ICAN - Harvesting Iowa's Homegrown Energy

Harvesting Iowa's Homegrown Energy

Sustainable Energy For Iowa: Frequently Asked Questions

Increasing Iowa's Renewable Energy Standard to 10% by 2010 and to 20% by 2020 can improve our economy, energy security, and environment.

Download a PDF format flyer version of this fact sheet suitable for reproduction and distribution.

This information was taken from the Iowa Department of Natural Resources Energy Bureau, The Iowa Policy Project, Union of Concerned Scientists and the Environmental Law and Policy Center.

What is a Renewable Energy Standard?
How will a renewable energy standard of 10% by 2010 decrease the cost of renewable energy and stabilize electricity and natural gas prices?
A renewable energy standard will increase our energy diversity, but isn’t renewable energy expensive?
Are tax incentives sufficient?
Why should the Iowa state government use renewable energy to meet 20% of its energy needs?
What are the economic benefits of renewable energy?
What are the energy security benefits of renewable energy?
What are the environmental benefits of renewable energy?
Wind energy is good for Iowa’s economy, but what happens to consumers when the wind doesn’t blow?
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What is a Renewable Energy Standard?

A renewable energy standard requires that utility companies provide a percentage of energy generated in the state of Iowa through the use of renewable energy sources like wind and solar power, biomass crops, and methane recovery. Our current standard, adopted by the state legislature in 1983 is approximately 2%. Thanks to that legislation, the wind power industry in Iowa was launched, and our state became one of the nation's leaders in the growing renewable energy industry.

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How will a renewable energy standard of 10% by 2010 decrease the cost of renewable energy and stabilize electricity and natural gas prices?

The benefits of renewable energy are clear. Unfortunately, renewable sources do not compete with fossil fuels on a level playing field. Tax breaks for fossil fuels and an existing infrastructure for fossil fuels (e.g.: coal fired plants and natural gas pipelines) are two major reasons that renewables are at a competitive disadvantage. Because of the lack of infrastructure, renewable energy is very capital-intensive. In order to attract investment there must be a market for renewable energy.

The Renewable Energy Standard (RES) is the best policy to ensure we meet resource diversity and environmental goals at the lowest cost. By stimulating a long-term market for renewable energy, the RES reduces the investment risk associated with building renewable facilities. Lower investment risk promotes cost-effective financing of new projects. Increasing the deployment of renewable technologies reduces manufacturing, installation, maintenance, and other costs over the long term. At the same time, competition among a variety of renewable businesses to meet the RES also helps drive renewable energy prices down.

Renewable energy sources can also help stabilize electricity prices by providing a hedge against volatile natural gas prices. This is important because natural gas has been the fuel of choice for most new power plants across the U.S. Recent studies show that renewable energy technologies provide a hedge value of between 0.6-2.6 cents per kilowatt-hour by avoiding the risks associated with gas price escalation, volatility, and delivery. Preliminary results of a recent study estimates that these risks would increase the cost of a new natural gas power plant by 14-60 percent. Renewable energy also serves as an insurance policy against future environmental regulations on carbon, mercury, and other air emissions.

Energy Fact: The Top of Iowa Wind Farm, managed by Zilkha Renewable Energy is the largest property taxpayer in Worth county Iowa, and farmers and other landowners will receive rental payments of over $200,000 per year in land owner fees.

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A renewable energy standard will increase our energy diversity, but isn’t renewable energy expensive?

Not anymore. Electricity from renewable energy in Iowa can be competitive with new power generation from any non-renewable energy source.

Renewable energy has made great strides in reducing costs, thanks to research and development and growth in domestic and global capacity. The cost for wind and solar electricity has come down by 80-90% over the past two decades.

In 2001, FPL Energy, the largest wind energy developer in Iowa, reported to the Governor's Task Force on Energy Policy that with the federal Production Tax credits, electricity produced from wind can be sold at a competitive price-- around 2.8 - 2.9 cents per kilowatt hour. It cost an average 3.5 cents to 5 cents per kilowatt hour for a new coal-fired plant and 3.5 to 4.5 cents per kilowatt hour for a new natural gas-fired plant.

A study by Iowa Utility Consultant Tom Wind found that a Renewable Energy Standard in Iowa would result in cost savings verses relying on conventional sources of power. This study, “Projected Impact of a Renewable Portfolio Standard on Iowa’s Electricity Prices” is available on the American Wind Energy Association website: www.awea.org/iowawind/publications.html.

Energy Fact: Approximately sixty cents of every dollar spent on energy leaves the state. That figure translates into more than $4 billion dollars leaving Iowa to benefit other economies in other states and nations in order to import 97.3% of our energy sources.

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Are tax incentives sufficient?

Iowa’s bountiful renewable energy resources are going to waste. Iowa’s history shows that implementing a Renewable Energy Standard (RES)- the amount of renewable energy utilities purchase- will benefit our economy, energy security and environment. The Iowa Legislature nees to increase the standard to 10% by 2010 in order to assure a cost-effective, secure energy future that provides economic development opportunities to Iowa.

Some would prefer to use tax incentives and state subsidies to incent new development of renewables. Tax incentives are a good idea, but they need to be combined with a stable market to sell the power in order to be effective. In fact, according to a Bush Administration September 2002 Federal Department of Energy (DOE) Study, "state tax incentives have often not been sufficient, alone, to spur substantial wind power development. Instead, other policy efforts such as purchase mandates, renewables portfolio standards, or system-benefits charges have also often been needed." See this report on the web at: http://eetd.lbl.gov/ea/ems/reports/51465.pdf.

