City’s power deal boosts wind energy

Contributions from two downstate wind farms will nearly double wind power’s presence in the city’s electricity mix.

July 9, 2013

(Flickr/contemplative imaging)

Two downstate wind farms will provide five percent of Chicago’s electricity, Mayor Rahm Emanuel’s office announced Tuesday, nearly doubling the share of wind power in the city’s electricity supply.

Through its municipal aggregation program, the city negotiated with electricity supplier Integrys Energy Services to increase the amount of wind energy it sends to Chicago homes and small businesses.

A report released Tuesday by the Illinois Institute of Technology’s Perfect Power Institute said Chicago’s electricity aggregation deal, including the new provision for local wind power, “achieve[s] substantial reductions” in air pollution. According to the report, electricity aggregation led to a 16 percent reduction in carbon emissions, a 98 percent reduction in ozone depleting and acid rain causing nitrogen oxide emissions, and a water-use savings equivalent to the annual consumption of about 12,500 households.

That report also said a previously underused natural gas power plant in Pennsylvania would ramp up production to meet the 95 percent of Chicago’s electricity demand not coming from Illinois wind. Chicago and the Marcus Hook power plant, located about 20 miles south of Philadelphia, are in the same region of the power grid overseen by PJM Interconnection, which stretches from New Jersey to North Carolina and also includes patches of Ohio, Indiana, Kentucky and Michigan.

In November voters let the city negotiate for cheaper energy on their behalf, approving electricity aggregation by 56 percent. The city agreed to buy electricity from Integrys, a sister company of Peoples Gas, at a fixed rate through May 2015.

Price was the defining feature of the deal. The city said replacing Exelon subsidiary Commonwealth Edison (ComEd) saved ratepayers an average of $150 per year on electricity bills, due to ComEd’s long-term contracts with more expensive energy suppliers.

But the aggregation deal also pushed the city’s power supply towards cleaner sources of energy. Chicago required its new energy supplier to rid the city’s fuel mix of coal, which previously provided about 43 percent of the roughly 5 million megawatt-hours of electricity the city consumes each year.

Chicago commands some attention in the market, so the city’s decision to specify the fuel mix could set a precedent.

“Something that suppliers wouldn’t necessarily put forth the effort to do for a smaller customer, they have done for Chicago,” said Mark Pruitt, a consultant with the city on its aggregation deal. “I think that the supply community, once they realize that this is desirable, will respond positively and they’ll find a way to get it done for smaller volume communities.”

Natural gas replaced the bulk of the power previously supplied by coal, irking some voters who viewed the November referendum as a vote for renewable energy. Currently the city’s deal requires Integrys to meet the state Renewable Portfolio Standard (RPS), which ramps up gradually to meet the state’s goal of 25 percent by 2025. This year it rose to 7 percent. Integrys satisfies that requirement largely through the purchase of paper credits called Renewable Energy Certificates.

The 5 percent of electricity coming directly from downstate wind farms, the identity of which the Mayor’s office would not reveal Tuesday, is in addition to the RPS.

Tuesday’s announcement that the city would seek electricity produced by two Illinois wind farms came as welcome news to members of the Illinois Clean Power Coalition, who fought to close Chicago’s Fisk and Crawford coal plants and promoted electricity aggregation as a means to renewable energy deployment.

“Our goal is to green our grid,” said Sarah Wochos of the Environmental Law & Policy Center, “not just to buy renewable energy certificates from faraway.”

Essentially paper credits used to offset pollution from fossil fuel-fired energy, RECs can go toward a city’s or energy supplier’s renewable energy requirements without procuring any actual electricity. Texas’ booming wind industry has flooded the market with cheap RECs that provide so-called “100 percent renewable” electricity deals with a relatively inexpensive way to say their power supply is green.

In reality, the industry does not track the sources of individual electrons sent through the grid. Still, direct power purchases send a stronger market signal than do RECs, many analysts say, although RECs do provide supplemental income for renewable energy providers.

Renewable energy supporters are hopeful that municipal electricity aggregation could prove a useful vehicle to promote policies from distributed energy storage to local green jobs.

“With municipal aggregation,” said The Sierra Club’s Illinois Chapter Director Jack Darin, “cities like Chicago and every city and suburb in Illinois has the power to ask those questions to their suppliers.”

“Chicago's inclusion of local wind energy in their power supply is an example for other aggregated communities to follow and build upon,” he said in a statement.

About 600 cities and towns across the state have pursued aggregation deals.

Chris Bentley writes about the environment for WBEZ. Follow him on Twitter at @Cementley.