.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;}
Before he began developing wind energy farms, Steve Dryden played a similar role in the oil and gas exploration business.

“I got into wind because every time I went out looking for oil, I’d have to go out further and further and drill deeper and deeper,” Dryden said. “I went into this side of it because it’s just vast.”

Dryden laid the groundwork for Iowa’s first large-scale wind farm in Cerro Gordo County a decade ago for his former employer, Florida-based FPL Energy LLC. He struck out on his own in July 2000 to launch Midwest Renewable Energy Corp., initiating development of four other major wind farms in Iowa. After selling those assets in 2006, he launched Renewable Power Markets Access (RPM Access). The West Des Moines-based company currently has nearly 1,000 megawatts (MW) of wind projects in the development pipeline.

The state’s wind energy landscape was significantly different 10 years ago, and it promises to change even more dramatically during the next decade, both tangibly and in terms of the legal and regulatory environment. Overall, wind energy projects will continue to grow larger, face more regulatory hurdles and consequently take longer to develop new generating capacity, say industry experts.

More than 1,100 turbines are now spinning in Iowa on 47 wind farms. Iowa currently ranks as the fourth-largest wind production state in the country, with 1,295 MW of electricity currently being produced. More than 25,000 wind turbines are now in operation nationwide.

Limited transmission capacity to carry the electricity generated from these turbines is currently one of the greatest barriers to new development throughout the industry. As that hurdle is overcome, more widespread development is expected to follow. Currently, wind farms are concentrated within just nine Iowa counties.

Big players

MidAmerican Energy and Alliant Energy are among the big industry players that are rapidly increasing their wind production capacity in Iowa. Last month, MidAmerican announced it will bring 73 additional turbines online by the end of the year, which will bring its total number of turbines to 800, producing more than 1,200 MW of electricity.

Alliant Energy currently purchases wind power from more than 300 large-scale turbines located on 15 wind farms in the Upper Midwest. Earlier this year, the Wisconsin-based company announced its purchase of the Whispering Willows Wind Farm site, with plans to bring 200 MW of the site’s 500 MW capacity online by 2010. It will be the first wind farm to be owned and operated by the utility.

Iowa’s regulatory hurdles have been minimal, but that’s bound to change as the industry matures, said attorney Terry Monson, a legal consultant to RPM Access.

“I kind of look at regulation following problems,” Monson said. “If you get people out there taking advantage of people, people will complain and legislators will pass laws to protect against abuse, and they should.”

As the optimal sites are developed and more marginal sites are considered, it’s also more likely that projects will begin to encroach into wildlife habitat or other areas that will spur legal conflicts, Dryden said. “We’ve done high-quality projects and we hope to continue with that as our niche.”

Impact on customer

Utility companies also will have to consider the potential rate impact on their customers, said Ryan Stensland, an Alliant Energy spokesman. He said Iowa’s regulatory environment has been favorable, and that the industry has reached the stage where it makes economic sense to own wind facilities in addition to purchasing that power.

“So far, the regulatory agencies and the governor have all been on the same page, that we need to expand our use of renewable resources in Iowa,” he said.

“I think at some point, as more and more of these large projects come online, one of the challenges we as a company will face will be balancing the need for the project and the impact on ratepayers, who are paying the cost recovery for those investments,” Stensland said. “I think there needs to be a balance, and our leadership is very well aware of that.”

The way in which Iowa landowners are compensated for their farmland used for wind turbines could also change. Currently, Iowa’s conservative farmers favor fixed payments with no surprises.

“When we started Cerro Gordo Wind Farm, the landowners wanted no part of (royalty payments),” Monson said. “If you go to Oklahoma or Kansas or into the oil patch where people have been receiving royalties for years and years, they don’t want to hear of anything else.”

More recently, however, a couple of farmers have asked about royalties, and Dryden said it’s possible that model could catch on in the state.

“You get guys who are 30 to 40 who are farming huge tracts of land and are very heavily invested in equipment, they want a quick return,” he said. “They’re the ones willing to take those kinds of risks. Is there a trend going that way? I’m not sure yet.”

“The only way you find out,” Monson added, “is by talking with hundreds and hundreds of people.”

Neil Hamilton, a professor at Drake University School of Law, said interest in the legal issues surrounding wind development is growing as quickly as the number of wind turbines. In April, he conducted an inaugural wind energy law class at Drake that he’ll teach again next spring.

“I think there’s an increasing recognition on the part of the legal community and landowners that there are some significant issues with this growth,” he said. Following a news story about the class, “I’ve had a flood of e-mails from people with questions about wind law, which makes me think there is a need for additional capacity in people who understand the legal issues, and the utility regulatory dimensions of it as well.”

Iowa’s policymakers should focus more attention on enabling more local ownership or investment opportunities in wind energy assets, Hamilton said.

“The large-scale, utility-owned operations aren’t that remunerative a possibility as some of the other models might be,” he said. “A typical wind easement that developers want landowners to sign is typically 50 years, and may have only a 2 percent escalation clause. When you consider that’s only 1 to 2 percent of the revenue of the turbine, that’s peanuts. Certainly those folks wouldn’t allow people to drill for oil on their property for 1 or 2 percent.”

Huge growth ahead?

This year, the U.S. wind energy industry expects to bring an additional 5,600 MW of generating power online, eclipsing the record 5,300 MW added in 2007, according to the American Wind Energy Association. Despite the rapid growth, wind energy production accounts for only 1 percent of all electrical generation in the country, enough to power about 4.5 million homes.

A U.S. Department of Energy report in May concluded that it’s possible for wind to produce 20 percent of America’s electricity by 2030. In Iowa, Gov. Chet Culver recently issued a challenge for the state to increase its wind energy production capacity to 2,015 MW by 2015.

The Federal Energy Regulatory Commission (FERC) is now considering a proposal by Midwest Independent Transmission System Operator (Midwest ISO) to create a “fast lane” for wind projects that are ready to be built on an interconnection queue. That queue has increased by 135 additional projects so far this year, with more than 400 Midwest energy projects – primarily wind farms – now awaiting regulatory approval.

Ten years ago, Dryden got each of his first two wind farms operating within 18 months. “Now, it’s getting longer and longer, maybe 24 to 36 months, sometimes five years to get a project developed because of the barriers to entry,” he said. “And there’s more competition that’s filling up the queue.”

Dryden worries the new queue rules will enable large operators to jump ahead of his projects.

“The companies coming in don’t want to be at the back of the line,” Dryden said. “So there’s a huge push right now to change the rules to bypass the queue. It also translates into having money.” Currently, getting on the queue requires a $20,000 deposit; with the new rules, those fees could total nearly $1 million, he said.

“I’m very eager to make comments when the proposed rules come out,” he said.