Cover Story: New Energy Powers Growth
By Jenny Vickers and Jack Rogers
From the March/April 2014 issue
Ever since the oil shocks of the 1970s, a primary U.S. national security concern has been reducing our dependence on foreign oil. As the 21st century dawned, the looming reality of climate change added new urgency to efforts to move from fossil fuels to cleaner alternatives. But the long-stated goal of achieving energy independence—and doing it in a way that’s cleaner and greener—seemed just a few short years ago to be unreachable in our lifetimes.
What a difference five years can make. Since 2008, the U.S. energy outlook has been transformed by nothing short of an Energy Revolution. Breakthroughs in a horizontal drilling technique known as hydraulic fracturing (a.k.a. fracking) have unlocked vast deposits of natural gas (and new oil reserves) from deep underground formations of shale across North America, enabling the U.S. to become a net exporter of energy for the first time in half a century.
During the Great Recession, the lion’s share of stimulus funding was earmarked for renewable energy projects, including wind, solar and biofuels. These investments now are paying off with exponential growth in installed wind and solar power generation capacity. Development of hydropower and geothermal energy is moving forward at a rapid pace. Regions strong in alternative energy also are getting serious about installing new transmission grids to get new energy to market.
In this report, we take a comprehensive look at the Energy Revolution. Join us as we zero in on the locations where New Energy is powering growth.
[Editor’s Note: The natural gas section of this feature was written by Jack Rogers. All other sections were written by Jenny Vickers.]
GAS BONANZA KEEPS EXPANDING
Pennsylvania went from importing 75 percent of its natural gas requirements in 2007 to becoming a net exporter of natural gas in 2011; PA is now the second-largest natural gas producing state in the United States.
The Marcellus Shale Formation, which contains nearly 500 trillion cubic feet of recoverable natural gas, has seen more than 7,700 new wells drilled in Pennsylvania since 2008. Shale gas development contributed more than $14 billion in economic activity in PA in 2012, when shale gas production in the state topped 2 trillion cubic feet, enough to meet 10 percent of U.S. demand. Early estimates for 2013 production project that output in PA topped 3 trillion cubic feet last year.
Since the onset of shale gas production, Pennsylvania businesses and homeowners have benefited from a 50 percent decline in natural gas prices and a corresponding 40 percent reduction in the cost of electricity. State officials estimate more than 240,000 people are working in jobs created or made more prosperous by the Marcellus and Utica shale gas plays.
The Ben Franklin Technology Center of Central and Northern Pennsylvania was awarded a $750,000 Discovered in PA—Developed in PA (D2PA) grant to support the Shale Gas Innovation and Commercialization project. Launched by the Shale Gas Innovation and Commercialization Center (SGICC), the initiative is designed to harness entrepreneurial innovation to maximize the economic return from the Marcellus and Utica shale formations. The initiative will focus on the commercialization of emerging technologies that increase the value of natural gas utilization.
SGICC will use the bulk of the D2PA funds to provide grants to PA-based small companies to demonstrate the feasibility of emerging technologies, or seed funds to test and help launch ideas, and to assist in market acceptance and growth of shale energy focused products or services. These grants will be available statewide in order to support the commercialization of new technologies leading to the creation of high-paying, sustainable jobs in the commonwealth.
Pennsylvania’s energy-focused incentives include tax credits, tax abatements, loans, loan guarantees and grants for different types of energy-related uses. The PA Resource Manufacturing Tax Credit provides incentives for manufacturers using natural gas and is aimed at large-scale capital investments of $1 billion or more.
Gov. Tom Corbett launched “Energy=Jobs,” Pennsylvania’s first State Energy Plan, during a visit to Penn College of Technology in Williamsport.
“Here in the Keystone State, we know that energy equals jobs,” Gov. Corbett said. “Pennsylvania’s abundant natural resources, sound public policies, improved business climate, skilled workforce and commitment to competitive markets are second to none.”
Natural gas also is lifting the state economy in Louisiana. In December 2012, Sasol announced plans to invest up to $21 billion in an integrated natural gas-to-liquids (GTL) and ethane cracker complex in Westlake, LA. In addition to creating 1,253 direct jobs, the project is expected to result in an additional 5,886 new indirect jobs and 7,000 construction jobs. One of the largest foreign direct investment manufacturing projects in U.S. history, it is expected to produce a total economic impact over the next 20 years of $46.2 billion. The 96,000 barrels-per-day GTL facility, the first of its kind in the U.S., will produce high quality transportation fuels, including GTL diesel, as well as other value-adding chemical products.
A companion ethane cracker will produce the chemical building block ethylene that is in high demand for many manufacturing applications, such as solvents, surfactants, polymers and other alcohol- and plastics-based products.
Already the nation’s No. 2 crude oil producer and No. 3 natural gas producer (including offshore production), Louisiana is uniquely poised to create significant next-generation energy growth. With 32 ports statewide, Louisiana offers six deep-draft ports capable of transferring large quantities of cargo, is one of only two U.S. states with service to all six Class I railroads, and offers more than 7,300 miles of oil pipeline and 11,200 miles of gas pipeline. So evolved is Louisiana’s pipeline infrastructure that the state’s No. 1 density ranking of 0.691 pipeline miles for each square mile of land is more than 2.5 times that of the Nos. 2-5 states (Ohio, 0.250; Mississippi, 0.233; Pennsylvania, 0.223; and Texas, 0.210), according to the U.S. Energy Information Administration.
