Over the past year, we’ve documented how creative thinking in Illinois—from local school districts kicking their dependence on electricity to the proposed development of turbines over the Great Lakes—has established the Prairie State as a leader in developing wind resources. But according to an AP article yesterday, cash for new wind projects is drying up due to the meltdown in the financial industries:

Firms like AIG, Lehman and Wachovia helped finance many projects by taking short-term ownership in exchange for the credits to help offset their own income.

Those three were among the biggest investors in the [wind] industry. Now, AIG is trying to survive the financial meltdown, Wachovia is being bought by Citigroup and Lehman Brothers filed for bankruptcy this year before being sold [...]

The investment money flowing into the wind-energy business flattened this year for the first time in several years, at about $5.5 billion dollars, said industry analyst Joshua Magee of Emerging Energy Research.

Some worry that interest in developing renewable energy sources may also wane if gas prices remain at current lows. Even oil tycoon T. Boone Pickens recently announced he’s delaying a massive new wind farm in Texas. His decision came just months after he shelled out big bucks to run TV ads pushing for a quick expansion of such projects.

But Wind for Illinois executive director Kevin Borgia tells us that the slowdown this time around is just temporary. Oil prices have fallen in the past only to skyrocket later, but now there’s a pro-wind administration headed for the White House.

“The smart policy,” which Borgia says he sees the incoming president pursuing, “is to put money into renewables to hedge against [oil price] volatility.”

Already, President-elect Barack Obama has announced plans to expand and diversify the nation’s power grid as part of his economic stimulus program. He’s also pledged to extend renewable energy tax credits. Combined, those investments should set the stage for an unprecedented growth in wind farms, Borgia tells us.

While they’d likely help jump start the dozen or so statewide projects already on the drawing table, to what extent the Land of Lincoln will participate in the historic expansion remains to be seen. The fact that Illinois is the only state in the region to levy a sales taxes on wind farm equipment could jeopardize its position as the country’s eighth biggest wind-power producer.

“Every other state around us has a sales tax—or use tax—exemption,” Borgia said. “Eliminating that would really accelerate wind in Illinois.”