Energy office faces funding drought

DENVER – Funding is in flux for the Governor’s Energy Office, an issue that could ultimately affect renewable energy companies in the Boulder Valley, according to those in the industry.

While the GEO, as it’s often called, currently is funded through $130 million in federal grants over a three-year period, those funds will dry up about a year from now, according to Angie Fyfe, associate director of the office.

The GEO’s previous funding from the Colorado Clean Energy Fund was eliminated by state legislators, Fyfe said. That funding stream – a percent of Colorado gaming revenue – gave the office $4 million in 2009 and $7 million in 2008, she said.

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Platte River must prepare for the retirement of 431 megawatts (MW) of dispatchable, coal-fired generation by the end of the decade and address more frequent extreme weather events that can bring dark calms (periods when there is no sun or wind).

“We need to find a source of state funding in 2012 to continue to deliver programs that we have delivered in the past and to provide economic development opportunities for folks in the energy industry,” Fyfe said.

Whether or not new funds are found for the Governor’s Energy Office, many worry that Colorado’s “New Energy Economy” is already hurt by the general uncertainty over all funding for renewable-energy incentives and rebates.

Across the solar industry, uncertainty about subsidies doled out through an Xcel Energy (NYSE: XEL) program is wreaking havoc, for example, said Andrew McKenna, senior vice president of Bella Energy Inc. in Louisville, which installs commercial solar panels.

In February, Xcel Energy said it would decrease the incentives it offers homeowners and businesses to install photovoltaic systems on their properties.

“Unfortunately, every solar company is laying off people as one of the ramifications of the chances in the (Xcel) incentives and the governor’s energy office,” McKenna said.

400 to 600 jobs lost

In 2010, probably 400 to 600 solar industry jobs were lost of the state’s 5,300-job total because of uncertainty about Xcel’s plans and about a similar issue at Black Hills Corp. (NYSE: BKH) another utility provider in Colorado, said Neal Lurie, executive director of the nonprofit Colorado Solar Energy Industries Association based in Boulder. The Boulder Valley has about 60 of the state’s 400 or so solar companies, Lurie said.

“It’s very concerning. Until we can create a more stable environment, it puts jobs at risk,” Lurie said.

Locally, solar companies may lose one-third to one-half of their solar panel jobs by the end of 2011, based on the Xcel decision and general uncertainty about GEO funding, said Blake Jones, president of Namaste Solar Electric Inc. in Boulder.

“We would like to see a strong, well-supported Governor’s Energy Office continue its work, and I think the solar industry in particular would benefit from that,” Jones said.

Mortgage deal could end

The Colorado Energy Star Mortgage program offered in Boulder Valley and other Bank of Colorado locations, is financed directly from the Governor’s Energy Office, which helps make the interest rate about 0.5 percent lower than other mortgages available on the market, said Stephen Ponce-Pore, energy program manager at the bank.

Homeowners use the freed-up money to make energy-efficient improvements to their homes, Ponce-Pore said. The bank has locations across Colorado; Ponce-Pore’s office in Loveland can work with Boulder County residents.

“I would love to see an (renewable energy) industry that can be supported by ongoing funding streams and policy,” Ponce-Pore said. “I think we’ll earn back more than we invest in it, and we’ll make more money through taxable resources and jobs and income.”

Consumers should pay attention, too, said Julie Herman, executive director of the Boulder Green Building Guild, which works with the Governor’s Energy Office in a variety of programs, including energy-efficiency rebates.

At the same time, several other incentive programs will continue, Herman pointed out.

“Take advantage of what’s there now,” Herman said. “No matter what happens with the governor’s funding, it’s never probably going to look as good as it does now, with local, state and federal rebates.”

Boulder County’s own federally funded program offers up to $1,000 per household in EnergySmart rebates through July 31, for example, said Eric Doub, founder and chief executive officer of EcoSmart Homes in Boulder, which does energy-efficiency work.

Having so many rebates currently available create a “cumulative buzz effect” in getting homeowners interested in doing more energy-saving work, Doub said.

$10 million in rebates

Solectria Renewables LLC new Louisville office also believes the state funding issue won’t directly affect its solar converter business, said John Shaw, regional sales manager. If the GEO goes away, it could hurt the entire renewables industry, however, Shaw said.

“They have wonderful momentum,” Shaw said.

In the last 11 months, the state office has handed out about $10 million in rebates, which resulted in a multiplier effect of about $90 million in new materials bought and new contractor work, Fyfe said.

The multiplier effect is calculated from a variety of sources, Fyfe said, giving the example of a $500 rebate given by the office to a consumer for a new furnace. The consumer actually would pay $2,000 for the furnace at the store, and hire someone to install it, Fyfe pointed out.

“So our investment leveraged at least another $1,500 investment,” Fyfe said. “That’s the type of result that we can take to the state Legislature to get them to reinstate the funding stream.”

A bill in the Legislature to create a “Colorado Energy Office” came from Jon Becker, R-Fort Morgan, who wanted to downsize the current office and focus on both traditional and renewable energy in Colorado. Becker wasn’t available for comment.

What’s most important is that Colorado continues to be seen as a leader in the clean energy marketplace,. Lurie said the governor’s office is expected to make it a priority to find new funding for the GEO.

“We think it plays a key role in attracting private investment, job growth and job creation right here in Colorado, so it more than pays for itself,” Lurie said.