Indiana, in the nation’s Interior Plains just west of the Appalachian Mountains, extends from Lake Michigan south to the Ohio River. Sediments deposited over millions of years, when the state was covered by inland seas and, later, lush swamps, became the rocks that contain Indiana’s fossil fuel resources, predominantly coal but also oil and some natural gas. The flat plains and slightly rolling terrain in the northern two-thirds of the state are the result of the 2,000-foot-thick glacier that covered much of the state during the Ice Ages. The retreat of the glacier more than 10,000 years ago left behind the excellent topsoil that supports Indiana’s agriculture. Ample summer rainfall and the rich prairie soils allow Indiana farmers to produce abundant corn and soybean crops. Using corn as a feedstock, Indiana has become a major ethanol-producing state. Indiana’s open farmland has substantial wind energy potential.

Although Indiana is one of the smallest states in land area west of the Appalachian Mountains, it has a varied climate because of its length from north to south. In the north, Indiana experiences lake-effect snows and winds off Lake Michigan. In the south, the hilly terrain creates localized weather variations. The climate statewide is influenced by the interplay of polar air moving south from Canada and warm, moist air moving north from the Gulf of Mexico. Indiana’s winters can be bitterly cold, spring weather often includes tornadoes, and summer days may have oppressive humidity and heat. In part because of those weather extremes, residential energy use per capita in Indiana is well above the national average. The industrial sector is the state’s largest energy consumer. Indiana’s industrial activities include the energy-intensive chemical, petroleum, transportation equipment, and steelmaking industries. The state consumes more energy than it produces.

Renewable Energy

Quick Facts

  • In 2013, Indiana ranked eighth among the states in coal production and third in coal consumption. The state’s industrial sector was second nationwide in coal consumption.
  • Indiana’s industrial sector, which includes manufacturers of aluminum, chemicals, glass, metal casting, and steel, consumed more energy in 2013 than the residential sector and the commercial sector combined.
  • As of January 2015, Indiana’s Whiting oil refinery had the largest processing capacity of any refinery outside the Gulf Coast region.
  • Indiana is a major producer of ethanol. As of January 2016, Indiana’s ethanol plants were capable of producing more than 1.2 billion gallons of ethanol per year.
  • A geothermal heating and cooling system installed at Ball State University in Muncie, Indiana, has replaced a coal-fired power plant and enabled the university to halve its carbon footprint.

About 5% of Indiana’s net electricity generation comes from renewable sources. Wind has become the primary renewable resource used for electric power generation in Indiana. In 2008, Indiana’s first utility-scale wind project, the Benton County Wind Farm, began operating in the northwestern part of the state. Currently, the state has nearly 1,900 megawatts of installed wind capacity, including the 500-megawatt Meadow Lake Wind Farm that stretches across three counties and is the eighth-largest wind project in the nation. In 2015, more than 4% of Indiana’s electric power was generated by wind turbines. The rest of Indiana’s renewable generation comes from biomass, hydroelectric power, and solar photovoltaic facilities.

Ball State University in Muncie, Indiana, has installed a geothermal heating and cooling system. The system replaced four aging coal-fired boilers and provides renewable power to heat and cool 47 university buildings. It is estimated that $2 million in operating costs will be saved each year, and that the university’s carbon footprint will be cut in half. The project was completed in 2014.

In 2011, Indiana’s legislature created a voluntary clean energy portfolio standard that took effect on January 1, 2012. As an incentive, regulated electric utilities and retail power suppliers are eligible for increases in their allowable profit if they obtain increasing amounts of their electricity supply from clean energy in each of three goal periods. The ultimate goal is for suppliers to obtain 10% of their electricity from clean energy sources in 2025. Technologies that qualify as clean energy include not only renewable resources, but also coalbed methane, clean coal technology, nuclear energy, combined heat and power systems, and natural gas that displaces electricity from coal. At least half of the qualifying energy obtained by Indiana’s participating electricity providers must come from within the state


Sales of electricity to Indiana’s industrial sector are among the highest in the nation.

More than three-fourths of Indiana’s electricity generation is typically fueled by coal, and 9 of the state’s 10 largest power plants are coal-fired. Natural gas accounts for much of the rest of the state’s net electricity generation. Wind provides a small but increasing share. Indiana does not have any nuclear power plants.

Retail sales of electricity to Indiana’s industrial sector are among the highest in the nation. Per capita residential electricity consumption in Indiana is in the top half of states. Slightly more than one-fourth of Indiana households rely on electricity as their main source of energy for home heating.

Natural Gas

Early discoveries of natural gas in the late 1870s attracted industry to the east central part of Indiana, but unregulated development caused the loss of much of the resource. The advent of advanced drilling technology has created interest in the New Albany Shale gas play in the state’s south, which, along with potential coalbed methane resources, could add significant new natural gas reserves. Indiana’s natural gas production is modest, but it has increased in the last two decades.However, production in the state is much lower than demand, and interstate pipelines supply Indiana consumers with natural gas from the United States and Canada. Indiana is crossed by a dozen major interstate natural gas pipelines. Natural gas enters the state primarily via Illinois and Kentucky, and a majority of the natural gas shipped into Indiana is sent on to Ohio and Michigan. Indiana does not have any natural gas market hubs. The state has 22 natural gas storage fields,with a total working capacity of about 33 billion cubic feet of natural gas.

The industrial sector is the largest consumer of natural gas in Indiana. The sector uses more natural gas than all other sectors combined. The residential sector accounts for only about 20% of the natural gas consumed in Indiana, even though three-fifths of households use natural gas for home heating. The electric power sector increased its use of natural gas for power generation significantly from 2009 through 2012, when it reached a level equal to residential use. Natural gas consumption in the power sector dropped in 2013 and 2014, but rose in 2015 to exceed the 2012 level.

Source: U.S. Energy Information Administration (Mar 2016)

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