Combined with those infrastructure advantages, the advent of low, stable natural gas prices in the U.S. has made Louisiana a prime development state for major capital investments in new and expanding process industries–manufacturers that rely heavily upon natural gas as a feedstock. In addition to the Sasol project, Southwest Louisiana now has several major LNG, or liquefied natural gas, export projects under development (Cheniere Energy, Sempra Energy, BG Group and Energy Transfer Partners joint venture, Magnolia LNG)—projects that represent a combined $31 billion in new capital investment; more than 700 high-paying, new direct jobs; and thousands of new construction and permanent indirect jobs.
A HEFTY GUST OF WIND POWER
Wind power in the U.S. quadrupled in the last five years, with four states possessing enough wind turbines to supply more than 20 percent of their annual electricity needs, according to a study published in December by the non-profit Environment Ohio Research & Policy Center.
Wind energy is now the fifth-largest electricity source in the U.S., according to the latest data from the Department of Energy’s Energy Information Administration (EIA). States poised for major growth in wind energy in coming years include Iowa, Kansas, Texas, Nebraska, North Dakota and Michigan.
Record growth of the industry resulted from the extension of the federal Production Tax Credit (PTC) in 2013, which provided up-front tax relief of 2.3 cents per kilowatt (KW) hour for the first 10 years of a project. Growth also has been driven by investments in new technology that has lowered the cost of wind energy by 43 percent in just four years.
According to the American Wind Energy Association (AWEA), at the end of 2013 more than 12,000 megawatts (MW) of new wind-power generating capacity was under construction, with a record-breaking 10,900 MW starting construction activity during the fourth quarter of 2013 (a total 47,000 utility-scale wind turbines have been installed nationwide).
The wind industry is helping the U.S. avoid almost 100 million tons a year of carbon dioxide emissions and save enough water to supply the annual water needs of more than a million people. That number will rapidly grow as wind energy scales up to 20 percent of the grid and beyond—making the addition of more wind power one of the fastest, cheapest and largest-scale ways for states to meet new federal goals for reducing carbon pollution from power plants.
Iowa’s position in the middle of the U.S. “wind corridor” has created a hotbed of activity in the Hawkeye State. In 2012, Iowa generated more than 24 percent of its electricity from wind power; the state has the third-highest installed wind capacity of any state (5,177 MW) and is the hub of the wind-turbine manufacturing industry.
Today, there are 3,198 utility-scale wind turbines in operation in Iowa and 100 wind projects online and producing electricity in the state. The Iowa wind energy industry supports up to 7,000 jobs, third in the country in employment related to the wind energy industry. The state is home to Acciona, a major turbine manufacturer, two major blade manufacturers (Siemens and TPI Composites) and a major tower manufacturer—Trinity Structural Towers.
In November 2013, MidAmerican Energy Co. broke ground on a 500 MW wind farm, the largest single site in Iowa history. Called the Highland Wind Energy project, it will construct 218 wind turbines spread out over 70,000 acres in O’Brien County. The project is part of a $1.9-billion expansion of Iowa’s wind generating capacity that the Des Moines-based utility announced in May 2013. The expansion consists of five new projects and will add up to 1,050- MW of wind generation in Iowa by the end of 2015.
The foundation work for the Highland turbines started last fall and should be done by the end of the year, with the turbines and the more than 650 blades set to go up by the end of 2015. The other new expansions are the 250 MW Lundgren wind project in Webster County; a 138.6 MW Wellsburg wind project in Grundy County; and a 117 MW Macksburg wind project in Madison County. The expansion also includes a 44 MW Vienna II wind project in Marshall County, which was fully constructed and completed in December 2013.
According to MidAmerican Energy, these new projects will provide more than $3 million in landowner payments each year and more than $360 million in additional property tax revenues over the next 30 years. The expansion will be constructed at no net cost to the company’s customers and will help stabilize electric rates over the long term by providing a rate reduction totaling $10 million per year by 2017, commencing with a $3.3 million reduction in 2015.
Approximately 1,000 construction jobs will be added to Iowa’s economy during the two-year construction period, and approximately 40 new permanent jobs will be added when the expansion is complete.
In addition, the company has contracted with Siemens Energy to supply all 448 turbines—the blades will be constructed in the Fort Madison, Iowa plant and the nacelles in the Hutchinson, KS plant. The company announced this past December that the order is the largest onshore wind turbine order in the world.
Once these projects are completed, the 1,050 MW wind expansion will generate enough electricity to power the equivalent of approximately 317,000 average Iowa households.
Mike Dellinger, executive director of Advance Southwest Iowa Corporation, said wind power was a key reason Google chose to locate three of its data center facilities in Council Bluffs, IA and it already is influencing other industrial and commercial users that are considering the greater Omaha region for capital investment.”
Iowa also is in the midst of developing a major high-voltage transmission line called the Rock Island Clean Line. The 500-mile line will export 3,500 MW of wind-generated electricity—three times more energy than the Hoover Dam—from northwest Iowa and bordering states to communities in Illinois and other states to the east.
The developer, Houston-based Clean Line Energy, is awaiting approval from regulators in Iowa and Illinois before going ahead with the direct current line. In February, the company announced an agreement designating an Iowa-based manufacturer, Sabre Tubular Structures, as a preferred supplier of transmission structures for the project. The company estimates the line will be in service in 2017, with construction beginning next year in O’Brien County.
“The Rock Island Clean Line project, along with leading Iowa manufacturers, like Sabre, are enabling one of our state’s most abundant resources—wind—to go to market, thus creating jobs and stimulating our economy,” said Debi Durham, director of the Iowa Economic Development Authority.
