The romantic vision of weaning the Midwest, and ideally the U.S., off the fossil fuel-powered electricity grid is appealing to many. Yet, perhaps equally as many believe it to be an elusive or perhaps unobtainable goal. I am not one of those skeptics - I am a believer.
A radically reduced carbon-dependent, cleaner energy vision becomes better understood, particularly as it pertains to the potential contribution from wind power, when one strips the situation down to the most crude, fundamental, yet most powerful drivers for large scale action - supply and demand.
On the demand side of the wind power market, the rest of the country needs to catch up to where the Midwest is in encouraging both utility scale wind and small community wind. At a minimum, states need Renewables Portfolio Standards (RPS) in place from their state governments to create the aggregate consumer market "demand" for clean energy. RPS is a regulation that generally places an obligation on electricity supply companies to purchase or generate a specified percentage of electricity from "renewable" sources such as wind, solar, biomass, geothermal, hydroelectric, etc. Only 27 states have such standards; however, all but Indiana in the classically defined "Midwest states" have some form of RPS in place. There are other important drivers in building demand (renewable technologies getting down the cost curve and competing with coal on cost is foremost), but RPS seems to have had the most direct impact thus far.
On the supply side, we obviously need more turbines, solar panels and clean energy developments in place. There are many drivers to boost supply, but wind energy is rather responsive to innovative tax credits and incentive programs for investors, developers and financial institutions. "The Minnesota Flip" is an example of a policy that has realized success in boosting wind energy supply, as demonstrated by Minnesota's national leadership position in community wind megawatt capacity. However, government-driven regulatory policy alone is not a sustainable clean energy panacea...
For the clean energy industry, in particular the wind industry, to really take off in the Midwest, it will require a regional wind supply chain ecosystem to both continually improve wind energy generation, through local companies driving technological innovation, and to develop local operational expertise that can bring down operational and especially maintenance costs of wind energy. Most wind turbines are physically enormous, expensive to purchase and very costly to install and maintain - just imagine the expense of getting a massive crane to a remote area to replace a broken turbine blade, coupled with the expense of moving around large replacement parts.
I am pleased to report that the development of this Midwest regional ecosystem is under way and is picking up steam. Yes, the Midwest will continue to pick up its share of contract manufacturing opportunities for major wind turbine OEMs, but the stories I find most encouraging and critical to accelerate and sustain the Midwest region's leadership in wind energy are those coming from the regionally-based wind-related technology innovators.
I'm not just blowing wind up your backside. Within the past month there have been announcements from Michigan-based wind sector technology companies from diverse sub-sectors of the wind power supply chain. (Disclosure: my venture capital firm neither invested in nor is actively considering an investment in any of the following three companies):
We are witnesses to this industry evolving right here in our Midwest backyard. It won't take place overnight, but innovative companies like Danotek, Astraeus and Accio, and many others are moving us closer to realizing the broader vision of substantially-reduced fossil fuel dependence, giving me reason to stand up to clean energy skeptics and confidently state, "I believe..."