Pew Report on Clean Energy Urges National Policy; IndianaDG Says State Energy Policy Also Needed Like FITs January 24, 2013Posted by Laura Arnold in Federal energy legislation, Feed-in Tariffs (FiT).
Tags: Aaron LeMieux the founder and CEO of Tremont Electric, community energy systems, Dan Ferber, Feed-in Tariffs, Laura Arnold President Indiana Distributed Energy Alliance, national Clean Energy Standard, Pew Charitable Trust, Phyllis Cuttino director of Pew’s Clean Energy Program, Pike Research
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Workers assemble a wind turbine blade at a factory in Grand Forks, North Dakota, in 2006. (Photo by tuey via Creative Commons)
The Midwest has the potential for a thriving clean energy industry, but only if coherent policies are enacted at the state and federal level, clean-energy experts say.
Experts on the Midwestern clean-energy sector say the region stands to benefit because of its research universities, strong supply chains and a high level of manufacturing know-how.
But whether it does or not depends largely on policy-makers.
According to a report issued last week by Pew Charitable Trusts, hurdles to an expanded U.S. clean-energy sector include a lack of a national clean-energy standard and longstanding tax breaks for oil, gas and coal producers. Unless these and other issues are addressed, they could lead to billions of dollars of economic activity moving overseas, the analysis concluded.
“The Midwest looks to me like a great place for clean energy,” said Phyllis Cuttino, director of Pew’s Clean Energy Program. But, she added, clean-energy leaders in the Midwest and nationwide “all said the same thing: The thing that makes it really hard for us is that we can’t plan.”
These conclusions come from two lines of investigation Pew undertook to prepare the report. They commissioned a detailed analysis of clean-energy trends by Pike Research, industry analysts who specialize in global clean-technology markets. Pew also conducted five regional roundtables of clean-energy business leaders, including researchers, manufacturers, companies deploying solar and biomass, and investors, as well as one national roundtable, all to get the industry’s take on how current policy was affecting them, and which policy changes would help.
Pew found that the industry was at a tipping point in the United States and globally. Investment is on the rise, prices for clean energy are falling, and more and more clean energy is being deployed.
“Clean energy is here to stay. It’s not niche. It’s quickly becoming cost-competitive and going into the next phase,” Cuttino said.
Indeed, investment rose six-fold between 2004 and 2011 and was projected to continue to rise. Clean-energy installations—installations of solar photovoltaics, onshore and offshore wind, marine and hydrokinetic energy, geothermal, concentrating solar thermal, and biomass—will create $1.9 trillion in revenue globally and $269 billion in the United States between 2012 and 2018, the Pike Research analysis concluded.
“We’re at a moment that looks like the auto industry at the turn of the 20th century or the early days of computers,” Cuttino said. “A whole bunch of actors are rushing in; we have an oversupply of production capacity, and more investments are coming because of the perception it’s going to take off.”
As a result, the race is on between nations seeking to become global leaders in clean energy technology, the Pew analysis concluded. That race will not last forever, business leaders warn, and it’s not yet clear whether the United States in general, and the Midwest in particular, is going to win.
Good news, bad news
There are some encouraging signs for the industry, both in the Midwest and nationally, Pew found. The United States attracted a record $48.1 billion in private clean-energy investments in 2011, and the nation remains a leader in clean-energy innovation.
But the Pew report pointed to signs of trouble. While U.S. solar installations have doubled each year since 2009, both Germany and Italy installed more than three times as much new solar last year. And China installed three times more wind in 2011 than the United States.
“These trends are worrisome because these are technologies that we really invented and we used to manufacture and export,” Cuttino said. “Now we’re finding that we’re not playing at the same levels as other countries. Of the top 10 wind and solar companies in the world, we only have one of each,” she pointed out.
The reasons for this include fierce international competition, including tariffs, tight credit markets, and policies that favor established fossil-fuel-based power over clean energy in the United States.