Clean Line projects the $2 billion project will create 2,000 construction jobs and 500 permanent jobs, as well as spur development of up to 2,000 wind turbines within a 100-mile radius of the county. Iowa also is in the midst of developing a new regional wind resource center.
The U.S. DOE, in cooperation with the National Renewable Energy Laboratory (NREL), has announced that a collaborative grant application submitted by IWEA, Windustry, and Wind Utility Consulting with sponsorship from the Iowa Energy Center had been accepted to develop a Midwest & Prairie Regional Wind Resource Center. The three-year grant, which includes up to $487,500 of DOE funding, will be administered by NREL. Matching funds, both cash and in-kind, will be provided by the Iowa Energy Center, Windustry, IWEA, Wind on the Wires and Wind Utility Consulting. The grant anticipates that the center will become self-sustaining after the initial three-year period.
The Midwest & Prairie Regional Wind Resource Center will disseminate information about the economic benefits of wind energy to the region, expand and preserve access to quality regional wind resources, and communicate with stakeholder groups to ensure accurate and reliable information about wind energy development.
With open skies and plenty of open space, Nebraska ranks near the top of the nation in its ability to generate energy from wind, crop waste and energy crops, solar power and biogas. Wind is by far the state’s lowest cost renewable energy resource and has considerable potential.
According to the NREL, Nebraska has the potential to build 7,800 MW of wind power by the year 2030—developments that could bring tens of thousands of new jobs. The wind industry already supports up to 1,000 jobs in the state.
Nebraska currently ranks fourth in wind energy resources in the nation, according to AWEA. In 2013, 459,380 kilowatt (KW) hours were generated by wind farms in Nebraska, a number that is expected to reach 534,380 KW hours in 2014. The state currently has 313 operational wind turbines.
Two of the state’s largest wind farms are Elhorn Ridge and Laredo Ridge, each with a capacity of 81 MW. One of the newest projects to come online is the 44-turbine Steele Flats wind farm. This farm started producing 75 MW of electricity at the end of 2013.
Construction is underway on two wind farms with power purchase agreements in place, according to the Nebraska Energy Office, the 118-turbine Prairie Breeze Wind Energy Farm located near Elgin and a 43-turbine project near Broken Bow. The projects near Elgin and Broken Bow are expected to begin producing electricity this year.
“These three new projects amount to over $1.25 billion in project investment. In addition, local landowners benefit from the turbine ground lease agreements, local schools benefit from the property tax paid by these projects, and local businesses benefit from temporary construction jobs and from the permanent new jobs which remain after the projects are completed,” said Dean Mueller, Omaha Public Power District (OPPD) manager of Sustainable Energy & Environmental Stewardship.
Nebraska is the only all public power state in the country, which means wind resources in the state must be sold to Nebraska utilities which have all of the retail customers in the state. Two of the biggest utilities are OPPD and Nebraska Public Power District (NPPD). The state also has no renewable portfolio standard.
However, utilities have set voluntary goals to have renewable energy account for 10 percent of their electricity by 2020, most coming from wind power. Legislation was recently passed to allow the export of Iowa wind power outside of the state.
“At OPPD we will be at 15 percent renewable energy by July and we will be at 30 percent renewable energy by December 2016,” said Mueller.
NPPD is geographically the state’s largest electric utility and uses a diverse mix of generating facilities, such as nuclear, coal, gas, hydro and renewable energy. In 2012, NPPD relied upon carbon-free energy sources for more than 40 percent of its overall resource mix.
“In recent years, NPPD has significantly upgraded its high-voltage transmission system, to enhance reliability and provide pathways for incorporating our state’s growing wind energy resources into the grid,” said NPPD Sustainable Energy Manager Dave Rich.
Current incentives include a Sales and use Tax Exemption for Community Wind Projects that can be applied to gross receipts on the sale, lease or rental of personal property for a community-based energy development (C-BED) project and a Property Tax Exemption for Wind Energy Generation Facilities that can be applied to 100 percent of appreciable tangible personal property tax (payment in lieu of tax required).
Wind energy also has a big environmental impact in the state. The water consumption savings from wind projects in Nebraska total more than 350,000,000 gallons of water per year. The wind power installed in Nebraska also will avoid over 950,000 metric tons of carbon dioxide emissions annually, the equivalent of taking more than 165,000 cars off the road.
TEXAS RULES THE ROOST
Texas is the national leader in wind energy—with more installed capacity, more wind turbines and more wind- related jobs than any other state. TX also is a manufacturing hub for the wind energy industry and home to seven of the nation’s 10-largest wind farms.
The Lone Star State recently flipped the switch on one of the largest transmission expansion projects ever completed and has announced a plan to build one of the largest wind farms in the nation. Over the next decade, the state plans to add 6,000 MW of wind power to the electric grid, a 58-percent increase over what blows in today.
According to the AWEA, Texas is no. 1 in wind installations with 12,355 MW of installed capacity, enough to power over 3.3 million average American homes. On May 2, 2013, Texas wind generation hit a record of 9,674 MW. “The wind energy industry has created thousands of jobs and provided billions of dollars in economic benefits in Texas,” said Jonathan Taylor, executive director of Economic Development and Tourism.
The wind boom in Texas was assisted by the expansion of the state’s renewable portfolio standard (RPS), use of designated Competitive Renewable Energy Zones and expedited transmission grid construction. The current RPS provisions require 5,880 MW of renewable energy by 2015. The state also has a target of reaching 10,000 MW of renewable capacity by 2025, a target that the wind energy industry met in 2010.