Our existing regulated system requires that consumers pay for whatever resources the utilities choose. Utilities collect money from consumers and make energy resource decisions on behalf of their customers. The RES simply ensures that a reasonable percentage of the State’s resource mix reflect customer preference for renewables. A variety of conservative, moderate, and liberal lawmakers throughout the country, from Governor Gray Davis in California to Governor George Pataki in New York. Even President George W. Bush signed a renewable energy bill that included a standard in 1999 when he was Governor of Texas.

“We can make New York a national leader in renewable energy usage. I am directing the Public Service Commission to implement a Renewable Portfolio Standard, a program which will guarantee that within the next 10 years at least 25 percent of the electricity bought in New York will come from renewable energy resources.”
Gov. George Pataki (R), New York in his State of the State address in January 2003

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Why should the Iowa state government use renewable energy to meet 20% of its energy needs?

Iowa has more potential than most other states to produce renewable energy, primarily from wind power and biomass. Renewable energy development will benefit our economy, our environment, our national security and our health.

During his 2002 Re-election campaign, Governor Tom Vilsack said that we need to turn our farm fields into energy fields, that it makes more sense to grow our fuel than to buy it, and that Iowa has the opportunity to be energy independent. Our state government should lead by example and use renewable energy to meet 20% of its energy needs.

This is not a new idea. Republican Governor George Pataki of New York signed a similar executive order in 2001 that directed New York’s state agencies to purchase 10% of their power from renewable energy sources by 2005 and 20% by 2010. The city of Chicago has a policy that requires 20% of its electricity to come from renewable energy sources. Expanding Iowa’s renewable energy development has many benefits to Iowa.

By generating more energy from home-grown renewable sources, Iowa keeps its energy dollars in state, creating new high tech jobs, providing extra income to farmers and increasing our tax base.
Renewable energy reduces Iowa and the nation’s reliance on imported fuels. Renewable energy sources are not affected by the politics of other nations.
Increasing renewable energy production results in greater price stability. By having a more diverse energy resource base we reduce our exposure to fossil fuel price fluctuations.
Renewable energy means cleaner air and cleaner water for Iowa.

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What are the economic benefits of renewable energy?

Iowa imports 95% of its energy from out of state, spending more than six billion dollars annually. Yet, Iowa is among the states with the greatest potential to create energy from renewable sources. Harvesting energy from homegrown renewable sources keeps energy dollars in the state, creates jobs and increases our tax base. Iowa has the potential to produce many times its current electricity needs from renewable energy sources - we could transform Iowa from an energy importer, to an energy exporter.
Wind power provides an economic boost for Iowa's farmers. Farmers near Spirit Lake receive about $2,000 per wind turbine per year in lease payments, while each turbine unit takes only about 1/4 of an acre out of production. These payments provide diversity and stability to farm income.
The Chariton Valley Switchgrass Project successfully demonstrated a percentage of coal could be replaced with locally grown switchgrass. Ag-based biomass energy crops could provide new sources of much needed income to Iowa's farmers.
The production of ag-based transportation fuels is another emerging industry. Iowa can benefit from this new technology. Ethanol is a prime example of how Iowa benefits from ag-based transportation fuels. Ethanol, along with bio-diesel and chemical byproducts and solvents produced from ag-fuels promise huge opportunities for Iowa's economy.

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What are the energy security benefits of renewable energy?

Diversified energy production-particularly with renewable sources-is less vulnerable to physical attack and disruption than current centralized fossil fuel and nuclear production. In our current system, damage to a few key facilities could result in serious energy production and distribution problems in the US.
Increasing reliance on local, renewable energy reduces our vulnerability to monopolistic attempts at energy market manipulations, from forces both at home and abroad.
Harvesting Iowa's renewable energy capacity softens volatile market price fluctuations, by creating more energy sources, and more stability in energy production. The natural gas shortage during the winter of 2000- 2001 would not have been as painful if we utilized greater energy diversity.

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What are the environmental benefits of renewable energy?

Renewable energy means cleaner air and cleaner water. Iowa's existing wind turbines create zero emissions and displace fossil fuels that otherwise would have produced 1.3 billion pounds of greenhouse gases (carbon dioxide), equivalent to the emissions of 175,000 cars or 100,000 sport utility vehicles.
Increasing reliance on local, renewable energy reduces our vulnerability to monopolistic attempts at energy market manipulations, from forces both at home and abroad.
Co-firing switchgrass, corn stover, and other ag-based energy crops along with coal can reduce toxic emissions from existing power plants, while providing new opportunities for farmers to reduce chemical inputs, erosion and nitrogen contamination of wildlife habitat.

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Wind energy is good for Iowa’s economy, but what happens to consumers when the wind doesn’t blow?

Wind power varies both day-to-day and month-to-month. When a turbine isn’t spinning, the demand for electricity must be met by other generators – either wind generators at another location or generators powered by another fuel source.

On a day-to-day basis, utilities already scale their generation up and down to follow consumer demand. The fluctuations in wind power are small compared to the ups and downs of consumer demand. According to utility industry studies, the grid’s control systems that match supply to demand can easily handle the fluctuations in the wind for systems that produce up to 15% of their total energy from the wind.

On a month-to-month basis, the fluctuations in the wind are predictable. A wind developer measures the wind speed at a site before building turbines, and knows how much energy will be produced in each month of the year. The developer and the utility plan ahead for specific, reliable amounts of energy to be produced in each month.

“Since an Iowa wind farm produces electricity about 85% of the time, it is a reliable addition to any utility’s power supply portfolio."
Elizabeth Hutchinson, Director, Project Development for the Upper Midwest, Zilkha Renewable Energy (co-developers of the Top of Iowa wind farm).

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