What’s more, in other nations clean energy has not become the political football it has become here, said Aaron LeMieux, the founder and CEO of Tremont Electric, a six-year-old Cleveland-based company that specializes in harvesting kinetic energy.
“When we go to other countries like Japan, there’s a compelling understanding of what clean energy is and the need to have new [energy] technology alongside existing technology,” LeMieux said. In the United States, in contrast, “renewable energy technology tends to be a partisan argument between Democrats and Republicans.”
“At our business roundtables, they were kind of shocked that this had become a politicized issue,” Cuttino added. “They’d seen government engage in support for new and emerging industries—computers, trains, railroads and others. They couldn’t understand why not this sector.”
Investment without rewards?
As a result of our policy confusion, “we continue to innovate, but we don’t necessarily reap the rewards of our innovation and risk taking,” LeMieux said. “That’s passed to other countries to be able to build, manufacture, and deploy these technologies.”
In Pew’s roundtables, business leaders like LeMieux named the U.S. clean-energy industry’s biggest obstacles as policy uncertainty, global oversupply, international competition, access to credit and private investment, and the uneven playing field with established fossil-fuel-based energy.
But new national policies would create opportunity as well. A national Clean Energy Standard could stimulate demand for renewable energy. Such a standard would be broader than state renewable energy standards in that it might include natural gas and nuclear. The nation could invest more in basic energy research, which lags dramatically behind comparable investments in the health-care and defense sectors, Cuttino said.
Effective policies to facilitate private sector investment in the industry could help, business leaders told Pew.
For example, the Advanced Energy Manufacturing Tax Credit, which was established as part of the 2009 Recovery Act, provided a 30 percent tax incentive for investments of clean energy manufacturing. Far more companies applied than received funds, and it was documented to create 17,000 jobs at 180 facilities in 43 states, Cuttino said. The tax credit has expired but could be renewed.
Clean-energy business leaders also suggested such measures as getting rid of special tax credits for oil and gas industries. Some suggested getting rid of all subsidies, or taxing the health and environmental costs incurred by burning gas, oil and coal, Cuttino said.
“Now is the time for our policy makers to really level the playing field so that entrepreneurs and business leaders can compete with our competitors throughout the world,” LeMieux said.
We also need a clear national policy aimed at phasing in more clean energy, LeMieux said. “Quite a few other countries are leading the charge in terms of clean energy. All have a national energy strategy.”
That strategy should include a clean energy standard, the business leaders assembled by Pew concluded. Although 33 states have renewable portfolio standards, the lack of a federal standard harms the industry and keeps it from growing, LeMieux said.
“We’re trying to tell people in Washington, D.C., that this is a big issue.”
A manufacturing powerhouse
With effective policy changes, the Midwest could become a national leader in clean energy manufacturing, technology and R&D, LeMieux said.
“The Midwest is the manufacturing powerhouse of the nation. It always has been,” he said.
And more clean energy could mean more good jobs in the region, said Laura Arnold, president of the Indiana Distributed Energy Alliance, an Indianapolis-based nonprofit that promotes distributed renewable energy.
The real economic development potential is not just building wind farms, Arnold said. “The real potential is in the manufacturing, not just buying and installing and producing renewable electricity. That’s where the middle-class manufacturing jobs come from.”
Companies producing those jobs could make renewable energy components for export as well as domestic markets, Arnold said. Abound Solar, a Colorado-based company, was planning to create 800 jobs in Tipton, Indiana, to manufacture solar photovoltaic panels and they were planning to export 90 percent of what they made. In that case the plans were canceled, but they showed what’s possible, Arnold said.
The United States in general, and the Midwest in particular, “has the manufacturing know-how to put out a quality product,” Arnold said.
States matter, too
The policy changes Pew suggests could go a long way, but changes at the state level are also essential, Arnold said.