In January, Texas completed the last segment of the $6.8 billion Competitive Renewable Energy Zone transmission project (CREZ), capping nearly a decade of planning, upgrades and new construction along 3,600 miles of high-voltage transmission lines across central and West Texas. CREZ is being overseen by the Electric Reliability Council of Texas (ERCOT), which runs the state’s largest electricity grid (and one of three grids in the nation located in Texas). The project is one of the largest transmission expansions to bring renewable energy to the market.
The new expansion is allowing CREZ to transmit 18,500 MW of wind power—much of it emanating from windy West Texas—to load centers in the eastern part of the state. That’s about 50 percent more capacity than is currently installed in Texas and more than three times as much as any other state. CREZ has helped to spur a surge in new wind farm projects in West Texas and the Panhandle, where the new lines have opened millions of acres for potential development.
The 161 MW Spinning Spur Wind Project began generating power in December 2012 and gained fame when Internet giant Google invested $200 million in the project. The project is owned by EDF Renewable Energy, one of the largest wind energy developers in the Amarillo area, which is in the process of building two additional wind farms, known as Spinning Spur 2 and Spinning Spur 3, boosting the complex’s capacity to 516 MW.
Dallas-based Tri Global Energy announced in September it plans to build a 1,100 MW wind farm near Lubbock with up to 650 wind turbines—which would make it the largest wind farm in the country and among the largest in the world. The Tri Global project, which includes partners Lakeview Wind Farms and East Mound Renewable Energy Project, will span 122,000 acres (190 square miles).
Additional TX projects include:
- Hereford Wind with 499 MW in Castro County (to be completed in April)
- Conway Windfarm with 600 MW in Carson County (December)
- Comanche Run Wind with 500 MW in Swisher County (December 2015).
Texas also is home to numerous wind energy manufacturers, including turbine maker DeWind, five major tower manufacturers, blade manufacturer Molded Fiber Glass and many component suppliers. At least 35 Texas facilities manufacture components for the wind energy industry. Overall, the wind industry supports over 10,000 jobs in Texas, the number one ranking for wind-related jobs in the nation.
With its wind power, Texas has eliminated 22 million metric tons of carbon dioxide emissions annually and saved more than 8.1 billion gallons of water per year.
GEOTHERMAL HEATS UP IN UTAH
Scientists have discovered a potential geothermal goldmine in the Black Rock Desert Basin in western Utah. The Utah Geological Survey has identified an approximately 100-square-mile area that could eventually support power plants that could conservatively produce hundreds of megawatts (MW) of electricity. A MW is enough energy to run the appliances in 750 homes.
Geothermal energy—tapping into the heat of the earth—is a particularly attractive green energy source because it works all the time, unlike wind and solar power, and is therefore suitable for base load power like fossil fuel power plants.
According to the Geothermal Energy Association (GEA), Utah continues to be a strong player in the geothermal industry, outpacing most of its neighboring states in electrical generation and on tap to increase capacity with 19 projects under development, which could eventually generate a lot of jobs and economic growth. Although geothermal isn’t growing as fast as other renewables, like wind and solar, the industry is heating up. As 2013 came to a close, the GEA identified 70 countries that are moving forward with nearly 700 geothermal power projects, compared with a similar report from 2007 that showed only 46 countries that were developing or actively considering geothermal projects.
The U.S. is the global leader in geothermal capacity with 3,386 MW, which accounts for 3 percent of the renewable energy-based consumption in the U.S. Last year, geothermal power production grew by 5 percent and right now there are 175 geothermal projects in development and as many as 14 more plants could be operational this year.
While nowhere near the capacity of California—the nation’s leader in installed capacity for geothermal resources at 2,732.2 MW or Nevada’s 517 MW—Utah has outpaced most other Western states and remains a hotspot for would-be developers, says the GEA.
The majority of Utah’s geothermal energy comes from PacifiCorps’ Blundell plant near Milford and Raser Technology’s Hatch/Thermo Hot Springs plant in Beaver County.
“We actually really like geothermal energy,” said Samantha Mary Julian, director of the Utah Office of Energy Development in a Feb. 26, 2013 Deseret news article. “It is truly a clean, renewable energy and it has a unique quality that the others do not. It is a base power that goes all the time, not just when the wind is blowing or the sun is shining. It’s just a clean product.”
Utah’s third biothermal plant, the Enel North America’s Cove Fort plant, came online at the end of 2014. The $126 million project adds 25 MW of installed capacity to Utah’s geothermal power grid. According to Utah’s Energy Development Office, the plant could boost the state’s production capacity by 50 percent.
With regulatory uncertainty related to carbon and other emissions, Utah’s geothermal industry is poised for growth. A 2009 study commissioned by the State of Utah has identified 2,166 MW of geothermal potential existing with the state.
To help spur geothermal growth, the state offers a Renewable Energy Systems Production Tax Credit, which is worth $0.0035 per kilowatt hour (kWh) for the first four years of a geothermal project’s life. It also has an Alternative Energy Development Incentive, which is worth 75 percent of all newly generated state revenue (not inclusive of local property tax) for the first 20 years of a project life.
The federal government also offers the Production Tax Credit (PTC), which has helped support the expansion of U.S. geothermal power production. However, these federal tax credits expired at the end of 2013. Industry advocates say for geothermal and other renewables to continue to expand, the PTC must be extended.
“To achieve more dramatic growth, geothermal needs continued and predictable federal incentives to spur investors to undertake the risk of investing in new geothermal projects,” says Karl Gawell, GEA executive director.
NEXT-GEN BIOFUELS EMERGE IN MN
The U.S. biofuels industry has boomed in recent years, thanks to high oil prices and a growing demand for alternatives. Today, fuel and other types of energy produced from biomass roughly match hydropower as America’s largest source of renewable energy.
