In 2017, Iowa utility Alliant Energy officially ended operations at its Dubuque Generation Station, originally a coal plant sited on the banks of the Mississippi River where the state meets its eastern neighbors Wisconsin and Illinois.
Alliant had already transitioned the Dubuque plant to burn natural gas. But during its decommissioning process, utility spokesperson Mike Wagner told the Associated Press that Alliant was “shifting away from smaller, older coal- and natural-gas-burning facilities” and toward wind, solar and new natural gas.
To replace the Dubuque plant, Alliant planned to rely on existing natural gas, wind and the build-out of two solar plants within city limits. The inclusion of those solar plants, although they topped just 6 megawatts total, was a significant step.
“At the time, combined, that would have been the biggest installation in Iowa,” said Raki Giannakouros, COO of local developer Blue Sky Solar, which is headquartered in Dubuque.
Alliant’s decision to supplant that power with wind, solar, and yes, natural gas indicates where Iowa stands in the energy transition. The state ranks second in the nation for installed wind capacity, which provided about 34 percent of its generation in 2018.
MidAmerican Energy Company, a Berkshire Hathaway subsidiary and one of the state’s investor-owned utilities, has already surpassed 50 percent renewable energy and is eyeing a path to 100 percent. So far, it’s relied entirely on wind.
Still, the majority of the state’s power still comes from coal, at 45 percent, with natural gas accounting for nearly 12 percent and nuclear making up just under 8 percent. Solar accounts for a meager amount, at less than half of 1 percent of state generation.
But solar's presence on the grid is growing, underscoring a wider trend of solar moving into wind-dominated states around the country. Now, Chicago-based wind, solar, storage and gas developer Invenergy is building three solar projects totaling 750 megawatts in the state. When online, the capacity will multiply Iowa’s current installations more than sevenfold. For its part, Alliant Energy plans to add 1 gigawatt of solar by the end of 2023.
Invenergy's Iowa solar projects
The trend of solar encroaching in wind's territory is most pronounced in Texas, where wind crowded the grid and now solar is flooding the interconnection queue. But it’s possible to measure the same movement, albeit more marginally, across the windy plains.
“We’re starting to see solar take root and gain traction in states where we’ve never really seen solar before,” said Colin Smith, a senior solar analyst at Wood Mackenzie Power & Renewables. “Places like Wyoming, the Dakotas, Kansas, Iowa and Nebraska are all places that we expect to see more and more solar over the next five to 10 years. But if you look back...at the previous decade, there was little to no solar at all” in those places.
That doesn’t mean that Iowa will quickly become a solar boomtown akin to Texas. But recent project announcements indicate solar is set to complement Iowa’s traditional wind portfolio in a notable way. The state officially affirmed the legality of third-party power-purchase agreements in July 2014, offering a clearer runway for projects.
Invenergy’s trio of solar projects will be the largest in the state by far. When siting projects, the developer told GTM it looks for locations with robust resources, transmission access, customer demand and willing landowners. In Iowa those factors have traditionally aligned on wind installations, though Invenergy has solar projects elsewhere in the Midwest.
Looking ahead, the developer said it recognizes an opportunity for solar in Iowa based on landowner interest and declining prices. The projects may include the addition of battery storage.
The Central Iowa Power Cooperative (Cipco), a cooperative energy provider with 13 member utilities, lays claim to the state’s only other notably large project, which is also currently under construction. Idaho-based solar developer Clenera signed a 25-year power-purchase agreement with Cipco for the 127.5-megawatt project, called Wapello Solar. Cipco owns six small solar projects and has power-purchase agreements with several large wind facilities, but the Clenera solar farm is its first large-scale solar site.
Both Invenergy and Clenera’s projects, still unique in Iowa, are helped along by the increasingly incontrovertible economic case for utility-scale solar. Solar projects above 150 megawatts are expected to undercut large-scale wind on price in Iowa by 2022, according to projections from WoodMac.
