Coming clean -New Mexico looks to take advantage of its natural resources, including an abundance of sun and wind, to attract investors and firms in renewable energy

Coming clean -New Mexico looks to take advantage of its natural resources, including an abundance of sun and wind, to attract investors and firms in renewable energy

Renewable energy is no longer just the darling of environmentalists plotting to save the planet.

Solar, wind and other clean power has become a magnet for suited capitalists looking to cash in on the next great wave of investment – the green wave.

By Dan Shingler
Tribune Reporter

http://www.abqtrib.com/archives/business04/042604_business_renew.shtml

And it could fuel New Mexico’s next job and economic development engine.

"I want our state to be one of the nation’s leading suppliers of clean energy – wind, solar, biomass and zero-emission coal," Gov. Bill Richardson said this month at the Western Governors Association’s North American Energy Summit in Albuquerque.

Richardson, a former U.S. energy secretary, says the time is right for New Mexico to capitalize on renewable energy, just as it has in the past on oil, natural gas and nuclear technologies.

The stars, observers say, are lined up just right, right now.

"It’s a very good moment for renewable energy, given a variety of factors coming together at the same time," said Dan Reicher, president of New Energy Capital in Wellesley Hills, Mass.

Reicher worked for Richardson during the Clinton administration and is now a venture capitalist. His company invests in renewable energy production and natural gas electrical generation facilities.

He calls New Mexico "the Saudi Arabia of renewable energy" because of its vast wind and solar resources.

"We on the East Coast are very envious of your renewable resources in New Mexico," he said. "We don’t have the resources you have."

Time is right

Reicher and other industry watchers point to several factors that are making renewable energy sources more popular than they’ve been since the Carter administration.

Gasoline and natural gas have experienced spikes in both price and volatility in recent years. This makes it not only more expensive to drive a car and heat a home, but helps drive up the cost of electricity because some of it is generated by natural gas. That makes renewable energy more able to compete with other energy sources on price.

States such as New Mexico and, more importantly, California have adopted strict rules in recent years requiring that a certain percentage of their electricity come from renewable sources.

Public awareness and concern over the environment and global warming are high and on the rise, sparking demand for cleaner sources of power.

The technologies behind renewable energy, especially wind power, have made significant advances in recent years. That makes them more able to compete with other fuels, such as natural gas, oil and coal.

Government subsidies, though not certain, appear poised to boost the development of renewable energies, just as they’ve boosted fossil fuels and nuclear generation in the past.

"A whole host of factors come together and, I think, make this the most attractive time we’ve seen for renewables," Reicher said.

Taking advantage

New Mexico is banking on those trends continuing and is positioning itself to take advantage of growth in the renewable energy industry.

"We’re taking bold steps to fulfill our clean energy potential, while at the same time creating thousands of high-wage jobs and helping the U.S. with its energy crisis," Richardson said at an energy summit news conference.

Richardson this month declared New Mexico a "Clean Energy State," and appointed a solar energy task force. He said he expects the task force to propose a 50 megawatt commercial solar generating facility in the state, to be funded by state and private funds, by the end of the year.

Richardson wants to create a market for the clean energy New Mexico can produce. And he wants to make the state an attractive place for companies to do research and development as well as manufacture generation equipment and produce power.

On the demand side of the equation, Richardson said he has been working closely with his "new best friend," California Gov. Arnold Schwarzenegger to create a larger market for renewable energy in California, the hungry Goliath of energy consumption in the West.

Just before the recent energy summit, Richardson and Schwarzenegger issued a challenge to their fellow western governors: develop at least 30,000 megawatts of clean energy in the West by 2015 and increase energy efficiency in the region by 20 percent by 2020.

Perhaps more importantly, Schwarzenegger is considering raising California’s renewable energy requirement from 20 percent of the state’s total electricity to 30 percent.

Creating a market

Such talk piques the interest of even big utility companies like Public Service Company of New Mexico.

"That’s where I do believe there is a market," said PNM Chief Executive Officer Jeff Sterba of the potential move by California.

Sterba, often a skeptic regarding swift shifts toward alternative fuels, said that if California does adopt such a stringent standard for itself, it will create opportunities for states such as New Mexico, and companies such as PNM, to sell them clean power.

PNM already has contracts to buy all the energy produced by a 200 megawatt wind farm in eastern New Mexico and plans to resell most of it to other power companies that need renewable power.

To make New Mexico an attractive place for more renewable energy development, Richardson said the state has already enacted some measures and will put others in place.

Tax cuts on personal income make the state more attractive to outside companies.

High-wage-job tax credits and employee training funds, established under Richardson, are also lures to companies looking for a place to locate new facilities, economic development officials say.

Next year, Richardson said he will ask the Legislature to approve more manufacturing tax credits for companies that produce items such as solar panels or wind turbines in New Mexico.

The initiatives appear to be paying off.

