Georgetown Law
 

clean energy

Greenwire: EPA releases new state 'carbon budgets' under power proposal

 

U.S. EPA moved yesterday to show states what their responsibilities would be if they choose to use cap-and-trade programs to comply with a landmark federal draft rule aimed at curbing greenhouse gas emissions from power plants.

In a long-promised clarification memo, EPA said states would be allowed to turn carbon intensity targets into "carbon budgets," letting them comply with the rule via policies that limits emissions on an annual basis.

...

Gabriel Pacyniak of the Georgetown Climate Center said states might opt for a "carbon budget" approach in part because it's easier to administer than the rate-based target. All a state would need to do is measure emissions from power plants, rather than using a complex equation considering demand-side energy efficiency efforts and other factors.

Read the full article at Greenwire.

USA Today: Blue and red states going green on energy policy

 

Politically "red" and "blue" states are increasingly turning green as they push energy efficiency and renewable power to save money and protect the planet, says a report today with prominent bi-partisan support.

In the last two years alone, GOP-dominant red states have adopted policies that could serve as models for others seeking to meet proposed federal targets for reducing heat-trapping carbon dioxide emissions, according to the "State Clean Energy Cookbook" by Stanford University and the Hoover Institution.

...

In the last decade, as its costs have fallen, solar and wind energy have grown markedly nationwide. So, too, has the number of energy-efficiency programs. Vicki Arroyo, executive director of the Georgetown Climate Center, a research group, says 40 states now require or encourage a certain amount of their energy be obtained from efficiency measures, renewable power or both.

Read the full article at USA Today.

Inside EPA: EPA Plans Guides To Ease Hurdles On ESPS Rate Conversions, Efficiency

 

A top air office official is pledging to take steps to ease states' compliance with EPA's greenhouse gas (GHG) standards for existing power plants, with the agency slated to release guidance on how to translate its rate-based GHG targets to mass-based measures, as well as a policy for verifying reductions from energy efficiency programs.

In addition, Joe Goffman, EPA's associate assistant administrator for climate and senior counsel for EPA's air office, said in Sept. 18 remarks that the agency could rework interim 2020 emissions goals that states must meet under the existing source performance standards (ESPS) but which many states have urged the agency to drop because they require such steep reductions.

"It seems to us that will be something we will have to analyze very, very carefully," Goffman said of the interim targets. The agency will have to revisit the issue "to the point of providing additional analysis that concludes we got it more or less right, or if we can't come to that conclusion, look at ways of changing that feature."

Goffman's remarks during an event at the Georgetown Climate Center in Washington, D.C., did not include specific announcements of new guidance or a different approach to the GHG rule's targets, but they underscore that EPA is actively considering several major requests from states and utilities.

Read the full article at Inside EPA.

Bloomberg BNA: EPA Power Plant Rule ‘Workable’ But Needs Improvement, Utilities Say

 

An Environmental Protection Agency proposal to regulate carbon dioxide from existing power plants is “workable” but needs improvement, energy executives said at a Sept. 18 forum.

While utilities said they could support the EPA's approach to regulating carbon dioxide emissions, they also cautioned that the rule may not provide the incentives needed to stimulate investment in demand reduction programs or new lower-carbon generation sources during a forum sponsored by the Georgetown Climate Center and Lazard, a financial advisory firm.

“Overall, the industry views the rule as generally workable, but it needs some important tweaks to make it truly workable,” Ted Craver, chairman, president and chief executive officer of Edison International, said. “The framework is there, but the comments will be oriented toward being constructive and suggesting improvements that need to be made.”

Read the full article on Bloomberg BNA.

The Energy Daily: EPA carbon rule ‘generally workable,’ but needs tweaks—EEI chairman

 

Investor-owned utilities see proposed federal regulations to trim power plant carbon emissions as “generally workable,” but have identified 20 areas of concern that need to be addressed by the Environmental Protection Agency, the chairman of the Edison Electric Institute said Thursday.

