State’s abundant sun, wind, research hubs pull renewable energy businesses from around globe
Saturday, January 26, 2008
Article Source: Rocky Mountain News
One year ago, the governor set out to make Colorado the renewable-energy capital of the world.
“Let’s start by being bolder than any other state when it comes to renewable energy,” Gov. Bill Ritter said in his inaugural speech on the west steps of the state Capitol. “Let’s commit right now to making Colorado a national leader . . . a world leader . . . in renewable energy. Let’s create a ‘New Energy Economy’ right here in Colorado.”
This “New Energy Economy” called for harnessing the sun, wind, and plant and animal waste. And more important, all the energies can be found on the state’s soil.
But does Colorado have the financial muscle or the cheap labor to compete with Texas, Ohio or Michigan to draw renewable-energy investment?
Over the past year, bigwigs and startups – from London to Spain to Denmark – flocked to Colorado, betting the state is undergoing a seismic shift in the way it develops energy for the future.
“There has been a sea change in Colorado,” said Ken May, a graying former scientist at NREL who now is division director at Abengoa Solar, a subsidiary of Seville, Spain-based Abengoa. “It’s been pretty incredible.”
Abengoa Solar, with U.S. headquarters in Lakewood, plans to triple its size in the next year. London-based Camco International wants to work on local projects to develop and aggregate carbon credits. And Danish company Vestas is putting the finishing touches on its first U.S. wind turbine plant in Windsor.
Clearly, investor interest is on the rise.
A Spanish delegation comprising about a dozen wind and solar companies is visiting Feb. 12 through 14 to check out Colorado’s renewable-energy portfolio. Executives from Iberdola and Abengoa will spend an entire day at the National Renewable Energy Laboratory in Golden.
Spanish companies plan to spend $7 billion to $10 billion in the United States on renewable- energy projects over the next few years, said Paul Bergman of the U.S. Department of Commerce in Denver, which is organizing the delegation’s visit next month.
Even local companies Ascent Solar, AVA Solar, PrimeStar Solar and Sunflower Solar are poised to become important players. FPL Energy, a subsidiary of Florida Power & Light, is scouting for office space in and around Denver and plans to hire about a dozen employees this year.
Colorado’s advantages are obvious: 300 days of sunshine in a year, strong winds sweeping the eastern plains and plenty of biomass, or plant and animal waste.
It has the political will, evidenced by voters approving that a portion of their electricity should come from renewable resources. That Colorado can boast of NREL, a formidable force in renewable-energy research, is its “jewel in the crown,” Bergman said.
Colorado School of Mines, Colorado State University and the University of Colorado not only add to the scientific prowess but also catapult the spinoffs and startups to commercial success.
But can the state translate those advantages into a tangible success at drawing renewable-energy investments?
Denver has an inherent drawback in that it competes with “megapolitans” such as Silicon Valley in California; Portland, Ore.; and Seattle, which have banded together to attract investors.
Moreover, Colorado can’t offer financial incentives like Texas’ or Ohio’s to attract undercapitalized startups.
“Our biggest challenge is other states that do not have the wealth of resources, that do not have a lot of sunshine or wind, have financial resources to draw fledgling startups that we don’t have,” said Tom Clark, executive director of Metro Denver Economic Development Corp.
“We have to understand renewable energy is a big opportunity for Colorado. We have to compete with other states. And we have to up the stakes in a bidding war.”
State takes action
Colorado’s frenzied focus on renewable energy has taken scientists and supporters, long disappointed by the federal government’s years of neglect, by surprise, especially since NREL has been around for about 30 years, and wind, solar and biomass technologies have existed even longer.
Colorado’s biggest change, most observers say, has been its policy makeovers in past years. Voters forcing utilities to obtain a portion of their electricity from solar, wind or biomass has created an instant market for the fledgling industry, ensuring companies ready buyers for their products.