This month Richardson announced that Spire Corp., a solar panel manufacturing company in Bedford, Mass., will begin manufacturing solar panels near Taos next year. The factory is expected to employ 30 people.

Those panels will generate power for nearby electric cooperatives, including Kit Carson Electric Cooperative in Taos, which has already agreed to buy power from the project.

And the state reportedly is in negotiations with Sharp Electronics, the world’s largest producer of solar components, to attract a solar research and development facility.

Solar history

New Mexico has long been involved in solar research and has the brain power necessary to help jump-start a renewable energy industry, Reicher said.

"From a human resource perspective, the state is well equipped," he said.

Sandia National Laboratories has been doing solar energy research since the 1970s. A large solar tower, surrounded by a glimmering array of mirrors focused upon it, has been catching the sun’s rays since Jimmy Carter first tried to overhaul America’s energy policies more than 25 years ago.

But the commodity the industry may need most is not as free as sunlight or wind. It’s money.

Renewable energy no longer sits on the sidelines in attracting investors.

"The three largest pension funds in the U.S. – two in California and one in New York – are looking to make investments in clean energy," Reicher said. "Citigroup, the largest bank in the U.S., they’ve identified this as a new investment target."

California Treasurer Phil Angelides has begun what he calls the "Green Wave" initiative for the state’s investments.

As part of that initiative, the California Public Employee’s Retirement System and the California State Teacher’s Retirement System will invest $1.5 billion in clean energy technologies and environmentally responsible companies, according to Angelides’s office.

New Mexico is hoping to get some of that investment, said Ned Farquhar, Richardson’s energy and environment policy director.

And New Mexico has its own money – a little more than $200 million in state permanent funds earmarked for direct investment in New Mexico companies – and some of it could be used to help capitalize renewable energy ventures, said state Investment Officer Gary Bland.

He said that while his office won’t invest most of that money itself, it has committed about $140 million to 17 venture capital firms and refers potential renewable projects to them for consideration.

Deals on the way

Already one of those venture capital firms, Murphree Venture Partners, has invested more than $500,000 in Meso Fuels, an Albuquerque company working in hydrogen fuel cells.

More deals are likely on the way, Bland said.

"We’re aware of at least four proposals that the various funds are considering," Bland said.

He said his office is also considering direct investments in several projects proposed around the state, including at least one commercial wind generation facility. But none of those deals has developed to the point that the state can disclose them, he said.

Bland said any investment in renewable energy must meet the same criteria as other investments – the potential rewards must outweigh the risks so the state can avoid losing money.

But he said he is also well aware of the importance Richardson has placed on renewables and their value to the state in terms of creating jobs.

"For every new job you create in that industry, because it’s an entirely new industry you create five throw-off positions to support that," Bland said. "Clearly the manufacturing is important, but there’s construction, there’s maintenance and there’s facility servicing too."

Popular support

Jobs and money aren’t the only thing that make clean energy popular with politicians. People like clean energy and want to see more of it, especially in New Mexico.

PNM began marketing wind power last year through a program known as Sky Blue. The program asks customers to pay a premium to have up to 10 percent of their total energy supplied by wind power.

The company began offering customers the Sky Blue option six months ago. Before television advertisements began running last week, more than 1 percent of PNM’s customers had already signed up for the program.

That’s more than some other green-power subscription programs ever get, said Daniel Drennan, PNM’s product developer for Sky Blue.

"So far, we’ve had a tremendous response to date in terms of participation," Drennan said. "We currently have 100 businesses and 4,100 residential customers participating and that’s just about twice what we thought we’d get by now."

Hurdles

But there are still hurdles to overcome, some of them significant, Sterba said.

The western electrical grid, which transmits power between states, will need substantial upgrades for New Mexico to ship clean power to states such as California.

"We have virtually no additional transfer capacity to get electricity from New Mexico to California. All that there is is being utilized," Sterba said. "Clearly, an additional line has to be built across the Colorado River to get into California."

And federal subsidies that last year helped make wind power and other clean energies more affordable have lapsed. When the federal energy bill stalled in Congress last year, the subsidies, which would encourage investment in clean energy, stalled with it.

The subsidies have since been removed from the energy bill and made part of a tax bill, which enjoys more bipartisan support, legislators and observers say.

Some worry that the nation will turn back from developing clean energies as it did in the 1980s after seemingly embracing them a decade earlier.

Benjamin Luce, chairman of the Coalition for Clean Affordable Energy and a member of Richardson’s Solar Task Force said the country could have made strides 20 years ago on renewable energy.

"So we shouldn’t necessarily be patting ourselves on the back so much that it’s just now possible," he said.

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CLEAN AND GREEN

Renewable energy comes in a variety of forms. Here are some of them:

Solar: Energy from the sun, used to either make electricity directly or to generate heat to drive chemical reactions such as those that produce hydrogen fuel.

