States Look to Renewable Industry Jobs to Power New Economy
by Mikel Chavers
Virginia Sen. Frank Wagner fondly remembers living for a week in Virginia Tech’s experimental and innovative solar house on the grounds of a science museum in Richmond three years ago. The house used the sun to power everything in it—from its appliances to radiant floor heating.
He carries those memories of renewable energy in action with him when he campaigns to bring more green jobs to his state and when he strives to bring offshore wind farms to Virginia’s coast.
Wagner believes offshore wind farms are key to creating green jobs. In fact, other states are looking to cutting-edge renewable energy technology projects ranging from offshore wind farms to underwater wave-power farms that create electricity from the waves and more, for desperately needed jobs.
“The fact that we spend so much of our money outside the borders of this country buying energy … I try to focus on those things that create American jobs to produce American energy for American homeowners and American industry,” Wagner said.
But because these renewable projects often use new and expensive technology, it’s the old prototype challenge. Many need help becoming financially feasible and many won’t make money for years. A wave farm project off the coast of Oregon, for example, isn’t expecting to make money for three years and is relying on selling anticipated state tax credits it receives to survive. (See WATER case study.)
But these projects are also getting a financial boost from the stimulus, and states are leveraging the federal dollars for green jobs.
“Certainly with the amount of money that’s on the streets now, with the stimulus package, there’s a real market pull to get people into these (green) jobs that can accomplish spending that money well,” said Suzanne Watson, director of policy for the Washington, D.C.-based American Council for Energy-Efficient Economy.
The number of green jobs created by federal Recovery Act dollars is not overwhelming. Just more than 22,000 green jobs were generated thanks to the stimulus by year’s end 2009—nearly a year after the Recovery Act passed, according to a report by The Council of State Governments. These jobs were supported by stimulus funds through the Department of Energy, Department of Labor and Environmental Protection Agency.
But in the hunt for green jobs—with its ever-widening definition—the clean energy technology sector might not be the savior for states hungry for jobs, according to a new report by consulting firm McKinsey Global Institute. The innovative emerging sector is just too small by itself to make a difference to economy-wide growth, according to the report. Instead, low-tech green jobs such as improving building insulation and replacing older, less energy-efficient heating and cooling systems in buildings have greater potential to create jobs than developing renewable technology solutions, McKinsey reports.
And not all states will be winners in the new clean energy economy, said Chris Whatley, director of The Council of State Governments’ Washington, D.C., office.
“There are certainly going to be widely dispersed opportunities in new energy but in terms of places where you end up having companies who really build up to scale and who are exporting technologies and playing a global role within the sector, that’s going to be just in a few places,” he said.
Watson said the biggest influence on where renewable energy companies locate is states that have rules in place requiring energy efficiency and renewable energy.
For businesses, it’s a “no brainer for them to look to states that are putting in place these standards,” Watson said. “Those states are where the market is; they know the work is there.”
With the beginnings of these projects often come indirect jobs involved in installing that first wind turbine or putting in new lighting sensors. But the prize most states are chasing are those manufacturing jobs that provide the materials and upgrades for the projects.
Wagner from Virginia thinks for some renewable industries, states are still waiting for the manufacturing jobs. For offshore wind farms, the turbines actually sit in the water on federal land and must get federal permission to build. He said states are in a holding pattern right now because it takes seven to nine years to get an offshore wind farm permitted.
And without strong, established offshore wind projects, it’s hard for a manufacturer to locate their offshore wind turbine manufacturing here, he said.
“Manufacturers have made it crystal clear they’re not willing to make that kind of commitment until they see a commitment out of our federal government for substantial acreage set aside for this that would show them the market they need to be able to make a decision to establish a manufacturing plant somewhere in this country,” Wagner said.
With that as the backdrop, here are the new frontiers for jobs in renewable industries:
EARTH | States Turn Sawdust, Plant Materials into Heat and Electricity
A 133-bed juvenile detention facility in Charleston, Maine, will use wood pellets for heat.
Sawdust or pulp not good enough for lumber or to make paper can be pulverized and made into a pellet—
a renewable energy source known as biomass.
The state corrections department will use the next-generation wood pellet boiler to reduce the facility’s oil consumption by 145,000 gallons of heating oil a year, according to Maine Gov. John Baldacci’s office.
In fact, Maine is currently using $11.4 million in stimulus funds to convert 15 public buildings to wood chips or pellet-fueled heat, which is often cheaper than heating with oil.
That’s also important because 85 percent of what Maine spends on oil leaves the state, according to Alec Giffen, director of the Maine Forest Service.
“If you use biomass, the money that you’re spending is largely re-circulating within your state economy because you’re paying landowners, you’re paying loggers, you’re paying truckers, you’re paying people who run these various kinds of manufacturing facilities such as pellet manufacturers,” Giffen said. “So, it’s a boom for the economy.”
In fact, the forest products industry generates 77 percent of the nation’s industrial biomass energy, said Carlton Carroll, spokesman for the American Forest and Paper Association.
He said the industry has been producing renewable energy for at least 80 years, and it’s important to continue to support the old biomass—such as sawdust and wood chips—as well as the new kinds of biomass like cellulosic ethanol, a fuel for vehicles made from plant materials.
A federal subsidy for biomass—called the Biomass Crop Assistance Program—could also help Maine and other states beef up renewable energy efforts. That program benefits those who harvest the biomass, covering suppliers of wood chips, fats, oils and greases, for example.
