Environmentally friendly investments bring economic opportunities
Iowa is on the road to a greener future.
Iowa continues to build on an impressive renewable energy portfolio that leads the nation in ethanol and biofuel production, is blowing through the competition in wind energy and is beginning to harness the sun with more solar panels brightening the state’s urban and rural landscapes.
Make no mistake — Iowa remains a net importer of energy, consuming more than double the amount of energy that it produces.
Overall, the petroleum, coal and natural gas that Iowa industries, businesses and individuals consume must be imported, and the state has an energy production profile that is less diverse that the nation as a whole.
However, the Iowa Renewable Fuels Association recently announced the state’s 43 ethanol plants had produced a record 4.1 billion gallons of corn-based ethanol in 2016 while production of biodiesel fuel — mostly derived from soybeans — at Iowa’s nine plants increased 23 percent, to 297 million gallons.
Both totals led the nation.
Iowa also became the first state to generate more than 36 percent of its annual electricity from wind resources, and that market share could top 40 percent by 2020, thanks to nearly $12 billion worth of investments in wind farms led by the state’s two largest investor-owned utilities.
“I think we’ll see a lot of wind and solar. We have the potential to meet our electric needs 150 times over with both.”
– Nathaniel Baer
Iowa Environmental Council
Those inroads are important because experts say for the past five years, energy has been one of the largest expenditures in Iowa, with annual spending averaging $15.5 billion — amounting to almost $6,000 per person.
Overall, Iowa’s industrial sector — including agriculture — consumes roughly half the energy used in the state.
At the same time, the rise of clean-energy technologies have enabled Iowa to maintain some of the lowest energy costs in the nation.
That, in turn, has helped attract major tech companies such as Facebook, Google and Microsoft to Iowa and given the state a significant advantage when competing for new and expanding economic developments.
“Iowa is viewed as very advanced in the adoption of renewable energy technologies that relate to electricity, ethanol and soy diesel,” said Bill Fehrman, chief executive officer for MidAmerican Energy Co., whose company is on target for 85 percent of its retail customers’ energy from wind, with a future goal of 100 percent.
“The stability of the regulatory, legislative and executive branches in Iowa allows energy providers and customers to make long-term decisions while minimizing the risks.”
Tina Hoffman, spokeswoman for Iowa Economic Development Authority, said other U.S. states rival Iowa at the forefront of low-cost energy.
But she noted the mix of renewables in Iowa’s portfolio is “unequaled” in the country.
“We’re seen as a road map,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association. “When I go to some of the national meetings and they say, hey, if you want your state to be on the cutting edge of renewable fuels, look at the policies Iowans adopted.”
Iowa made an early commitment to alternative energy by becoming the first state to take on a renewable energy portfolio standard. The state also enacted advanced ratemaking statutes that included lifting the prohibition of ownership of renewable energy facilities by investor-owned utilities. It took a leadership position in energy efficiency efforts, beginning in the 1990s, that have spurred savings and — according to state data — returned $2 to $3 in benefits for every dollar invested in recent years.
“The most efficient energy is the energy you don’t have to produce,” said Kevin Gaul, a Pella Corp. executive who was one of 48 Iowans involved in a process spanning more than a year that produced the first-ever Iowa Energy Plan. The 100-page report, released in December, sets state priorities and provides strategic guidance for Iowa’s energy future.
“If you can make buildings more efficient, that’s energy we don’t have to generate, which means it’s energy you don’t have to transport or have the buildup in infrastructure to distribute,” Gaul said.
“We look at the most cost-effective option tied to energy is energy efficiency.”
Brian Selinger was the energy team leader in the Iowa Economic Development Authority’s energy office who oversaw the collaboration of energy experts, Iowa environmentalists and government officials in producing the report — iowaenergyplan.org. He said the dozens of objectives and strategies in the plan are guided by four categories:
— Economic development
— Energy efficiency and conservation
— Energy resources
— Transportation and infrastructure.
The forward-looking report is divided among seven key strategies:
— Expanding energy workforce development
— Research and development
— Rural and underserved areas
— Natural gas
— Alternative fuel vehicles
— Modernizing the state’s electrical grid.
Lt. Gov. Kim Reynolds, overall head of the energy project, said the plan does not contain suggestions for specific legislation or programs because the leaders wanted to provide a framework for future leaders without creating a mandate.
“We also wanted to create a plan that articulated a clear vision for the future, but a plan that also provided recommendations that were flexible and broad enough to be implemented by experts and stakeholders in each space,” Reynolds said. “We highlighted those (seven strategies) because we think that that’s something that can be implemented relatively quickly and can provide some significant economic opportunities.”
While the task force members studying Iowa energy future focused on renewables gaining market share, they also acknowledged the need for a diverse energy portfolio that includes natural gas and coal. In 2015, Iowa relied primarily on coal-fired plants to generate slightly more than half its electricity, with another 9 percent generated by Iowa’s only nuclear plant near Palo.