Wind: Wind is the reigning king of renewable energy development because of technologies that allow wind turbines to efficiently produce electricity. Eastern New Mexico has the world’s third largest wind generation facility.

Biomass: Wood, paper pulp and other combustible waste products can be used in clean-burning generation plants to produce electricity. Several proposals are in the works to use New Mexico’s forest and bosque thinnings to produce electricity.

Geothermal: Heat from the ground, especially around areas of thermal activity such as hot springs, can be used to produce electricity as well as to heat nearby structures. New Mexico is rich in geothermal activity. Geothermal doesn’t need the sun to shine or the wind to blow to provide energy.

Hydro-electric: Moving water, mostly in rivers, can be used to turn turbines to produce electricity. Such facilities normally require damming a river and are sometimes opposed by wilderness advocates who prefer to see rivers run free. New Mexico does not have the hydro-electric resources of states with more annual rain and snowfall.

Dan Shingler

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2 Phoenix firms to build generators

The Stirling/Schuff prototype, nearly four stories tall, includes an array of mirrors that concentrates light on an 8-inch opening to run an engine and power and electric generator.

Max Jarman
The Arizona Republic

http://www.azcentral.com/arizonarepublic/business/articles/0428solar28.html

An Arizona company and one of the state’s top industrialists are betting that a 20-year-old technology holds the key to making solar energy cost-effective.

The main reason that solar energy hasn’t blossomed in one of the country’s sunniest places is that it costs far more to produce than conventional electricity.

But Phoenix-based Stirling Energy Systems Inc. and Schuff Steel Co. Chairman Dave Schuff on Tuesday unveiled a prototype generator that could bring the cost of solar electricity down to 5 cents to 6 cents a kilowatt. That’s comparable to power produced by conventional plants powered by natural gas.

Schuff will build six of the generators for Stirling this year with hopes of eventually churning out thousands of the units. Each one can generate 25 kilowatts of electricity, enough to power about eight homes.

FYI
The solar dishes use a parabolic mirror to concentrate the sun’s energy at a focal point in front of the dish. A receiver mounted there converts the energy into heat that powers a Stirling external combustion engine.

The 1,200- to 1,400-degree temperatures cause hydrogen, contained inside the engine, to expand. The expanding gas pushes pistons that turn an electric generator.
Arizona Public Service Co., which is under an Arizona Corporation Commission mandate to generate 1.1 percent of its electricity through renewable resources by 2007, has agreed to buy 10 of the units next year. Southern Nevada Water Authority wants 40.

"A source of cheap solar electricity is what we’ve all been after," said Schuff, whose company provided the steel for Bank One Ballpark in Phoenix and the new Cardinals Stadium in Glendale.

Schuff’s company is manufacturing the 40- by 38-foot solar dishes under a contract with Stirling, but Schuff tentatively has agreed to personally invest money in the project.

"It seems to have a lot of potential," Schuff said. He acknowledged, though, that manufacturing the dishes could be a boon for his company, which has been hurt by the sluggish economy.

Schuff Steel’s publicly held parent, Schuff International, posted a $6 million loss last year due to a slowdown in major construction projects.

Stirling was founded by David Slawson in 1996 to acquire and develop the technology behind the solar generator. So far the company has raised about $15 million from private investors and has received additional funding from the U.S. Department of Energy.

The array of mirrors that covers the dish concentrates sunlight on an 8-inch opening. There, heat from the sun’s rays runs a four-cycle engine that powers an electric generator. Stirling has acquired a license to manufacture the engines in the United States from Sweden’s Kockums AB. Kockums initially developed the engine for use in Swedish submarines.

McDonnell Douglas Corp., Kockums and the Department of Energy developed the technology for the solar generator in the mid-1980s. McDonnell Douglas eventually sold the technology to Southern California Edison, which sold it, along with six prototype dishes, to Stirling.

Robert Liden, Stirling’s chief financial and administrative officer, said the California utility lost interest in the dishes when the state limited the amount of research and development costs it could recover from ratepayers.

Liden noted that the technology was heralded in the 1980s as one of the most-efficient means to harness the sun’s energy. Unlike photovoltaic cells that convert sunlight into electricity through a chemical process, the dishes do not become less efficient in hot weather.

And the Stirling units use no water, in contrast to so-called solar trough generators that use the sun’s energy to produce steam to turn turbine generators.

But at a cost of $300,000 per unit, the Stirling generators are hardly cost-effective. They can produce electricity for about $1 per kilowatt, or 50 times more than power generated by the Palo Verde Nuclear Generating Station, west of Phoenix, and 20 times more than that produced by a natural-gas generator.

But Liden notes that the first units, including the engines, are being built by hand. Stirling believes it can bring the cost down to about $25,000 per unit if they are mass-produced. That would make them competitive with conventional power plants, Liden said.

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