Germany and Italy, for example, have feed-in tariffs, which reward people for installing solar panels by ensuring a long-term, steady, and high price for the electricity they generate. If Midwestern states chose to establish such policies, markets would grow, helping the region’s clean-energy industry flourish, Arnold said.
In Indiana, in contrast, “you can’t buy electricity from anyone other than your friendly electric utility,” she said. Policies that allow more choice would grow the market for renewable energy, she emphasized.
Other state and local policies could spur demand for renewable energy in the region. Today, there are people in urban neighborhoods who might want to install solar panels but don’t have good exposure to the sun. If a church in the neighborhood has an annex with a great rooftop, they could provide solar power to their neighbors, but only if local and state policies allow for community energy systems, Arnold said.
“I’m not sure how to do that with national legislation. I think it has to be done at the state level to permit more creative ways for people to own a piece of a small distributed system,” she said.
“Yes, there’s an overriding need for national policy, Arnold concluded. “but the real nitty-gritty work still has to take place at the state level.”
Editor’s note: An earlier version of this story misidentified the solar company that had planned to locate in Tipton, Indiana.
AP: Indiana wind energy industry relieved tax credit extended, but says long-term credit needed January 6, 2013Posted by Laura Arnold in Uncategorized.
Tags: Brevini Wind, Congressman Marlin Stutzman (IN-03), E-on Climate & Renewables, Global Blade Technology, Indiana Distributed Energy Alliance President Laura Ann Arnold, Indiana Office of Energy Development (OED), Laura Arnold President Indiana Distributed Energy Alliance, Meadows Lake Wind Farm in White County (IN), Noel Davis, President Barack Obama, US House Speaker John Boehner, Vela Gear Systems LLC, Wildcat Wind Farm near Elwood (IN)
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By KEN KUSMER, Associated Press
Updated: January 03, 2013 – 5:15 pm
INDIANAPOLIS — Officials with Indiana’s wind energy industry say they are relieved by Congress’ one-year extension of a tax credit but contend it will take a longer-term approach to grow the business and create jobs in the state.
The legislation signed earlier this week by President Barack Obama averting the fiscal cliff extended a wind energy production tax credit to projects that begin construction in 2013, but entrepreneur Noel Davis likened that to playing a single quarter of football instead of a complete game.
A project like the Wildcat Wind Farm going up in north central Indiana needs years to collect and analyze wind readings, perform economic studies, design a project, and secure land rights before starting to build.
“It takes a long time to do that,” Davis said. “Something like that cannot be done in one year.”
The uncertainty over long-term tax incentives has kept Indiana’s wind energy industry from fully taking off despite the promise of projects such as Wildcat and the 303-turbine, 500-megawatt-capacity Meadow Lake Wind Farm in White County that have helped produce the 13th largest installed wind power capacity among states. As of Wednesday, Indiana had 930 turbines producing 1,543 megawatts of electricity, according to the Indiana Office of Energy Development.
The 2.2 cent-per-kilowatt tax credit was established in 1992, and some in Congress, including Rep. Marlin Stutzman, R-Ind., sought its elimination as a costly subsidy to an “intermittent resource.”
Wildcat’s developer, E-on Climate & Renewables, raced to finish its 125-turbine first phase in Tipton and Madison counties, about 40 miles north of Indianapolis, by the end of 2012 out of fear the credit wouldn’t be renewed. Now that it has, it still needs to develop site plans and secure land rights for 200 more turbines in Howard and Grant counties, project manager Andy Melka said recently.
The uncertainty also has stalled job growth among manufacturers despite Indiana’s manufacturing-heavy economy. Italy-based Brevini Wind announced plans in 2009 for a 450-worker factory in Muncie that would build turbine gearboxes, but it had only 70 workers by last year and has until the end this year to reach 250 jobs to receive $1.7 million in tax-increment financing revenue from Delaware County.
Brevini is among more than a dozen Indiana companies manufacturing wind energy components, but adding others will take more than one-year extensions of the federal tax credit, said Davis, founder of Vela Gear Systems, which plans to build a gearbox factory in Marion but so far lacks financing.
