Based in Indianapolis, new co-op to gather renewable resources for electric co-ops
Indiana may not be wind-swept or sun-drenched enough for many high-profile, utility-scale renewable energy projects. But for over 70 years it has been tightly co-op-connected.
Those connections just got stronger — at one of the most critical junctures in the history of the electric utility industry — with the formation of the National Renewables Cooperative Organization in 2008. In November, the new co-op chose Indiana as its home.
Through the state’s two wholesale power cooperatives, NRCO will be a renewables gateway — providing Indiana’s electric co-op consumers access to a growing, aggregated load of diverse, cost-effective renewable energy resources from around the country.
“The wind doesn’t blow in all places, the sun doesn’t shine all the time,” said Amadou Fall, who was named NRCO’s CEO at its first annual meeting in Indianapolis in November. “With some of the limitations of renewables, it makes sense that a NRCO can come in and provide a least-cost solution for its members — in line with cooperative traditions.”
NRCO will gather together renewable resources allowing co-ops to meet their individual needs, but at a lower entry cost for all. The long-term vision for the co-op includes potentially developing and owning renewable resources.
Generating electricity from renewables is becoming more important for electric co-ops and all utilities — for both environmental and legislative reasons. Global climate change — blamed partially on man-made carbon dioxide emissions from burning fossil fuels to create electricity or gasoline to power automobiles — is creating a “carbon-constrained” world. Greener energy solutions are being sought to protect the environment. In addition, some 30 states have already passed mandatory or voluntary renewable portfolio standards or regulations that will bring a higher percentage of green energy into the mix, supplementing and supplanting traditional fossil-fuel power sources.
“Our cooperative members have shown great interest in renewable energy,” said Rick Coons, CEO of Wabash Valley Power Association, one of NRCO’s charter members. “That, combined with the possibility of legislation at the state and national level, made our membership in NRCO a very easy decision.”
As an electricity generation and transmission cooperative, or G&T, Wabash Valley is the wholesale power supplier for the 22 distribution co-ops, or REMCs, in the northern half of Indiana. Wabash Valley also has six other distribution co-op members in four other states. Wabash Valley currently gets its renewable power from an Illinois wind farm, waste gas from landfills across the northern half of Indiana, and anaerobic digesters that capture methane from manure at large dairy farms in northwestern Indiana.
“Wabash Valley Power has worked hard to diversify its power supply portfolio, and we’re proud of the fact that we currently have nearly 4 percent of our overall mix coming from renewable sources,” said Coons. “By joining NRCO, however, we’ll be able to take advantage of more plentiful renewable sources in other parts of the country.”
A new co-op is born
NRCO was formed in February of 2008. It has 24 members: 20 G&Ts and four unaffiliated distribution co-ops which purchase their own wholesale power. Fall noted that the number of members may soon increase as other G&Ts seek the benefits of the new innovative venture.
NRCO’s three functions are:
• To facilitate the cost-effective, joint development of renewable resources nationwide for its cooperative owners;
• To help its owners meet the requirements of Renewable Portfolio Standards and Renewable Energy Standards, whether those standards are mandatory or voluntary;
• To assist the National Rural Electric Cooperative Association with its renewable initiatives.
Both of Indiana’s G&Ts are charter members. Hoosier Energy REC, which is owned by and serves 17 REMCs/RECs in the southern half of Indiana, joins Wabash Valley in NRCO. Since both G&Ts are NRCO members, all 39 of Indiana’s local distribution co-ops and their consumer/owners will benefit.
“Hoosier Energy is committed to the development of renewable resources and resources that benefit the environment and are cost-effective,” said Steve Smith, president and CEO of Bloomington-based Hoosier Energy. “We see membership in the NRCO as an extension of that commitment.”
“We’re a fairly small utility,” said Coons at Indianapolis-based Wabash Valley. “Gathering together with other G&Ts gives us the ability then to gain some economies of scale regarding renewable projects because, normally, the larger the project the less cost it is per kilowatt-hour.”
NRCO was also developed in part because of huge concern among co-ops about meeting projected demand for new power over the next decade. Plans for new coal-fired power plants are being rejected by state regulators, and the nuclear renaissance remains stalled over escalating projected costs, said Glenn English, CEO of the national electric co-op association.