“We’ve reached an inflection point where solar is cost-competitive with wind on a cost of new entry basis, i.e., how much will it cost versus your future revenue stream if you build today,” said Smith.
Bill Cherrier, Cipco’s CEO, affirmed the economic argument and said solar provides dimension to a utility portfolio that’s become more reliant on renewables. While Iowa’s wind resource is strong, it’s also volatile. Solar can provide power at a different time of day that coincides more closely with peak demand.
“Any utility wants to have generation diversity,” said Cherrier. “Both solar and wind are necessary components of...a healthy renewable portfolio, especially in Iowa.”
For that co-op, member demand is also encouraging a shift toward more renewables. Cipco’s portfolio has been more than half carbon-free for some time, due to partial ownership of Iowa’s only nuclear plant, slated to close in 2020 (that plant is owned by NextEra, which is considering solar as a replacement for it).
Though Cherrier said the co-op has been adding gas reciprocating engines to its portfolio, that’s to support its investment in variable load from renewables. Cherrier doesn’t yet see the economic case for storage in Iowa, but he said it is something the company is watching.
"Sunshine tax"
Iowa doesn’t rank among the top states for residential solar, nor does it face the same resilience concerns as numerous markets that top those rankings, such as California and Florida. But in Q3 2019, the state still managed to eke out a record quarter of residential installations, according to WoodMac.
Giannakouros at Blue Sky Solar, which builds residential systems as well as small and large-scale commercial projects, said incentives including residential tax credits, property tax exemptions and net metering policy help the economics work for consumers.
Despite those policy fundamentals, the state has faced recent challenges for residential consumers. Last year, lawmakers proposed legislation that would add a charge to solar customers' bills, which utilities said would go to support grid infrastructure and maintenance. The legislation won support from investor-owned utilities and labor unions, but the solar industry labeled the charges a “sunshine tax” (similar fixed charges have been proposed in states such as Florida).
Ultimately, pushback prevented the law from moving forward. The future of net metering is still “the elephant in the room,” said Giannakouros, and the issue could crop up again this year. But he credited farmers, a key Iowa constituency, with turning the tide against the bill in 2019.
That dispute came after changes to the state’s net metering program in 2017; customers can now only net-meter up to 100 percent of their annual load (measured differently by each of the state’s two largest utilities). The new policies also disallow annual carryover of those credits. Consistent oversubscription of the state’s residential solar tax credit, equal to half the federal Investment Tax Credit and capped at $5,000 in value, has also likely somewhat dampened demand.
Solar and “the heart of Iowa”
One bright spot is the commercial space, where Blue Sky Solar now does the majority of its business. Both wind and solar are commonly sited on farmland in Iowa, which makes up nearly 90 percent of the state.
“Our core is farmers — that’s the heart of Iowa,” said Giannakouros, who added that there is a handful of incentives available to farmers and small businesses that install solar. Commercial entities can use accelerated depreciation, their state tax credit is capped at a higher $15,000, and they can cash in on loans and grants through the U.S. Department of Agriculture’s Rural Energy for America Program.
As farmers face increasing uncertainty in their traditional line of business, more agricultural land is being leased to solar developers. That’s an opportunity Invenergy seized — and one that Iowa is still grappling with. In a bid to protect prime farmland, the Iowa Farm Bureau, a nonprofit agriculture advocacy group, is calling this year for tighter restrictions on where wind and solar can be installed in the state, according to reporting from the Des Moines Register.
Advocates and utilities say even a significant build-out of solar would use up only a small chunk of Iowa’s land, especially in relation to the dominant wind sector. Increasing Iowa’s share of electricity derived from solar to 10 percent would require less than 1 percent of the state’s land, according to the Iowa Environmental Council.
Regardless, Cherrier at Cipco expects the trend toward renewables to continue. The co-op's current mix contains just 0.3 percent solar.
“Renewables have really become the most effective and economic additions to our portfolio,” Cherrier told GTM. “We continue to see — and believe we will see for the long term — growth in renewables as the biggest additions.”
