The New Energy Economy

The walls are blank inside Bill Ritter’s new office at Colorado State University’s Center for the New Energy Economy within the School of Global Environmental Sustainability. The policy center and Ritter’s post as its director and Senior Scholar were created in 2011, to enable the former governor to build on the state’s – and his own – legacy as a leader for clean-energy business and jobs. The bare office suggests that Ritter hasn’t been resting on his accomplishments.

“One of the things that I experienced as governor was the powerful impact of having clean-energy policy at the state level, even as Washington, D.C. tries to figure out its next move,´ said Ritter, dressed casually in a CSU sweatshirt. “So we’re going to take the lesson of Colorado (and) expand on that, by looking at what other states have done successfully in the clean-energy arena.”

Ritter launched his only term in office ambitiously, saying in his 2007 inaugural address, “Let’s start by being bolder than any other state when it comes to renewable energy. 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.”

More than four years, 50 relevant laws, and thousands of new jobs later, Ritter appears to have followed through on his bold commitment. In Northern Colorado, the clean-energy sector has emerged as a local economic force drawing global attention, powered by homegrown and international companies big and small.

“When it comes to the broader view of the New Energy Economy in Colorado, the biggest benefit has really been the great job done over the past few years to put the state on the map with the top handful (of states),´ said Sunil Cherian, founder and CEO of Spirae Inc, of Fort Collins, which designs and operates smart-grid systems. “It’s created an environment that’s a real advantage.”

Clean-energy technology companies, such as Spirae, have basked in the welcoming atmosphere and enjoyed support from state officials. But state programs, bolstered by federal stimulus funds, have also placed an emphasis on building insulation and weatherization programs, which can quickly provide jobs and energy-efficiency savings, although they have limited long-term impacts on remaking Colorado’s clean-energy profile and economy.

“A lot of the funding over the past two years has gone toward energy efficiency and retrofits, and there’s a focus on large-scale job creation for more of the technician level,” Cherian said. “My bottom-line take is that supporting more complex and sophisticated solutions that are required over the coming two to five years would, from an economic development perspective, actually enable more sustained (job) activity, as opposed to the kind of focus on weatherization and energy retrofits.”

Now, as local clean-energy businesses seek to establish themselves and major, new companies settle into Colorado, business leaders and state officials are faced with figuring out their roles and needs as the New Energy Economy matures.

A swift payoff

Among Ritter’s first moves as governor was rebranding the Governor’s Energy Office, formerly known as the Governor’s Office of Energy Management and Conservation. The new name reflected the fresh approach to energy policy. The state legislature backed Ritter’s vision by creating the Clean Energy Fund.

Using money collected from limited-gaming casinos, the Clean Energy Fund provided roughly $15 million to the GEO in 2007 and 2008 to support business development and other efforts.

Ritter’s endeavors paid off swiftly. Danish wind-turbine manufacturer Vestas chose Colorado for its North American manufacturing base in late 2007, after being wooed by local and state economic-development officials. The company committed to spend over $1 billion to build four factories in the state, including a blade-manufacturing plant in Windsor, and has created more than 1,000 jobs to date.

Many other international and domestic companies followed, including the German solar-system company, Wirsol, which set up its offices in Fort Collins. Angelina Pramatarova, Wirsol’s local business development manager, said the company located in Northern Colorado for several reasons, including the buzz about the New Energy Economy and the state’s abundant yet under-tapped solar resources. But more local factors helped the company make its decision.

Wirsol often works with Abound Solar, the solar-panel manufacturer which developed out of CSU and is now based in Loveland with a factory near Longmont and an R&D facility in Fort Collins. Abound’s regional presence and the existing community of clean-energy businesses, centered around the Northern Colorado Clean Energy Cluster – which was recently renamed and repositioned to include the entire state – CSU, and the technology incubator of the Rocky Mountain Innosphere, also attracted Wirsol.

A battery of laws

As a Democratic governor with a legislature controlled by his own party, Ritter cranked out new laws to build up the state’s clean-energy use and energy efficiency. The culmination came in March 2010 with the passage of a stronger state renewable energy standard, which now requires large utilities to produce 30 percent of their power from solar, wind, geothermal and other sources by 2020. Ritter said the standard, one of the highest in the country, means an increase in installed wind and solar energy; the law, along with others, has attracted some of the state’s new businesses and investment.

“We never pursued policy for policy’s sake,´ said Tom Plant, director of the Governor’s Energy Office under Ritter. “The focus wasn’t necessarily on passing legislation, it was on trying to create an environment where the New Energy Economy could succeed.”

By the time Ritter left office in January, he had signed 57 clean-energy-related bills into law. Colorado now has the fourth most clean-energy jobs among all states. The sector is booming at 18 percent annual growth, more than twice the rate of the rest of Colorado’s economy, according to a 2010 report by the Colorado Cleantech Industry Association.

Of course, even as the sector has added jobs in Colorado, the Great Recession has taken others away, and state budget shortfalls have grown. State lawmakers have allocated no money to the Clean Energy Fund since 2008. But just as state funds began to dry up, Colorado’s New Energy Economy received an astronomical boost from President Obama’s stimulus package.

Insulation over innovation?

For Plant, the stimulus money’s timing was “purely by accident,” but it was an extremely beneficent one for his cash-strapped department. The federal American Recovery and Reinvestment Act directed nearly $139 million to the GEO over three years, beginning in 2009, to create green jobs and reinvigorate the economy. The funds helped to support some ongoing and developing pilot projects, Plant said.