Since 2010, the growth of the U.S. biofuels industry under the Renewable Fuel Standard (RFS) has been a valuable part of the economy and today supports over 350,000 jobs. The RFS, which establishes minimum usage requirements to guarantee a market for biofuels, was created as part of the Energy Policy Act of 2005 and was expanded under the Energy Independence and Security Act of 2007.
The Act calls for 21 billion gallons of “advanced biofuels”—based on materials other than corn—to be produced by 2022. The act creates safeguards for biofuels designed to ensure that they reduce greenhouse gas pollution and don’t cause environmental harm.
Companies in this industry produce ethanol and biodiesel, produced from crops such as corn, soybeans and pressed sugar cane. In a few years, biofuels will likely also be produced from forestry and agricultural waste, such as corn stovers, rice husks and mill residues.
Major biofuel producers in the U.S. include Aventine Renewable Energy and Green Plains Renewable Energy, as well as units of traditional fuel makers like Valero and Chevron and crop processors like Archer Daniels Midland and Bunge Limited. POET is one of the largest ethanol producers in the U.S. and has four plants in Minnesota. Their Project Liberty in Emmetsburg, Iowa, is the first to coordinate an agricultural supply chain for biomass used to produce cellulosic ethanol.
This month, the U.S. Department of Agriculture (USDA) announced it is investing almost $60 million in the production of advanced biofuels, with biodiesel receiving a lion’s share of the funding. The Advanced Biofuel Payment Program, established in the 2008 Farm Bill and again supported in the recently signed 2014 Farm Bill, is delivering the funding. USDA Rural Development Acting Undersecretary Doug O’Brien made the announcement on Vilsack’s behalf in Omaha, NE at the National Advanced Biofuels Conference.
“Producing advanced biofuels is a major component of the drive to take control of America’s energy future by developing domestic, renewable energy sources,” Sec. O’Brien said. “These payments represent the Obama Administration’s commitment to support an ‘all-of-the-above’ energy strategy.”
Today, ethanol makes up more than 90 percent of current U.S. biofuels production. In all, the U.S. produces about 16 billion gallons per year: almost 14 billion gallons of ethanol and almost 2 billion gallons of biodiesel. U.S. ethanol production grew by more than 50 percent between 2009 and 2011. Biodiesel production has increased from about 25 million gallons in the early 2000s to a record 1.7 billion gallons in 2013.
From opening its first E15 station, to blending higher amounts of biodiesel, to developing processes to make renewable fuel out of new feed stocks, Minnesota is driving the next generation of renewable fuels, supporting thousands of jobs and generating billions in economic activity.
In November, E15 and E30, a new generation of biofuels, made its official debut in Minnesota’s Twin Cities at a ribbon-cutting ceremony at Penn Minnoco in south Minneapolis.
E15 is a blend of 15 percent ethanol and can be used in all vehicles manufactured in 2001 or after. E30 (a blend of 30 percent ethanol) can be used in flex fuel vehicles only. Both blends are less expensive than gasoline, are produced from renewable corn grown in the U.S. and help improve air quality and reduce greenhouse gas emissions.
“This is really a chance for my neighbors to take another step to do two very important things,” said Minnesota Speaker of the House Paul Thissen at the ribbon-cutting ceremony. “First, we can use these increased ethanol blends to reduce air pollution. Second, by using these blends, we’re reducing our dependence on foreign oil.”
The new E15 and E30 equipment were installed with the help of a public-private partnership offering grants to encourage ethanol fuels consumption.
The Minnesota Department of Agriculture (MDA) teamed up with the Minnesota Corn Growers Association/Minnesota Corn Research & Promotion Council, Growth Energy, Minnesota Biofuels Association and the American Lung Association in Minnesota to provide incentives to station owners to accelerate the adoption of higher ethanol blends and provide consumers more fuel choices at the pump.
Penn Minnoco is one of many applicants to receive assistance from an available $1 million grant provided by the MDA through the Agricultural Growth, Research and Innovation (AGRI) fund. The Minnesota Corn Research and Promotion Council also provided funding from its $2 million program to promote ethanol. These grants are coordinated through the American Lung Association of Minnesota. Over the next two years, many more stations will participate in the grant program, possibly as many as 50.
Overall, biofuels are making a big impact on Minnesota’s economy. According to the Minnesota Department of Agriculture, the state’s ethanol industry has contributed more than $5 billion annually to the state’s economy, and supports more than 12,000 jobs. The state’s ethanol plants are capable of producing more than 1.1 billion gallons each year.
“E15 and E30 help meet rising consumer demand for a more affordable alternative to gasoline and strengthen the market for corn grown right here in Minnesota,” said Minnesota Corn Growers Association president Ryan Buck at the ribbon cutting ceremony. “This is another milestone in the long history of Minnesota corn farmers and their partners being leaders in the renewable fuels market.”
Between the E10 and E85 that have been available for years, Minnesota drivers use approximately 270 million gallons of ethanol annually, while the remainder is exported out of state.
Starting next July, Minnesota could become the first state in the nation to require that most diesel fuel sold in the warm-weather months be a blend containing 10 percent biodiesel, under regulations being discussed by the Minnesota Department of Commerce, Department of Agriculture (MDA), and Pollution Control Agency (PCA) in late September 2013.
Minnesota, like some other states, currently requires a year-round 5 percent blend known as B5 for most diesel sales. The Minnesota Department of Commerce Weights and Measures Division, MDA, and petroleum suppliers and retailers are working to implement the higher biodiesel blend, E10, April-October 2014 and the move to implement B20 on May 1, 2015.
