cents to 4.4 cents and nuclear power is 11.1 cents to 14.5 cents, according to the report by the California Energy Commission.

The new interest in wind power has prompted traditional energy companies to get into the business.  Two of the biggest: Texas-based Enron Corp. and FPL Group of Juno Beach, Fla., which together have built wind turbines that are generating hundreds of megawatts of power.

"We think it's a niche market; it needs some specialization and some kind of fuels are going to become obsolete," said Stephen Dryden, director of wind projects for the Midwest at FPL Energy, a unit of FPL Group.

Despite its promise, wind represents a minuscule amount of the total power produced in Wisconsin.  The current 23 megawatts of capacity can power only about 4,600 homes.  Variable winds mean that the turbines are able to generate electricity about 25% of the time in Wisconsin -- turbines in prairie states such as Iowa and the Dakotas are more efficient, experts say.

Also, coal, oil and natural gas are not going away.

The Cato Institute, a conservative think tank, concluded in a study in April that traditional fossil fuels are becoming more -- not less -- abundant as technologies to extract them improve, world markets liberalize and investment capital expands.

Although the cost of wind is falling, Cato researchers said the price of fossil fuels, especially natural gas, will continue to drop.

But FPL's Dryden disagrees.

"Right now, we think that the economics are right," he said.  "We think that we can get wind down to the 2.5 cents to 3 cents area if the wind profile is right -- like in the Dakotas."

In states such as Wisconsin, the government tax credit and green power programs, where customers pay more for renewable power, makes the technology bankable as well, he said.

"It's moving in the right direction," he said.

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