A Vermont school that will run on biomass, a start-up company that turns waste from Iowa farms into pellets and a rural electric cooperative that uses woodchips to make low-cost electricity in northeastern Georgia are already benefiting from the program, according to the U.S. Department of Agriculture.
WIND | Turbines to Spin Offshore, Wind Industry Taxed in Wyoming
Giant wind turbines will appear to rise from the water more than 13 miles off the coast of Rehoboth, Del., beginning in January 2014. Nearly 100 wind turbines will start generating 450 megawatts of electricity by the end of that year.
This is the next generation of wind power projects.
Developer NRG Bluewater Wind LLC expects the project will create 500 construction jobs and 60 to 80 permanent operations and maintenance positions.
“Up and down the Eastern seaboard, we’ve seen the governors go out of their way to support offshore wind,” said Peter Mandelstam, founder and president of Bluewater Wind. “We believe this kickstarts the wind energy industry—which will lead to jobs,” Mandelstam said.
Governors from 29 states are interested in those wind industry jobs and formed the Governors’ Wind Energy Coalition. The coalition recommends 20 percent of the nation’s electricity needs come from wind power. In Rhode Island, home of the coalition’s co-chair Gov. Donald Carcieri, developer Deepwater Wind is working on an offshore wind project.
In Massachusetts, Boston-based Cape Wind is waiting for final approval of a federal permit to build an offshore wind farm in Nantucket Sound. Critics of that project say the turbines will block the view.
Critics of wind turbines Wyoming also say they block the view. Traffic from maintenance vehicles for the turbines also creates wear and tear on some rural county roads—leaving the state and counties to shoulder the burden of the wind farms’ impact, they say.
So the state passed a $1 per megawatt hour tax on the wind industry effective January 2012.
“If you’re going to do it here in Wyoming, if you’re going to impact our viewsheds and impact our roads … you’re going to have to pay a little bit,” said Wyoming Rep. David Miller, who co-authored the law.
Miller also thinks wind energy relies too heavily on government for what he considers very little benefit.
“Basically, wind turbine generation is heavily, heavily subsidized and has heavy, heavy tax credits attached to it,” Miller said. “The energy generated is minuscule also.”
WATER | States Catch Waves for Electricity
Gnarly waves off the coast of Oregon aren’t just for surfers anymore—they’ll be making electricity.
Off the coast of Reedsport, Ore., Ocean Power Technologies Inc. will install a large buoy this year that will produce 150 kilowatts of electricity from bobbing up and down with the ocean’s waves. Next year, another nine buoys will join the project.
Jobs are coming. Just building the first buoy in Oregon is employing 30 people, according to Oregon Sen. Jackie Dingfelder.
The project could have as many as 100 buoys and later phases of the project will use the new style of power buoy—a 500 kilowatt buoy supplying enough electricity to power 250 homes, according to Philip Pellegrino, vice president of business development with Ocean Power Technologies.
His company is working on projects in New Jersey and Hawaii. Although the project in New Jersey was a pilot project for research and development, a buoy in the water in Kaneohe Bay, Hawaii, will be connected to the power grid this month to supply electricity to the Marine Corps base there.
But there’s a challenge for the cutting-edge wave power projects: They won’t make money for years and rely on incentives to get going.
What’s making the project financially feasible is Oregon’s Business Energy Tax Credit Program. That program offers a tax credit to renewable energy companies for 50 percent of eligible project costs, according to Diana Enright, spokeswoman for Oregon Department of Energy.
Pellegrino said the company doesn’t expect the project to make money for at least three years and therefore won’t have a tax liability in the state—making a tax credit potentially worthless. But, he said, the company can sell the tax credits.
The project owner receives a cash payment of a certain percentage of the credit from another company—it’s based on a complicated formula—and the tax credit is passed along to the other company, which can then use it to offset its tax liability, Enright said.
FIRE | Watch out California, Other Solar States are Gaining on You
Gov. Arnold Schwarzenegger’s Million Solar Roofs plan catapulted California into solar stardom. But New Jersey and other states are giving California a run for its money when it comes to solar.
Altogether, more than 5,300 New Jersey residential, commercial, public and nonprofit entities have installed a solar electric system.
The state uses a slew of incentives to promote renewable energy through its Clean Energy Program, including the Renewable Energy Manufacturing Incentive and Solar Renewable Energy Credits.
“Here we’ve spent about $312 million on incentives to promote these programs,” said Lee A. Solomon, president of the New Jersey Board of Public Utilities. The New Jersey Board of Public Utilities established the Office of Clean Energy to run the state’s Clean Energy Program.
Those incentives brought jobs, Solomon said. “(The state) clearly has been successful in promoting the development of solar,” he said. “We have companies that are growing as companies by producing solar panels and facilities.”
But the total return on the investment is debated, Solomon said. That’s because solar, based solely on market factors was not fiscally competitive, Solomon said. Solar needed incentives.
But energy and energy creation is “not just about cost. If it was, we’d be gravitating toward coal,” Solomon said. The bottom line is this: Are we willing to spend a little more to get energy that has other societal benefits to it, Solomon said, even though that energy isn’t the cheapest option.
Colorado also just upped the ante when it comes to renewable energy. By law, the state now requires 30 percent of electricity be generated from renewable sources by 2020. That move will create thousands of new jobs and lead to 100,000 solar rooftops over the next decade.
Colorado Sen. Gail Schwartz said 230 solar businesses have already located in Colorado and she expects that number to increase with the new law.
“Even in this downturn, we’re still seeing new companies investing in Colorado,” Schwartz said.