Wind energy industry picks up speed in Iowa

Wind energy is booming in Iowa, and backers say it's only the beginning.

In the past year, a new wind turbine manufacturing industry has begun to blossom in the state, creating or promising hundreds of jobs and millions of dollars of investment in factories and equipment.

The state's biggest utilities have announced plans to dramatically increase the amount of electricity generated by wind turbines.

"We have had arguably the best year of any state in the nation in 2007 when it comes to wind energy," Gov. Chet Culver said.

But the jobs could blow away, economists warn, just as other manufacturing jobs have disappeared because of competition and technological change. Other states want to attract manufacturers, too. Wind power depends on subsidies, and changes in government policies could dampen the enthusiasm for wind.

For now, Iowa's manufacturing boom is driven by domestic and European companies rushing to satisfy demand for wind generation as electric utilities look for more environmentally friendly ways to meet growing demand for power.

Wind power has advantages such as producing no air pollution and using an energy source that costs nothing and is renewable, said Louise Guey-Lee of the U.S. Energy Information Administration. Wind turbines also take less time to construct, compared with traditional power plants.

Power is generated only when the wind is blowing, however, and upfront capital costs are high, Guey-Lee said. Interference with birds and radar are potential problems, she added.

Wind provides only about 1 percent of the nation's electricity now, but the wind energy industry "sees 20 percent wind as an achievable vision over the next 20 to 30 years," said Steve Lockard, chief executive of TPI Composites Inc. of Warren, R.I. His company plans to open a turbine blade factory in Newton next year.

Iowa ranks third among the states in wind power electrical generating capacity in operation, according to the American Wind Energy Association. The state's 992 megawatts of capacity generated by about 960 turbines is enough electricity for 248,000 homes.

Current and promised jobs in the industry in Iowa total 1,500. Investment made or promised in plants and equipment totals about $160 million.

A September report by the Sierra Club and the United Steelworkers estimates that nearly 5,200 manufacturing jobs, including 960 already promised, could be created in Iowa over the next decade.

Culver estimates the state could gain tens of thousands of jobs if it succeeds in attracting more manufacturers of major wind turbine components, as well as makers of smaller parts that go into towers, turbines and blades.

The governor has made renewable and sustainable energy a priority of his administration.

U.S. Sen. Charles Grassley, R-Ia., and the federal government have helped to give wind energy a boost, too.

Electricity producers can receive a federal tax credit for generating power with wind. The credit will expire at the end of 2008 unless Congress renews it. Grassley authored the original legislation in 1992 and is working for renewal, a spokeswoman said.

When the credit ran out for eight months in 2004, it had a devastating impact, said Randy Swisher, executive director of the American Wind Energy Association.

"General Electric had to lay off hundreds of employees, and their inventory of wind turbines went unsold while waiting for the credit to be reinstated," Swisher said.

The production tax credit - about 2 cents per kilowatt hour - makes wind generation competitive with use of coal or natural gas in traditional power plants, he said.

A conventional coal plant being built today could be expected to produce electricity for 5.4 cents per kilowatt hour in 2006 dollars when it goes into service, the U.S. Energy Information Administration says. The cost at a wind farm would be 7.6 cents per kilowatt hour, without the tax credit, the agency estimates.

"If the credit for wind were not renewed, it would no longer be as competitive and there would be a drop in market demand," Swisher said.

The wind energy association also argues that other energy sources are subsidized in one form or another. The cost of oil, for example, doesn't reflect military expenditures required to make sure that the shipping lanes to the Persian Gulf remain open, the association says.

John Solow, a University of Iowa economics professor, is cautiously optimistic about the future for wind generation and turbine manufacturing.

Future policy decisions and technological innovations could change that, he said. A breakthrough in clean-burning coal, for example, could reduce interest in wind energy and biofuels, he said.

David Swenson, an economist at Iowa State University, said Iowa is capturing a piece of the manufacturing business that involves making parts that are too large and heavy to haul long distances. The high-tech portions of the turbines, the inner workings of the machines, are made elsewhere, he said.

Andrew Kusiak, a professor of mechanical and industrial engineering at the University of Iowa, said long-term prospects for turbine manufacturing look good. Replacement machines and parts will be needed as turbines age, he said, and breakthroughs in efficiency could lead to demand for newer machines.

Swisher, an Iowa native, said Iowa is competing with other states that have economic development strategies that include support for the wind power industry.

Michigan Gov. Jennifer Granholm, for example, has been promoting turbine manufacturing and other alternative energy industries as a way to create jobs to replace those lost in the auto industry.

Swisher said at least a dozen other states are working hard to lure wind industry jobs, but Iowa appears to be out front because it got an early start.

Culver said Iowa has competed with other states for each of the projects that eventually landed in the state. He said that only one other state, Texas, has plants that manufacture all three elements of a wind turbine - the tower, the blade and the generator.

Iowa has an edge because of its educated work force, manufacturing experience, cost advantages and central location, Culver said. The state's transportation system includes rail lines, interstate highways and barges on the Mississippi River, he added.

Culver has been a personal recruiter for wind manufacturers. Brad Anderson, a spokesman for the governor, said Culver has made trips in the United States and overseas to encourage wind industry businesses to locate in Iowa.

A study by consultants for the state said Iowa could benefit from an anticipated $22.4 billion in wind generation projects within 600 miles of the state over the next seven years.

Reporter William Ryberg can be reached at (515) 284-8104 or bryberg@dmreg.com