Ted Craver, chairman, president and chief executive officer of Edison International and chairman of EEI, which represents investor-owned utilities, told a Washington, D.C., conference that one of the group’s biggest concerns with the EPA’s Clean Power Plan (CPP) regulation is the timetable for reducing power plant emissions of carbon dioxide (CO2).

...

“Timing is probably the single most critical area for utilities,” said Craver, who spoke on a panel at a conference sponsored by the Georgetown Climate Center and the investment firm Lazard. “The 2020 to 2030 period will be a big focus for utilities….”

Read the full article at Energy Daily.

New Online Tool Illustrates Key State Energy and Carbon Pollution Data Ahead of New EPA Rules

 

Leading up to the Obama Administration's release of new carbon pollution standards for the power sector, the Georgetown Climate Center today launched a dynamic online tool that generates maps and graphics that can help the public better understand how the new rules may affect different states.

The data visualization tool is intended to assist state policymakers, stakeholders, and reporters grappling with energy and carbon pollution data.

It gives users the ability to compare energy and carbon pollution data across multiple states, create regions for analyzing potential multi-state collaborations under the new rules, view in-depth state energy profiles, and generate an array of U.S. data maps, including maps that show the degree to which carbon pollution has changed in each state since 2005.   It will also provide context about how such data can inform states' compliance options under the power plant standards.

"We believe this tool provides essential data for states as they move forward to implement the power plant standards to achieve cost-effective carbon pollution reductions," said Vicki Arroyo, executive director of the Georgetown Climate Center. "The tool makes it easy to see how many states have already reduced their carbon pollution emissions and emission rates, and to explore the potential for further reductions."

The State Energy Analysis Tool provides state-by-state breakdowns of key energy data, including carbon pollution reductions, electricity generation sources, changes in electricity generation mix over time, emissions of carbon dioxide and other pollutants, renewable energy usage, and states' clean energy potential. Data provided by the tool is compiled from leading sources, including the U.S. Energy Information Administration and the National Renewable Energy Laboratory.

To view State Energy Analysis Tool data, go to one of the links below:

The Center launched an initial, spreadsheet-based version of the tool in 2013 that was developed by the Analysis Group.  Today's tool builds on the initial success of its predecessor, increases the amount of data available, and provides users with an interactive, graphics-rich experience.

Illinois Clean Energy and Economic Development Policies

 
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More than 300 Illinois companies work in the wind, solar or geothermal energy industries. They range “from old-line steel fabricators to high-tech start-ups” and employ over 18,000 people.   On the automotive front, the state will invest over $10 million in electric vehicle infrastructure from 2011-2014.

Illinois is home to about 16 wind farms - over 2700 megawatts of wind generation capacity.   In 2011, Illinois was second only to California in new installed wind power and currently ranks fourth in wind-generated electricity.  More than 150 Illinois companies engage in some piece of the wind-energy pipeline.

Chicago has thirteen wind energy headquarters including developers and wind turbine manufacturers.   Chicago draws wind companies because of proximity to wind projects; its air, rail and auto transportation infrastructure; and legal and financial expertise.  The state’s Renewable Portfolio Standard (RPS) increases demand by requiring investor-owned electric utilities to ramp up to 25 percent of electricity from renewable sources by 2025, with 75 percent of that to come from wind. Additionally, six percent of renewable energy must come from solar by the year 2015. In 2008, lawmakers amended the law to cover all competitive electric suppliers in Illinois, essentially doubling the size of the RPS.

The wind-power industry employs about 1,500 directly in Illinois, plus another 3,800 among local suppliers, according to a Navigant Consulting, Inc. study for the American Wind Energy Association. The study predicts a drop to about 800 direct jobs and 1,100 supplier jobs by next year if the federal wind production tax credit expires.

Renewable Energy Resources Program

This state program promotes the development of renewable energy through the Renewable Energy Resources Trust Fund, a public benefits fund administered by the Department of Commerce and Economic Opportunity (DCEO).  The Fund receives about $5-6 million a year for eligible projects and is supported by surcharges including a $0.05 per month per residential electric and gas service, $0.50 per month for small nonresidential electric and gas service, and $37.50 per month for large nonresidential electric and gas service.   These funds support several renewable energy programs including the Solar and Wind Rebate Program, Community Solar and Wind Energy Program, Renewable Energy Business Development Program, and Biogas and Biomass to Energy Grant Program.