The MDA, along with the Minnesota Corn Growers Association, contributes to a $3 million fund for petroleum retailers to update their infrastructure so that they will be able to sell E15/flex fuel blends on every island of their service station.
Minnesota also is in the process of negotiating contracts with grantees for its NextGen Energy program.
The Next Generation Energy Board was established by the Governor and the Minnesota Legislature in 2007 as part of the Next Generation Energy Act. The “NextGen” Act established nation-leading requirements on Minnesota’s electric utilities, expanded and strengthened the state’s commitment to the development of locally-owned renewable energy projects and put Minnesota as one of the top states leading the way toward reducing greenhouse gas emissions.
In March, the State Legislature held hearings on legislation which include a number of incentives to advance the biofuels industry. The Renewable Chemical and Advanced Biofuel Capital Equipment Loan Fund program will make cash payments available to eligible producers of advanced biofuel, renewable chemicals and biomass thermal.
A qualifying facility must source at least 80 percent of its feedstock from Minnesota and they must be from agricultural or forestry sources or the organic content of municipal solid waste. Existing biofuels, as well as new producers, are eligible for the payment. Advanced biofuels facilities must produce at least 950,000 MMBtu per year, renewable chemicals facilities must produce at least 30,000,000 pounds per year and biomass thermal facilities must produce at least 7,500 MMBtu per year to qualify.
The cash payment incentives are designed to replicate the success of the Minnesota ethanol producer payment program from the 1990s that helped launch Minnesota to the vanguard of the renewable fuels industry.
SKY’S THE LIMIT FOR SOLAR POWER
The solar industry is one of the fastest-growing sectors in the U.S., creating clean energy jobs for more than 142,000 workers and generating thousands of megawatts (MW) of power. In 2013, the solar industry added nearly 23,000 new jobs, representing a growth of nearly 20 percent from 2012, according to a new study by The Solar Foundation (TSF), an independent nonprofit solar research and education group.
“The solar industry’s job-creating power is clear,” said Andrea Luecke, Executive Director and President of TSF in a January press release. “The industry has grown an astounding 53 percent in the last four years alone, adding nearly 50,000 jobs. Our Census findings show that for the fourth year running, solar jobs remain well-paid and attract highly-skilled workers. That growth is putting people back to work and helping local economies.”
According to TSF, since 2008, the amount of solar powering U.S. homes, businesses and military bases has increased six-fold—from 1,100 MW to more than 7,700 MW today, which is enough to power more than 1.2 million American homes. Some of this growth is attributed to the fact that the cost of a solar system has dropped by nearly 40 percent over the past two years, making solar more affordable than ever for consumers.
California and Arizona are well known solar states, but New Mexico’s and New Jersey’s solar industries have lit up with rapid growth in recent years.
With over 310 days of sunshine, aggressive incentives and a low cost business environment, New Mexico is one of the leading solar energy regions in the U.S. The state has a total of 236 MW of solar capacity, enough to power about 48,000 homes. In 2013, New Mexico installed 45 MW of solar capacity, up from 24 MW installed in 2012. Overall, the solar industry has 82 companies that provide jobs to almost 2,000 people.
New Mexico’s solar industry is part of an overall strong renewable resource base which includes wind energy, biofuels and geothermal. To help stimulate development of utility-scale concentrating solar power (CSP) projects throughout the state, the state has adopted substantive policy measures.
The Solar Market Development Tax Credit, established in 2006, created an income tax credit for homeowners, businesses and agricultural entities that install solar PV or solar heating systems. Other distributed solar initiatives are the Solar Gross Receipts Tax Exemption, “Solar-Ready Roofs” Act and a strengthened Solar Rights Act. Other renewable energy tax credit programs applicable to solar power generation include the Alternative Energy Product Manufacturer’s Tax Credit and the Advanced Energy Deduction.
At the utility scale, the state’s electric companies are expanding solar-generation capacity. Public Service Company of New Mexico (PNM), for example, had 22 MW of PV plant power as of 2012, and
added another 20 MW in 2013, enough to power 13,400 average New Mexico homes. First Solar Inc. also is building a 50-MW PV plant to supply El Paso Electric Co., making it the largest solar plant in New Mexico.
The state’s Renewable Portfolio Standard (RPS) requires that 20 percent of all electricity sold by investor-owned electric utilities and 10 percent sold by cooperatives come from renewable energy sources by 2020.
In August 2013, PNM and First Solar installed the first of more than 100,000 panels at its new PNM Manzano Solar Energy Center in Valencia County. The installation provided 160 construction-related jobs and once complete, the energy produced by the 8-MW facility will equal the annual consumption of 2,600 homes, representing PNM’s largest solar electric plant to date. This project is one of four new solar projects planned by PNM to double the amount of solar capacity the utility will own in 2014, costing a total of $180 million.
In April 2013, PNM broke ground on its $17.5 million Otero County Solar Energy Center, which consists of 101,250 solar panels on 54 acres that will provide 7.5 MW of electrical power. The project brought 115 construction-related jobs to the area and will provide enough electricity for 2,450 average homes and reduce carbon emissions by 7,200 tons—or the equivalent of removing 1,360 cars from the road.
New Mexico also is home to a new solar producer, Solaro Energy, which relocated its headquarters from California to New Mexico in January 2013. Solaro Energy, producer of residential and commercial products, such as solar-powered attic fans and lighting, invested about $15 million to build a 60,000-square-foot complex at the City of Socorro’s industrial park. The company hired 15 new employees at its new headquarters and will hire up to 100 employees over the next few years for additional projects.