Before investors will sink money into Davis’s company, they want to make sure he has orders for his products. Developers won’t provide them until they have the assurance of long-term tax credits, he said.
“If I don’t get an order, I’m not going to get the money. It’s the same for everybody in this business,” Davis said.
Laura Ann Arnold, president of renewable energy promoter Indiana Distributed Energy Advocates, said the one-year extension was “extremely important” but the industry was hoping for more.
“A one-year-extension is really a Band-Aid. You can’t take a major industry and do this stop-start, stop-start thing. It’s like yo-yo dieting,” Arnold said.
A multi-year tax credit, even one that’s eventually eliminated, would better provide the stability needed to grow the industry and create jobs. Northwestern Indiana’s steel industry, for example, stands to benefit if a blade manufacturer opened a factory in or near this state. Netherlands-based Global Blade Technology has announced plans to produce its first U.S. blades in Evansville by 2014.
“I think a gradual phase-out over a longer period of time would have been better,” Arnold said.
Stutzman, who represents northeastern Indiana, was among 47 U.S. House members who signed a letter to Speaker John Boehner in September criticizing the tax credit. They said a one-year extension would cost taxpayers more than $12 billion. Stutzman was the only Indiana representative to sign the letter.
“It often drives wind developers to build projects with little regard to consumer demand, as long as they can be placed on line and their power brought to market to collect the subsidy,” the letter said.
(Story distributed by The Associated Press)
Tags: Citizens Action Coalition Executive Director Kerwin Olson, Dean Leischow with Sunrise Energy Ventures, Hoosier Environmental Council (HEC) Executive Director Jesse Kharbanda, IPL VP William Henley, Laura Arnold President Indiana Distributed Energy Alliance
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As Indiana utility ends feed-in tariffs, some question motive
Workers install solar panels on the roof of an Indianapolis home in 2009. Indianapolis Power & Light may soon have more solar power installed in its service area than any other utility in the Midwest. (Photo courtesy EcoSource, Inc., used with permission)
Last month, Indianapolis Power & Light (IPL), an investor-owned utility that provides electricity to 470,000 customers in central Indiana, put out a press release boasting about its support of 30 MW of new solar developments.
The new developments would make IPL the leading provider of solar power among Midwestern utilities, the company claimed, citing Solar Electric Power Association’s 2011 utility solar rankings. IPL also touted the 300 MW of wind power already in its portfolio.
The utility’s claims were repeated in glowing news reports around central Indiana.
But what the company did not say was that the 30 MW of new solar was all that remained of an innovative feed-in tariff project that would have incorporated up to 100 MW of renewable energy into their generating mix, and is now ending—over the protests of both renewable energy developers and environmentalists.
“They did a 180-degree turn on the program,” said Laura Arnold, the president of the Indiana Distributed Energy Alliance.
“It’s really disappointing,” said Jesse Kharbanda, executive director of the Hoosier Environmental Council, an Indianapolis-based environmental group. “Just three years ago, IPL was part of a broad coalition of utilities that were rightly calling public attention to climate change and the need for a comprehensive national policy,” he added. “Now IPL is withdrawing one of its only existing policies to begin the long process of cutting carbon.”
IPL did not respond to several phone calls and emails requesting comment.
Unlike many other states, Indiana does not require utilities to incorporate increasing amounts of renewable energy into their generating mix via a renewable portfolio standard, although it did institute modest voluntary goals in 2011 that aim for 10 percent renewable energy in the state by 2025. The state also has no law mandating a renewable feed-in tariff—a policy that requires utilities to provide customers that provide electricity to the grid from solar, wind or biomass a long-term rate high enough to justify their initial investment.
As a result, any feed-in tariff program by an Indiana utility is voluntary. The state’s public utility commission, the Indiana Utility Regulatory Commission, approved IPL’s pilot feed-in tariff program, which it calls its Rate Renewable Energy Production (Rate-REP) program, in March 2010.
