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Ikea Taps Into Trend: Private-Sector Companies Drive US Wind Power Market Forward

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Private companies are turning to wind power as a way to protect against fluctuating costs of electricity.

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The onshore wind energy sector is booming in the United States, where there's enough of the renewable resource on hand to meet the annual demands for 15 million homes. It may take one of the biggest retailers in the world, however, to usher in the necessary change in energy consumption.

The American Wind Energy Association said wind energy in the United States accounted for more than 4% of all the electricity generated in the country last year and that the trend was on pace to continue. According to the AWEA, America is increasingly powered by wind.

Now Swedish home-furnishing company Ikea says it's embracing the green energy fad with the purchase of a 98-megawatt wind farm in Illinois, its largest single renewable-energy investment to date. The world's largest furniture chain reported a 2013 profit of $4.5 billion, a 3.1% increase from 2012, and Rob Olson, the company's chief financial officer, said investing in renewable energy made good business sense.

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"We invest in our own renewable energy sources so that we can control our exposure to fluctuating electricity costs," he said.

Ikea says the Hoopeston Wind facility outside of Chicago will provide 165% of the electricity needed for its entire US retail and distribution footprint and will offset carbon dioxide emissions equivalent to pulling 55,000 cars off the road.

AWEA said wind energy accounted for well over half of the new energy capacity brought online in the US Midwest between 2011 and 2013. The US Energy Information Administration puts the Midwest among the top in terms of wind energy potential, and Illinois alone saw a 15.6% increase in wind energy from January 2013 to January 2014.

A report from the Intergovernmental Panel on Climate Change warns that the continued use of fossil fuels is a key contributor to the emissions blamed for downward environmental trends. If policymakers are serious about curbing greenhouse gas emissions, IPCC said wind power capacity could meet 20% of global electricity demands by 2050.

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For the United States, 12 states combined to account for 80% of the wind-generated electricity last year, and it was the oil-rich state of Texas that led the nation with nearly 36 million megawatt-hours of electricity generated from wind.

While the United States is behind in terms of offshore wind capacity, private sector interest onshore such as Ikea's may help drive the sector forward. IPCC said more than $50 billion was invested globally in wind power in 2009, though it still accounts for only a small fraction of the global electricity supply. IPCC warned that a business-as-usual approach to energy may leave the global environment in ruins. The wind energy market is expanding rapidly. For IPCC, with the right policies in place, the global potential for wind energy exceeds current global electricity production. For companies like Ikea, it's a business decision, but it may be one that drives the sector forward.

This article was written by Daniel J. Graeber of Oilprice.com.
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