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The Rise of Wholesale Power Development in Indiana

In Indiana, the number of businesses and wholesale power providers exploring the construction of generation resources has increased in recent years.  This growth has been spurred by several factors: aging facilities, a forecasted growing demand for energy, and location, location, location.

Although Indiana law does not allow retail customers to choose among competing electric providers, the need for wholesale power in the region is strong.  According to the Indiana Utility Regulatory Commission (IURC) 2017 Annual Report, the years 2010 through 2020 are expected to have far greater construction of new electric generation than either of the two prior decades, due largely to the retirements of many coal-fired units resulting from increasingly stringent environmental regulations and market forces.

In Indiana, it is relatively easy to obtain approvals to build a wholesale power plant, particularly natural gas and CCGT facilities.  Approval from the IURC is required, but generally the IURC elects to lightly regulate the construction and operation of wholesale generation facilities.  The IURC approval process typically includes the filing of a petition, testimony and an evidentiary hearing.  The IURC approval process usually takes four to six months from the date of filing a petition to the issuance of an IURC Order.

Indiana is uniquely suited to have wholesale power generating facilities due to its proximity to two RTOs: MISO and PJM.  In addition, access to transmission makes serving utilities in MISO and PJM opportune.  Another situational advantage of Indiana is the number of areas with low populations or with brownfields ready for redevelopment.

One challenge has been the high level of competition among those in the wholesale power space, including self-built facilities by Indiana’s incumbent utilities.  Perhaps the biggest challenge facing wholesale power developers is the willingness of retail utilities to enter into long-term PPAs.  Having such contracts in place is a critical element in the decision to move forward with construction. However, Indiana enacted a law in 2017 that requires a retail electric utility to demonstrate to the IURC that it thoroughly investigated alternatives and evaluated competitive bids before building its own generation facility.

For more information, contact Nikki Shoultz or Kristina Wheeler.