To understand wind energy’s troubles, look to Broadwind’s Cicero factory

By Grid Business | Get In Touch: @Grid_Chicago | grid@suntimes.com Grid – April 19, 2013 12:00 am

Broadwind Energy, an industrial and wind energy gear company based in Cicero, exemplifies Illinois’ choppy wind power landscape.

The company is seeing a resurgence in manufacturing and has grown into one of the biggest players nationally in the wind power components industry.

“We are creating good-paying manufacturing jobs and putting older facilities in urban areas like Cicero to productive use,” says President and CEO Peter Duprey.

Yet Broadwind’s gearing-business workforce of about 200 machine operators, whose pay reaches $25 an hour, is less than half that during the wind energy market’s peak in Fall 2008, and the wind power industry in general continues to compete with oil and gas projects that offer bigger returns.

Broadwind, previously known as Brad Foote Gear Works, an 89-year-old industrial gear producer, has had to scale back its wind power work to replacing worn gears in wind turbines.

The gearing business comprised 26.4 percent of Broadwind Energy’s $210.7 million in 2012 revenues.

Broadwind’s revenues have increased every year for the past three years, up 13 percent in 2012 from 2011, but the company remains unprofitable as it restructures to cut costs. The company last year moved its headquarters to Cicero from Naperville to save $250,000 a year.

And just as Chicago plays host to the Windpower convention May 5-8 at McCormick Place, a dispute is brewing about how to fund Illinois’ renewable power industry and how wind energy company consolidation will play out.

image 1 for To understand wind energys troubles look to Broadwind's Cicero factory

Environmentalists, wind farm and other renewable power developers and operators are leading an effort in the Illinois Legislature to change how renewable energy is purchased because market changes have left the state’s renewable energy standard unworkable. The result could give wind farm operators a more reliable, longer-term revenue stream.

The proposal, opposed by powerful utility Commonwealth Edison as unnecessary, would give all renewable power buying authority to the Illinois Power Agency, which now buys power for utilities ComEd and Ameren, and take it away from alternative suppliers that have sprung up in the marketplace. The alternative suppliers could still sell renewable energy to customers who want to buy more than the law mandates, but it wouldn’t count toward the state’s mandated amount.

Energy suppliers must buy 25 percent of their electricity supply from renewable sources by 2025, and 75 percent of it must come from wind power by that date, according to Illinois state law.

But the state’s newly competitive residential electricity market has left the agency with fewer residential customers because people are voting to buy their electricity from companies other than ComEd and Ameren. The city of Chicago and 450 other municipalities have shifted to alternative suppliers through the process known as municipal aggregation.

Already, the Illinois Power Agency has bought more than enough electricity for its utility customers for the foreseeable future, so it has no plan to buy more renewable energy through 2017.

Yet the bigger picture of wind energy’s viability is less contentious. President Barack Obama’s recently renewed federal tax credits now apply to companies that start wind power projects rather than finish them within the calendar year, giving the industry more room to grow.

Wind energy is politically correct in the business world. Companies ranging from Walgreen and McDonald’s to Testa Produce and The Great Escape Restaurant tout their wind power use.

“The Wind Energy Supply Chain in Illinois,” the latest report compiled by the Environmental Law and Policy Center, pointed to old-line manufacturers such as S&C Electric Co. in Rogers Park, Finkl & Sons on the South Side and Winergy Drive Systems in Elgin as transforming at least parts of their businesses to serve the wind industry.

The report showed that 104 companies in Illinois with more than 15,000 employees, including 60 companies in the Chicago region, are playing a role in the wind power industry, whether it’s making parts, mixing cement or providing legal, banking, engineering and accounting services for the industry.

Howard Learner, the center’s executive director, says Illinois has become the nation’s crossroads for electricity transmission, in addition to its historic role as a crossroads for railroads and highways.

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