Most of the stimulus money, however, was dedicated to weatherization programs to improve insulation and energy efficiency for buildings. In addition to other money from the U.S. Department of Energy, the Recovery Act funds devoted $80 million to weatherization and energy retrofits.

The money enabled the GEO to weatherize more than 7,400 homes and apartments in 2010, doubling its work from the previous year and helping low-income residents reduce utility bills. The projects also provided employment opportunities; the GEO partnered with community colleges and Veterans Green Jobs, a Denver-based nonprofit that gives job training to military vets and their families.

“Energy efficiency is, by far, the biggest bang for your buck when it comes to saving money for the consumer and for private buildings,´ said Jim Driscoll, who handled legislative and policy issues for the GEO before leaving last month.

But the crush of federal weatherization dollars oriented the GEO toward what Spirae’s Cherian called a “low-hanging-fruit kind of a strategy.” The initiative has created jobs and conserved energy, but done little to advance big-picture economic programs or to support complex and coordinated technology research.

“The Governor’s Energy Office has not really been well funded,” added Mark Chen, Abound Solar’s marketing director. “They had a lot of pass-through money from the (U.S. Department of Energy) through the stimulus bill for energy efficiency, but that doesn’t really affect solar manufacturers or installers.”

“The remainder of their funds was predominantly spent on pushing policy and the legislative agenda. They were absolutely key in scoring the (renewable-energy standard) expansion to 30 percent here in Colorado, which is great for the industry, but has no immediate impact,´ said Chen, whose company does most of its work outside the state. “We’re not really seeing any incremental benefit yet.”

Unenviable choices

The stimulus funds are scheduled to dry up by 2012, and the future of the GEO is somewhat in doubt. Gov. John Hickenlooper has pledged support for his predecessor’s New Energy Economy programs, but has waffled on how he intends to fund the energy office.

Last month, the legislature passed a bill that prohibits the GEO from receiving limited-gaming money for the Clean Energy Fund, as it did in 2007 and 2008. The governor allowed the bill to become law – not by signing it, but by refusing to veto it – but sent a letter to the General Assembly asking for another funding source for the GEO. The Legislature has about a month left in this session, with an array of contentious issues still ahead.

Hickenlooper hasn’t pursued an aggressive policy agenda similar to Ritter’s, and he certainly faces a tougher political gauntlet since Republicans gained control of the state House of Representatives in the 2010 election. Instead, Hickenlooper has said he’ll push for more energy-efficiency improvements to buildings.

“I know it’s tough budget times. The governor has unenviable choices,´ said Bill Ritter, in speaking of his successor. “I’m mindful that the Governor’s Energy Office, at least, will experience some cutbacks as a result of the downturn. But in terms of the policies that have been a part of our work, we really are hopeful they don’t experience any kind of a rollback.”

The former governor is still spreading the gospel of the New Energy Economy; Ritter recently met with officials in Alaska and Arkansas to share his insight on the benefits of a clean-energy policy agenda. (For his part, Ritter isn’t adding to the state’s budget woes since his $300,000-per-year job at CSU is being funded by the Bohemian Foundation and the San Francisco-based Energy Foundation.)

The GEO has already shed 15 percent of its staff -from 47 to 40 employees – since last year, according to Angie Fyfe, the office’s local programs manager. The office has used some of the stimulus money to set up a revolving fund for businesses, but future income streams remain unclear. Driscoll, the former GEO policy official, said the office will have to become more focused and analytical under Hickenlooper.

In the meantime, business leaders say the state is missing opportunities and failing to address pressing issues. One recent report from the Colorado Solar Energy Industries Association shows that while permitting for projects varies widely across the state, depending on local rules, the average approval for a solar project in Colorado costs nearly twice as much and takes seven times longer than recommended national practices.

Comprehensive plan needed

In October, the Colorado Cleantech Industry Association produced a state action plan outlining the trends and challenges for clean-energy technology businesses. One of the greatest obstacles for the state’s New Energy Economy, according to the study, is the lack of a comprehensive energy plan to project changing power demands and sources over the next few decades.

“What would help in Colorado is if there is a coherent strategy or approach to economic development and to bring in more companies to the area,´ said Abound’s Chen. “There are other companies who have considered Colorado – I’ve spoken to a number of them – and they say, ‘We were looking at Colorado for our U.S. headquarters, and we went to Arizona or Texas.’

“For whatever reason – and I don’t know what the solution is – there are definitely a lot of companies who have expressed interest in coming to Colorado [because] there are a lot of great resources here from a technical, personnel, and environmental perspective,” he added. “Yet, somehow, we’re not creating this groundswell of interest in Colorado as a center for renewable energy.”

Colorado has stayed ahead of the national curve in attracting clean-energy business. Through reputation, innovation and legislation, the New Energy Economy, as Ritter envisioned it, has taken root in the state. The impacts of state policies and the viability of clean-energy industries remain works in progress.

In Northern Colorado, the Fort ZED initiative to create a net-zero-energy downtown district in Fort Collins has moved forward on a mix of federal, state and local action. The highly coordinated program has advanced – with stops and starts – through policies, research support, and financial assistance. Other innovative experiments that seek to transform the state’s communities and businesses, and how they generate and use energy, will require similar collaboration and strategic planning.

“Colorado has a lot of the assets in place, more than any other place that I’m aware of,´ said Cherian of Spirae. “But it definitely needs capital and the ability to pull it together, which hasn’t happened yet.”

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