Alliant Energy has received regulatory clearance to add 500 MW of wind energy in Iowa.
Under advance ratemaking principles approved by the Iowa Utilities Board, Interstate Power and Light, Alliant’s Iowa utility, will earn an 11% return on equity on the new wind projects.
- Combined with its existing portfolio of wind farms and wind power purchase agreements, Alliant says about one-third of its capacity in Iowa will be derived from wind power by 2020.
Declining equipment costs and phase down of the federal production tax credit (PTC) are fueling a flurry of wind power projects. Operating wind power capacity grew 9% last year, according to a report released Tuesday by the American Wind Energy Association.
The quickest pace of wind farm development in 2017 was in New Mexico, which added 570 MW last year, a 51% increase over the 1,112 MW installed in 2016, according to AWEA.
AWEA data show that wind power now generates more than 30% of the electricity in four states: Iowa, Kansas, Oklahoma and South Dakota — a threshold that Alliant is poised to match in Iowa by 2020.
Iowa has a renewable portfolio standard, but Alliant has already met its part of the state's 105 MW target. The utility has 299 MW of operating wind farms in Iowa and last year received approval to add 500 MW more. The 1,000 MW of of upcoming wind farms, several of which are already under construction, are scheduled to come online in 2020 at a total cost of $1.8 billion.
“This is something we are doing to advance clean energy and diversify our fuel mix,” Alliant spokesman Justin Foss told Utility Dive.
Alliant also plans to put the new wind projects in the rate base. It will earn an 11% return on equity as long as IPL meets the requirements for the PTC and stays within a construction cost cap of $1,780/kW.
That cap is slightly lower than the $1,830/kW cap on the 500 MW of IPL wind projects the Iowa Utilities Board approved last year.
IPL intends to include the costs of the new wind plants in its next rate case. It's too early to say what rates IPL will seek in that case, Foss said.
Usually when a generation source is put in the rate base, there are ongoing costs associated with fuel costs that outlast the cost of building the plant. But the wind farms are “unique,” Foss said. All else being equal, the increase in rates would be offset by lower fuel costs and the income stream from the PTC. “The costs going down are larger than the costs going up,” Foss said.