Alliant's Iowa utility will rely on wind supplies once nuclear facility is closed

An Alliant Energy utility subsidiary will rely on repowered wind farms and build additional wind generation in Iowa to effectively replace power it will lose once the Duane Arnold nuclear facility, located near Cedar Rapids, Iowa, is shut in late 2020.

A spokesman for the Iowa utility subsidiary said Monday that Interstate Power and Light currently meets 25% of its customer demand in the state through an off-take agreement with NextEra Energy Resources, which owns the majority interest in the 615 MW nuclear facility and controls 430 net MW from the 44-year old plant.

NextEra Energy Resources also owns nine wind farms with multiple phases in wind-farm-heavy Iowa, with combined capacity of more than 1,000 MW. As part of its deal with IPL, NextEra Energy Resources will supply power from four repowered Iowa wind farms that will have about 340 MW of capacity once the $250 million repowerings are complete.

That no new off-take agreement for power from the nuclear facility has materialized means Duane Arnold's closure will not likely be reversed.

That there are no other contracts "speaks to the economic conditions in the Midwest Independent System Operator market," said one power sector source Tuesday, who asked to remain anonymous.

IPL EXPANDS WIND GENERATION IN IOWA

In its recent second-quarter earnings report, Alliant discussed its plans to "transition" to cleaner energy resources by 2024 by reducing its dependency on coal-fired capacity to 23% in 2024 from 31% at the end of 2018, and boost its use of renewables, mainly wind, to 33% in 2024 from 20% at the end of 2018.

It said it expects to see its natural gas fired capacity, currently at 42% of its fuel mix, remain roughly the same in 2024.

IPL owns two wind farms with combined capacity of 299 MW that are located in Iowa, and recently brought online two others -- Upland Prairie and English Farms -- with combined capacity of 470 MW.

The utility is expected to bring online four additional wind farms in Iowa by the end of next year, which will bring its wind generation capacity in the state to 1,449 MW.

Alliant Energy is a full or partial owner of nine coal power plants in Iowa, adding up to 5,003 MW of total capacity.

Iowa's wind industry represents more than one-third of the state's energy generation -- more than 7,300 MW.

Although Iowa is a leader in energy generation from wind, coal generation remains the largest source of energy generation in Iowa at roughly 45% of total net electricity generation in 2018, according to data released the Energy Information Administration released in April.

Chairman, President and CEO John Larsen said in an August 6 earnings release that Alliant's utilities "had lower earnings year over year driven by lower electric and gas sales due to milder temperatures in the second quarter, and timing of income tax expense."

But he said that increasing the utilities' wind generation portfolio and operating efficient gas units at higher capacity rates will "result in lower fuel costs for our customers."

IOWA HAS 8,957 MW OF INSTALLED WIND: AWEA

According to American Wind Energy Association data, Iowa had 8,957 MW of installed wind capacity as of the end of Q2. Only Texas, with 25,629 MW of wind, has more.

But Texas has been the focus of wind investments from dozens of developers, some of whom are homegrown, but many are national developers such as Duke Energy's Commercial Development group, and international wind developers, such as Germany's E.ON or Spain's Iberdrola.

Iowa, on the other hand, sees its wind generation dominated by Des Moines-based regulated utility MidAmerican Energy and, to a lesser extent, NextEra Energy Resources and, more recently, Alliant's IPL.

MidAmerican, a subsidiary of Berkshire Hathaway Energy, has 27 wind farms across Iowa with generation capacity of 4,400 MW. MidAmerican's newest projects will add 591 MW to that total by the end of this year.

The Iowa Utilities Board verified June 21 that MidAmerican Energy served 51.4 % of its retail load using renewable energy.

MidAmerican filed with IUB retirement information from Midwest Renewable Energy Tracking System, or M-RETS, and PJM Generation Attribute Tracking System, or PJM-GATS.

MidAmerican stated at the time that it recorded all of its renewable generation in 2018 in either M-RETS or PJM-GATS.

"MidAmerican asserts it owns the vast majority of its generation, with a small amount subject to power purchase agreements. All power purchase agreements entered into by MidAmerican include the renewable attributes of the generation."

-- Jeffrey Ryser, jeffrey.ryser@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com