MidAmerican Makes Big Bet on Wind Power in Iowa

Iowa, which already gets more of its power from wind than any other U.S. state, will become more reliant on the electricity source under a $3.6 billion plan announced Thursday by a utility owned by Warren Buffett's Berkshire Hathaway Inc.

MidAmerican Energy Co. said Thursday that it is planning to build up to 2,000 additional megawatts of wind turbines with a goal of generating 85% of its power from wind. The company, based in Des Moines, will use renewable-energy tax credits that Congress extended last December to make the project economically feasible, said MidAmerican Chief Executive Bill Fehrman.

"Because of the tax credits and our ability to deliver these projects at a low cost, we're setting up our customers for a low-carbon future," Mr. Fehrman said in an interview. "Whatever happens with carbon regulations…we will be able to meet those requirements without additional costs for customers."

Thirty-one percent of the power in Iowa is now generated by wind, more than in any other state, according to the American Wind Energy Association, an industry group. MidAmerican's new project would boost wind's share to 40%, according to the state.

In absolute terms, Iowa is the nation's No. 2 wind-power producer, with 6,200 megawatts of wind turbines, behind Texas, according to the group.

MidAmerican is the biggest wind-power producer among regulated utilities nationwide. The company already operates nearly 3,500 megawatts in Iowa, or about 58% of the power it supplies its customers in the state. Parent company Berkshire Hathaway is the third-largest wind-farm owner nationwide, behind NextEra Energy Inc. and Iberdrola SA.

Coal-fired plants remain the leading source of electricity in Iowa, providing 53% of power in 2015, while nuclear, natural gas and hydroelectric power generators produced roughly 16%, according to the U.S. Energy Department.

The wind industry is important to Iowa's economy, said Iowa Gov. Terry Branstad, a Republican. Wind-power-equipment makers employ 7,000 people in the state, and thousands of other construction and technical jobs are created when new wind farms are built, he said.

Farmers and other landowners hosting wind farms receive lease payments, and wind-farm operators pay property taxes, which local governments use for schools and other expenses, he added. Iowa's relatively low power prices and high renewable-energy quotient have attracted companies such as Alphabet Inc.'s Google, Microsoft Inc. and Facebook Inc. to the state, he said.

"Many manufacturers would like to tell their stockholders they're using green energy," said Mr. Branstad in an interview. "It's a great marketing tool for us."

Iowa consumers pay about 10 cents a kilowatt-hour for power on average, compared with 12 cents nationwide, according to the Energy Department. Large commercial and industrial customers in the state pay about 5 cents to 8 cents a kilowatt-hour, on average, compared with 6 cents to 10 cents nationwide.

Wind power fetched about $29 a megawatt-hour, or 2.9 cents a kilowatt-hour, on average, under long-term contracts signed last year between power producers and utilities, according to Bloomberg New Energy Finance.

That compares with an average price of $34.34 a megawatt-hour for power, primarily from coal and natural-gas plants in the Midwest, including Iowa, last year, according to Energy Department data.

Nationwide, wind farms supply nearly 5% of U.S. electricity, while coal and natural-gas plants each generate 33% of the nation's power. Nuclear plants produce 20%, hydroelectric dams generate 6% and solar farms and smaller arrays supply about 1%, according to the Energy Department.

Write to Cassandra Sweet at [e-mail]

(END) Dow Jones Newswires

April 14, 2016 17:15 ET (21:15 GMT)

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