The company opened a second 12,000-square-foot building in late summer 2013 and is planning a much larger, 3,000-square-foot facility to open in 2014 that will house the nation’s first low-wattage solar cell factory.
The project is self-financed by Solaro Energy President and CEO Dennis Grubb. According to an Albuquerque Journal news article, Mr. Grubb will seek the state’s Job Training Incentive Program assistance, but no other local or state aid. Solar Energy was launched by Mr. Grubb in 2008. The company reached $2.5 million in sales in 2012.
The state also is in the midst of developing a massive transmission infrastructure project. The Tres Amigas SuperStation, which will be located in New Mexico, north of Clovis, on a 22-square-mile site near the Texas border, will allow NM to move its energy to other states that don’t have those opportunities but have mandates to use a certain percentage of renewable energy. Tres Amigas will transmit energy and balance power loads among the three U.S. grids using a massive network of underground superconductor pipelines and AC/DC converters, eventually opening the entire country to renewable energy access.
In a major project milestone, the Clovis City Commission approved plugging in Tres Amigas to a $1.655-billion industrial revenue bond. When the company draws on its bonds, a 30-year tax abatement, it will have 120 months to build all three phases of a power superstation on 14,400 acres of Curry County land that would merge together the country’s three largest power grids and allow for power transfer between them. The construction is set to take place over an eight-year timeframe in three phases.
NEW JERSEY IS A SOLAR GIANT
It may come as a surprise, but New Jersey ranks third in the country in terms of solar jobs and capacity, ranking just behind California and Arizona. Last year, the state became the third state in the nation to have more than 1 gigawatt (GW) of installed solar, which is quite an achievement for a non-Sunbelt state.
In 2013, the Garden State’s solar industry grew to 6,500 workers, up from 5,700 workers in 2012, according to The Solar Foundation. That solar employment total is exceeded by California (47,223) and Arizona (8,558). The 1,211 MW of solar energy currently installed in New Jersey is enough to power 173,200 homes, according to the Solar Energy Industries Association (SEIA).
While New Jersey will never have the mammoth, triple-figure-megawatt utility-scale developments like in California (in New Jersey a 12.5 MW plant is about as big as they come), the state has shined over the years in commercial installations—solar that goes on government, business and nonprofit buildings. The SEIA has found that “New Jersey was responsible for nearly one-third of the nation’s non-residential…solar installations last year. In total, more than 415 megawatts of solar was added to the state’s power grid in 2012, a 33 percent increase over 2011 (313 megawatts).”
Like New Mexico, New Jersey’s success is due to strong incentives to spur solar investments. The state’s solar financing model relies on one of the most aggressive Renewable Portfolio Standards (RPS) in the country. New Jersey’s 2011 Energy Master Plan sets the standard that 22.5 percent of the electricity supplied to retail customers in the state be from qualified renewable energy resources by 2021. Much of this renewable energy will be solar.
In January, the NJ Board of Public Utilities (BPU) approved 19 relatively large projects to provide electricity from solar panels to the power grid over the next few years. Unlike many of the solar projects installed in the past, when arrays were deployed on homes and businesses as a way of cutting energy bills, these systems would feed electricity directly into the grid. The new projects could end up supplying 140 MW of electrical capacity overall.
Two of the projects approved by the BPU involve installing solar panels on former landfills, a priority of the Christie administration, which wants to steer grid-supply projects away from open space and farmland.
None of the 17 grid-supply projects are bigger than 10 MW—with one exception—and they range geographically from Cumberland and Salem counties in the south to Sussex and Warren in the north. Hunterdon County had six grid-supply projects approved.
The two landfill projects approved were in Bordentown: a 10 MW project to be developed by Public Service Electric & Gas and a 12-MW project to be developed on the former Industrial Land Reclaiming Landfill in Edison by Vanguard Energy Partners, LLC.
Last year, New Jersey also welcomed a new solar manufacturer to the state. In February 2013, SIEL, SpA, a Milan-based manufacturer of solar power inverters announced it is investing $1 million to open a 27,000-square-foot assembly, warehouse and sales operation in Parsippany. Glauco Pensini, CEO of SIEL’s new U.S. operations, told NJ Biz last year that the Northeast offered more direct transportation connections to Milan, so he narrowed the firm’s site selection process down to New Jersey, New York, Massachusetts and Pennsylvania. Pensini said in the article, “I have chosen New Jersey because it’s more or less the same as Pennsylvania and New York, but the cost of transportation is better and it’s easier to move goods in and out of the state.”
Pensini ultimately selected a European-style 28,000-square-foot flex warehouse space in Parsippany as a result of its close proximity to Newark Liberty International Airport, which offers direct flights to Milan.
New Jersey also is home to the Mars Solar Garden in Hackettstown, the largest solar facility installed in New Jersey by a food manufacturing plant. It is the first project completed by PSEG Solar Source, a subsidiary of PSEG.
The solar garden is comprised of more than 28,000 ground-mounted solar panels on 18 acres adjacent to Mars Chocolate North America’s headquarters, where more than 1,200 associates work and M&M’S® Brand Chocolate Candies are manufactured. The solar garden provides 2 MW of power during peak hours, which is equivalent to approximately 20 percent of the plant’s peak energy consumption. It will reduce carbon dioxide emissions by more than 1,000 metric tons, equivalent to removing 190 vehicles from the road each year.
Other solar projects creating jobs in NJ include:
- EffiSolar, a North American utility-scale solar power project developer, recently announced a plan to invest $2.3 billion to develop solar farms on 2,975 acres across New Jersey. The company has already completed a 20 MW solar farm in Tinton Falls and an 8.5 MW solar farm in Hamilton Township.