Under the program, as originally proposed, solar, wind and biomass developers would apply to IPL to participate, and the winning companies would build projects providing up to 100 MW of power—about 1 percent of IPL’s generating mix. In exchange, IPL would contract with the companies to pay them between 7 cents per kilowatt-hour for wind and 24 cents per kilowatt-hour for solar over a 10-year period. (IPL’s current contract terms guarantee a fixed rate for 15 years rather than ten.) IPL would charge slightly higher rates to its customers to cover the cost difference.
The policy worked: Within a year, solar and wind developers applied to build 170 MW of projects, Arnold said.
Then IPL pulled the plug.
‘Considerable return’ on investments
In a June 28 letter to the chair of the IURC explaining the company’s reasoning, William Henley, IPL’s vice president of corporate affairs, first lauded the pilot program, saying that it “had generated benefits for both customers and the Company.”
Customers, Henley wrote, would be paid for 15 years at rates high enough to cover costs and generate a “reasonable return on their investments.” IPL and its customers would benefit by “sourcing renewable energy from within IPL’s service territory at a set cost for 15 years to hedge against the potentially higher cost to comply with future renewable energy purchase mandates and to help keep the investments local.”
If it was so successful, then why did IPL terminate the program? In his letter to IURC chairman James Atterholt, Henley listed several reasons.
With 300 MW of utility-scale wind farms under contract and several MW of solar, IPL had enough renewable energy in its generation portfolio to promote clean energy and hedge against future renewable energy purchase mandates, he wrote. But today’s higher costs of renewable energy, as compared to “traditional forms of generation” such as coal, “must be balanced against other expected cost increases such as those necessary to comply with Environmental Protection Agency mandates,” Henley wrote.
Henley also maintained that costs for solar panels may soon rise, causing demand to fall.
And he said that “Rate REP has not generated the interest among customers that IPL originally expected.”
That’s highly misleading, say renewable energy advocates.
Afraid of competition?
By 2011, a year after the pilot program was launched, the company had 170 MW of proposed projects, more than the program could accommodate. Then IPL moved to end it.
“We believe they withdrew the program because the program would have been quite successful,” said Olson. “Utilities have fought solar PV for decades, especially rooftop PV. You’re generating your own power. It’s competition and loss of business,” Olson explained.
At the time of IPL’s announcement in late June, IPL had contracts for 2 MW in solar projects, and in their July 19 press release, they announced that Sunrise Energy Ventures, had won a reverse auction to supply 30 MW of solar energy to IPL’s mix. (In the reverse auction, the contractors proposed a price at which to sell electricity, and IPL chose the lowest bidder.
Dean Leischow, managing director of Sunrise, told Midwest Energy News the company plans to build three 10 MW, 70-acre solar farms in fields on the outskirts of Indianapolis. IPL has agreed to pay the company a fixed rate for 15 years.
As a result, IPL could lead all Midwest utilities in the amount of solar power generated in their service territory, according to Solar Electric Power Association’s 2011 utility solar rankings, IPL maintained in its press release.
That sounds about right, said Leischow, of Sunrise Energy Ventures.
“The Midwest is not a hotbed for renewable energy, so that would make it fairly easy for IPL to take a lead position. I think IPL going out with 30 MW puts them in the lead,” he said. “It’s an exciting project for Indiana and an exciting project for us, and I’m looking forward to getting it rolling.”
And Ken Zagzebski, IPL’s president and CEO, also touted the deal.
“IPL’s interest in solar energy is part of our commitment to a more diversified portfolio of power generation that includes appropriate renewable sources that allow us to provide safe, reliable energy at some of the most affordable residential prices in the nation,” Zabzebski said, according to the company’s July 19 press release.
But Olson had a very different take on the situation. “There’s lots of greenwashing going on,” he said.