Selinger of the Iowa Economic Development Authority said representatives of rural communities and rural utilities joined the supportive embrace of renewable technologies. But some caution that a diverse energy portfolio needs to be maintained as a transition, given that many smaller utilities have long-standing agreements for traditional resources, such as coal, to power their operations.
“So there are costs to too quickly switch gears and move that into the renewable space,” Selinger said.
“That’s something that we took to heart. We can build upon our wind and other renewable strengths, but in doing so, we had to listen to our rural partners and make sure that we’re not moving folks too quickly or too aggressively because that would have a cost uptick — and that would be detrimental to our rural citizens and businesses and leave some gaps.”
No cost estimates are associated with energy modernization in Iowa, he noted.
At the same time, Fehrman said MidAmerican gradually has been reducing its reliance on coal, noting coal accounted for 70 percent of his company’s electric generation 12 years ago and now is 31 percent compared to 47 percent of the generation capacity from wind.
“We will not be doing away with our coal generation, but we won’t be building any more fossil-fuel generation,” he said. “Renewable energy is our future.”
Another theme in the discussions was the need in rural and underserved areas that do not have access to energy experts that could help them identify efficiency efforts and saving opportunities for their homes and businesses.
Also, there is “a very real concern” about cyber security for Iowa’s energy infrastructure, especially smaller utilities that may not have technical expertise, knowledge or funds to make sure they are secure to these types of attacks coming from around the globe.
Finally, as it relates to rural communities, Selinger said they have a concern that they do not have adequate access to natural gas for economic development opportunities. That prompts a potential need to examine or alleviate burdens or barriers to issues such as public-private cost shares to build out the infrastructure needed to offer low-cost, reliable energy for their manufacturers and economic development efforts.
“I think it’s another unique thing in Iowa. We have a lot of agreement with utilities and environmental groups that clean energy works and it makes sense for customers and for the environment and for the economy,” said Nathaniel Baer, a member of the Iowa Environmental Council who was part of the task force that formulated Iowa’s energy plan.
“I think we’ll see a lot of wind and solar. We have the potential to meet our electric needs 150 times over with both.”
While not too many years ago, talk of energy from the wind and the sun and fuel from corn and soybeans was met with rolled eyes and skepticism, task force participants agreed the newfound profitability of these emerging technologies — aided by helpful incentives and other benefits — have made believers out of just about everyone in Iowa.
“They eventually realized that we were right,” Baer said with a laugh.
Residents of rural Iowa already are taking aggressive steps to embrace green technologies, with growth in solar energy driven by decreasing prices of solar panels, supportive government and utility incentives, and the development of community solar projects and utility-scale solar farms.
Tim Graber, a Henry County farmer and president of the Waco school board, said his district has saved considerable energy costs, thanks to solar panels in use at schools in Wayland and Crawfordsville. The district used a financing arrangement in which investors took advantage of tax incentives and lease the units to the district.
“The way I look at it now, the school’s saving basically one teacher salary a year” by shaving up to $40,000 of its yearly utility costs, Graber said. “It’s really a good deal for the school and provides an educational tool” by providing a hands-on project that allows students to learn how the sun works and the mathematical and scientific elements of the solar panels.
Graber and other southeast Iowa farmers also have adopted solar technology to their farming operations. Graber has installed solar panels on his turkey barns that allow him to use “net metering” with Alliant Energy — he banks surplus energy credits during his low-use months and recoups the power during his peak-use periods.
“It provides roughly about 60 percent of my total utility cost, so it works really good,” he said. “The paybacks were anywhere from one to five years.”
Tim Dwight, a former University of Iowa and National Football League player, said the technologies of scale are finally becoming profitable for solar energy, and he expects the sun will join the wind as Iowa’s next big power play.
“Our potential is incredible. Our market is robust,” said Dwight, who now serves as president of the Iowa Solar Energy Trade Association. “We’re going to start exporting a lot of our power, I think, in this state, which is going to be awesome.
“I went to Kuwait and Iraq, and they export the oil there and they make billions of dollars, so we’re trying to create that same model here, just through electricity.”
While Iowa’s ethanol plant construction boom has slowed, Shaw, of the Iowa Renewable Fuels Association, noted that new efficiencies and advancements have resulted in a “capacity creep” that has boosted production on average by about 2 percent a year. That amounts to increased production of 80 million to 100 million gallons of ethanol a year “quietly behind the scenes,” which equates to a new plant that would be viewed as a major expansion.
Shaw said the next challenge for the ethanol industry is to get wide acceptance and placement of blender pumps that offer 15 percent, 30 percent or 85 percent ethanol blends. He also pushed for advances in smaller, high-compression internal combustion engines that will rely on ethanol as the “cheapest, cleanest, highest-performing, highest octane component out there in the array of various petroleum products.”
Iowa officials also have produced a report — available at http://smgs.us/3kc7 — on electric vehicles that are becoming increasingly popular. The state recently was designated as part of a critical corridor where charging-station infrastructure could be developed to serve electric vehicles, Selinger said.
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