Wind-farm development slows in Indiana due in part to cheap natural gas

Posted by Laura Arnold  /   October 21, 2015  /   Posted in Indiana Utility Regulatory Commission (IURC), Renewable Electricity Standard (RES), solar, wind  /   No Comments

Wind-farm development slows in Indiana due in part to cheap natgas

Louisville, Kentucky (Platts)--20 Oct 2015 434 pm EDT/2034 GMT

Wind energy development has slowed in Indiana, in keeping with the national trend, with only two wind farms totaling 400 MW commissioned in the past four years, according to Indiana's State Utility Forecasting Group.
The latest project, the 200 MW Headwaters wind farm in Randolph County operated by EDP Renewables North America, was completed last December. According to a review by SUFG, located at Purdue University and the official energy adviser to the Indiana Utility Regulatory Commission, several factors have contributed to the decline in wind development, including decreased availability of capital thanks to the 2008 global financial crisis and the reduced competitiveness of wind in the face of abundant, low-cost natural gas.

Much of that new gas supply is coming from the Utica and Marcellus shale.

As wind has faltered in Indiana, however, solar energy has made inroads, although the state's 120 MW of installed solar capacity still is dwarfed by its more than 1,100 MW of installed wind capacity.

Solar is "certainly growing faster, though it has a ways to go to catch up," SUFG director Douglas Gotham observed in a Tuesday interview.

Until a decade ago, hydroelectric power was the leading renewable energy resource in the Hoosier state, but it generated only slightly more than 70 MW.

Indiana's first commercial wind farm began operating in 2008.

Since then, "we've developed a fair amount of renewables" in a state without a mandatory renewable portfolio standard, he noted.

Unlike neighboring states such as Michigan, which is slowly moving away from coal-fired generation, Indiana still gets about 80% of its power from coal.

And, also unlike Michigan, Indiana has an active coal mining industry that provides jobs, he added.

Indiana is among the top 10 coal producers in the US, regularly turning out more than 35 million st/year. There are no coal mines in Michigan and other regional states such as Minnesota and Iowa, where renewables are growing faster.

Gotham said Indiana has the ability to get more power from renewables. "Certainly," he said, "you could mandate more and you would get more. But the question is, what are the costs and are the policymakers willing to impose those extra costs in order to get the higher levels of renewables?"

So far, the answer appears to be no. Republican Governor Mike Pence is a strong supporter of coal and a vehement opponent of the Environmental Protection Agency's new Clean Power Plan aimed at cutting carbon dioxide emissions mainly from coal plants.

If wind energy is to resume growing again in Indiana, the CPP may be the reason, Gotham said. "Depending on how the state complies and what they are doing, you may see some growth in that area."

--Bob Matyi, newsdesk@platts.com
--Edited by Lisa Miller, lisa.miller@platts.com

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