- Solar City, a residential solar company, expanded operations in December 2013, creating 35 new jobs.
- Roof Diagnostics Solar, a manufacturing facility of solar integration equipment, created 300 new jobs in April 2013.
- True Green Capital Management, a New York-based private investment firm, announced in January 2013 it is constructing a 123 MW solar project in Burlington County, creating 120 new jobs.
NRG, a Princeton-based Fortune 500 company, announced this month that it will offer an incentive program for NJ homeowners that make the move to solar power. The company estimates that over the next four years, approximately 35,000 to 40,000 more homeowners will install 250 mw of rooftop solar in NJ’s industry.
HYDROPOWER: CLEANEST OF ALL
Hydropower doesn’t consume, waste or deplete water and produces no air pollutants and minimal greenhouse gases. It accounts for about 20 percent of total installed global renewable energy capacity. North America is the third largest hydropower market with 19 percent of installed capacity, compared to 41 percent in Asia-Pacific and 24 percent in Europe. However, the North American hydropower market is expected to surge with 200 GW of installed capacity added by 2020.
Hydropower accounts for 97 percent of Canada’s renewable electricity generation. The U.S. produces more electricity from hydropower than from any other renewable electricity source–it accounted for 56 percent of renewable generation in 2012 and 7 percent of the nation’s overall electricity generation.
Two bills signed into law by President Obama last year—the Hydropower Regulatory Efficiency Act and Small Conduit Hydropower Development and Rural Jobs Act—will streamline the regulatory process required to add new hydropower generation to existing dams or upgrade existing hydro generation resources, unlocking thousands of miles of waterways, creating 1.2 million green jobs in the U.S. while adding 60 gigawatts (GW) of new renewable electricity to the grid.
Anchored by the Great Lakes and the Niagara and St. Lawrence hydro plants, the New York-Ontario region is one of the fastest growing hydropower regions in North America.
Currently, Ontario has approximately 8,400 MW of installed hydroelectric capacity and expects to have 9,000 MW in place by 2018.
Ontario Power Generation (OPG), an electricity generation company wholly owned by the Province of Ontario, operates 13 generating stations in northeastern Ontario with a capacity of over 1,000 MW of hydroelectric power. In August, OPG and its partner Coral Rapids Power, a wholly owned company of Taykwa Tagamou Nation, announced it is developing a 25 MW hydroelectric generating station in northeastern Ontario.
The $2.6 billion Lower Mattagami Project, launched in 2010, is upgrading four generating stations located northeast of Kapuskasing, adding 440 MW of generating capacity.
Ontario is now harnessing more hydropower from Niagara Falls through the completed Niagara Tunnel Project, which came in-service in March 2013. The tunnel has increased the amount of water available for power generation at the Sir Adam Beck generating complex, allowing it to produce an additional 1.6 billion kilowatt-hours (kWh) of electricity per year. During development, the Niagara Tunnel Project was the largest renewable energy project of its type under construction anywhere in the world. At its peak the project employed 580 people and spurred over $1 billion of investment in the Niagara region.
Ontario also is investing heavily into electric grid upgrades. Since 2003, over $11 billion has been invested in improvements in Hydro One’s systems, including upgrades to more than 10,000 kilometers of power transmission and distribution lines—more than twice the distance from Montreal to Vancouver.
New York is the largest hydroelectric power producer east of the Rocky Mountains and is fourth in the nation in the generation of electricity from hydropower. Today, more than 300 hydroelectric generating stations connect to New York’s electric grid. The New York Power Authority (NYPA) owns the two biggest plants, the Niagara River and St. Lawrence Power Projects (with generating capability of 2,441 MW). Overall, hydro plants typically meet at least 17 percent of the state’s total electricity demand.
New York’s RPS requires that 30 percent of electricity come from renewable energy resources by 2015. Upgrades to 25 existing hydropower generation stations have been completed or are underway in New York. In October, NYPA upgraded the first of 12 pump-turbines at the Niagara Hydroelectric Power Plant’s Lewiston Pump-Generating Plant (LPGP) as part of a 10-year, $460-million project.
In 2012, Gov. Cuomo signed the Western New York Power Proceeds Act, which authorized NYPA to set aside the net earnings from the sale of unutilized hydropower and place them with the Western New York Economic Development Fund.
In January, Cuomo allocated low-cost hydropower to three firms supporting more than 1,900 jobs and more than $6 million in capital investments: Ingram Micro in Amherst, Graphic Controls in Buffalo, and the Village of Groton (for the Finger Lakes Fresh produce distribution center).
Low-cost Niagara hydropower is currently priced more than 50 percent less than wholesale market electricity. In December, NYPA approved allocations of hydropower totaling 7,100 kW from NYPA’s Niagara Hydroelectric Power Plant operations. Collectively, the investments top $206 million in private sector-financed projects while creating 643 new jobs. The companies that received the allocations are the Ford Motor Company in Hamburg, Brunner International in Medina and Gracious Living USA in Buffalo.
Replacement Power and Expansion Power are reserved for companies within a 30-mile radius of the Niagara plant or for businesses in Chautauqua County and provided at a price that is currently more than 40 percent lower than wholesale market electricity in the region. The hydropower serves more than 100 businesses in the region with a combined payroll of more than $2 billion.
In July 2013, Gov. Cuomo announced low-cost power through the RNY program for 18 businesses in support of 3,191 jobs—450 newly created—and more than $446 million in capital investments. The first six rounds of allocations under the program accounted for approximately 762 MW to 710 businesses and 72 not-for-profit organizations.
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