World-class institutions such as NREL, Colorado School of Mines in Golden, CSU in Fort Collins and CU in Boulder are pioneering cutting-edge research, intent on lowering the cost of renewable-energy technologies. They serve as magnets for startups needing help upfront with research and finance.
Most important, Ritter has been an ardent fan.
“The governor’s visibility on the issue has driven some of the (investment) decisions,” Clark said.
One of the first bills Ritter signed doubled Colorado’s goal for renewable energy, requiring utilities to get at least 20 percent of their electricity from renewable resources by 2020. He signed another bill that allows utilities to propose transmission lines and recover those investments from electric ratepayers fairly expeditiously.
Meanwhile, Xcel Energy – Colorado’s biggest utility, which serves 1.7 million gas and electric customers – has been expanding wind and solar farms since voters passed Amendment 37, the original renewable-energy goal, in November 2005. That Xcel CEO Dick Kelly wants the company to become a green utility helps.
Ritter has appointed renewable-energy proponents Ron Binz and Matt Baker to the Colorado Public Utilities Commission, an agency charged with approving power projects to keep pace with the state’s energy demand.
Another important stimulus, some say, came from Congress last year when it approved a $100 million infusion for NREL, reversing years of budget cuts and layoffs.
Before then, the lab was languishing on the back burner. In an article from Jan 25, 2007, The New York Times wrote:
“Thirty years after it was founded by President Jimmy Carter, the National Renewable Energy Laboratory at the edge of the Rockies here still does not have a cafeteria.
“Evaporation chambers for new solar energy systems look like they belong in an H.G. Wells movie. Technicians had to knock out a giant door from a testing facility to fit modern wind turbine blades, which now stick out like a bare toe from an old sock.”
That was a far cry from today, as NREL hires scores of scientists and builds multimillion-dollar facilities to advance research. The lab’s budget jumped 50 percent to $309.6 million last year and will be higher this year.
NREL still doesn’t have a cafeteria.
Skilled labor scarce
But dark clouds are hovering over Colorado’s renewable-energy future.
Companies say the availability of a qualified work force is a big concern. For example, Vestas wants to double its wind turbine plant in Windsor. That means it would need to employ about 650 skilled workers – an issue that company executives discussed with the Colorado Department of Labor and Employment.
“The challenge is that we still have a low unemployment rate here, say, compared with Michigan,” said Jim Reis of the World Trade Center in Denver.
Moreover, Colorado is not a union state, so labor is comparatively less expensive here. So nonunion labor could be a draw for foreign investors, Reis said.
“The Japanese investors wouldn’t touch Michigan with a 10-foot pole,” Reis said. “We have the advantage, but that’s not the only factor.”
The fact that Colorado needs to nurture a viable work force to attract renewable companies is gaining traction among state officials.
David Griffin of the Department of Labor and Employment said his agency is working with companies to train people required at wind or solar farms.
Colorado could find it hard to compete with richer states such as Ohio and Texas that can offer huge financial incentives to draw companies. Those incentives are crucial for startups that need help upfront but may not be a big lure for mature companies.
Moreover, Colorado also doesn’t offer much of a presence outside the U.S., except for a lone trade office in Mexico. That could become an issue if one considers that foreign companies, especially in Europe, have made big leaps in the invention and marketing of renewable energy and related products in past years.
Denver’s biggest hurdle is that it is competing against other megapolitan areas, Clark said.
Megapolitans such as North Carolina, South Carolina and Atlanta, or the Interstate 35 corridor stretching from Texas through St. Louis., or even Arizona with Southern California can combine their financial and infrastructure resources to attract and retain investors.
“The challenge for us is that major metro regions in the United States are getting together,” Clark said. “Denver is by itself; we cannot create a megapolitan area with Casper or Pueblo.
“The big challenge is to realize the vital importance of the Denver International Airport as our premier asset for competing in the global economy, and attention needs to be turned toward its expansion.”
chakrabartyg@RockyMountainNews.com or 303-954-2976