“We’re, for all intents and purposes, eliminating the prime fuel source we’ve relied upon for all these years,” he said, “ … so what we have to have is as much production as we can get from renewables and efficiency.”
At NRCO’s annual meeting, hosted by Wabash Valley, its board also signed a service agreement establishing ACES Power Marketing as its energy management company.
Headquartered in Carmel, ACES is akin to NRCO because it, too, was formed by a group of cooperative power suppliers. When the wholesale power market became intensely competitive and volatile in the late 1990s, Wabash Valley and three other G&Ts created ACES by pooling their resources in an effort to bring the best professionals and technologies in the marketplace to work for co-op consumers.
ACES started with these four owners and was located in a reconfigured control room at Wabash Valley’s headquarters. It quickly outgrew its first home and eventually moved to a new facility. Today it has 16 cooperative owners nationwide and works with scores of other energy industry participants.
Co-op family tree continues
NRCO is a continued growth of the electric cooperative family tree that has its roots deeply grounded in rural self-reliance and self-determination.
In 1935, in the throes of the Great Depression when only 10 percent of the nation’s farms had “central-station electricity,” a grassroots movement of rural residents, led by farmers and farm organizations, came together to form their own local electric cooperative utilities. With the help of the newly-enacted Rural Electrification Administration, local consumer-owned electric distribution cooperatives soon were stringing power lines into the vast unserved areas across America, bringing electricity to rural folks who had none.
By the 1950s and 1960s, united by a common need to secure more reliable power supplies and lower wholesale costs for their consumers, groups of REMCs then came together to form their own power supply cooperatives — the G&Ts. By joining forces, the co-ops gained the financial clout and independence needed to build their own generating stations and could demand better terms from many of the investor-owned wholesale power suppliers.
In 1999, G&Ts formed ACES. NRCO is yet the latest branch.
The crossroads and beyond
During NRCO’s transition over the next two years — as NRCO formulates its business plans and adds staff — the renewables co-op will be based out of the ACES building. Fall, so far the only employee of NRCO, was a seven-year ACES employee and its vice president of transmission when he was selected to lead the new co-op. ACES has dedicated staff to assist NRCO until it transitions into its own facilities.
But as long as ACES remains the energy management company for NRCO, Fall said he anticipates the cooperative will remain headquartered in Indiana.
An electrical engineer by training, he’s been involved in almost all aspects of the electrical industry, from engineering and technology of nuclear to renewables, from regulatory to transmission issues.
Fall said the business plan calls for future growth that includes not just aggregating resources from within the membership and third-party developers but developing its own assets.
Wind and solar will no doubt be part of the mix, but he said much can and is being done with biomass and landfill and livestock methane, and new hydroelectric technologies. All of these could be on the table.
He said much of NRCO’s future plans, though, will depend on where state and federal lawmakers and regulators take renewable portfolio standards: what resources and forms of energy they will allow utilities to pursue to meet standards. “Beyond renewable resources, NRCO also is meant to provide climate change solutions when legislation from a climate change standpoint comes through,” he said.
While renewables will be a big part of the climate change solution, he said coal is a necessary part of the energy mix, since coal still provides half of the electricity the nation demands. While he doesn’t prefer the term “clean coal,” he said technologies that allow the cleaner use of coal, like gasification or carbon capture and storage, will also be part of NRCO’s focus — as the new laws and regulations dictate.
Developing energy efficiency and demand management programs will also be part of these solutions, and part of NRCO’s goals.
Enhancing the transmission system to get renewable generation from the source to where people live will also be a focus for the cooperative. “We’re trying to go the speeds of an Indy racing car, while we have a car that is probably 80 years old,” he said of the current state of the nation’s transmission system. The intermittency of renewables like wind create even more challenges to transmission reliability.
Fall said the first three months he’s been on the job have been a “whirlwind.” But he noted he believes the timing is perfect for a new cooperative venture like NRCO — as mandates and regulations are coming down on utilities at the same time new technologies are making many renewable projects more attractive strictly on their own merits of cost and power capacity.
“It’s really a crossroads of items coming to a head here,” Fall said.
“The goal over a long period of time is to help cooperatives in the build-out of their renewable resources, and also help the efforts of energy security that the nation is working toward — to the extent that clean energy has a role,” he added. “I think NRCO has a big role to play in that in a cost-effective manner.”