Solar and Wind Energy Programs

The DCEO offers rebates for solar and wind energy systems up to 30 percent for residential and commercial systems (equipment and installation) and up to 50 percent for non-profit and government installations, with a maximum individual award of $30,000.  DCEO also offers a grant program that provides similar incentives for larger distributed solar and wind energy projects.  The maximum incentive for this program is $250,000.

Renewable Energy Business Development Program

This program funds projects that support new or expanded renewable energy production through the development of renewable energy businesses and component manufacturers.  Proposed projects currently are eligible for grants up to 50 percent of total project cost, with a maximum grant of $500,000.  

This program has helped attract several solar and wind energy manufacturers to Illinois.  For example, in 2010, DCEO provided Wanxiang America a $700,000 grant for developing a solar panel production facility in Rockford.  The $12.5 million project is expected to create 60 jobs.  In late 2011, Rockford Solar Partners, LLC, a joint venture between Elgin-based Wanxiang America and Chicago-based New Generation Power, received federal environmental approval to proceed on the largest U.S. commercial airport solar farm, starting at 20 MW with plans to scale up to 62 MW. Ameren Illinois executed a 20-year power purchase agreement to acquire the energy and all renewable attributes from the project as part of the state’s long-term renewable energy procurement program. 

In 2008, Siemens Energy & Automation received a $1.25 million grant for a second plant in Elgin for its Mechanical Drives and Winergy businesses, adding an estimated 355 jobs.  The high precision, high torque mechanical gear drives are used by the wind, cement, coal and oil and gas industries.

In recent years, fewer state funds were spent on this program due to the federal ARRA stimulus grant programs.  DCEO received grant applications for the Renewable Energy Business Development Program last fall and expects to approve up to five grants in 2012.

Biogas and Biomass to Energy Grant Program

This state program helps fund projects designed to use biogas or biomass as fuel to produce electricity with combined heat and power (CHP) through gasification, co-firing or anaerobic digestion technologies.  Applicants are eligible for up to $2,500 for feasibility studies and up to 50 percent of total project cost, with a maximum grant for biogas to energy systems of $225,000 and for biomass to energy systems of $500,000.  So far, $800,000 has been awarded for several feasibility studies and six projects including two electric generating systems at wastewater treatment facilities in Fox Lake and Danville, a digester gas system at a dairy cow farm in Pearl City, and co-firing corn bran pellets and wood chips at a CHP system at John Deere Harvester in East Moline.  

Invest Illinois Venture Fund

The Invest Illinois Venture Fund (IIVF supports young, innovative companies and start-ups that show a high potential for future growth resulting in the creation of high-paying professional Illinois jobs.  The fund focuses on cutting-edge technology sectors including clean energy and energy efficiency and  is part of the state’s Advantage Illinois program to reduce the credit crunch for small businesses through a federal small business program.

Electric Vehicles and Infrastructure

 Illinois provides early leadership and support for the adoption and use of electric vehicles (EVs):

  • The Illinois Environmental Protection Agency offers rebates toward EV purchases.
  • DCEO received up to $10 million in capital funding to award EV manufacturing and infrastructure grants and loans.
  • The Illinois Commerce Commission (ICC) launched a Plug‐in Electric Vehicle Initiative to explore regulatory issues related to EV deployment including impact on the electric grid. 
  • In partnership with the City of Chicago and Clean Cities Coalition, Illinois is installing a comprehensive public charging station network.  With about $1 million from a DCEO capital grant and $1 million in federal Clean Cities American Recovery and Reinvestment Act (ARRA) funds, the partners leveraged almost $7 million in private investment to develop the Chicago Area EV Charging Station Project. The project will deploy 73 DC Fast Charge and 207 Level 2 EV charging stations throughout the Chicago area.
  • In addition, EVtown’s creation in Bloomington-Normal  and Kane County’s EV infrastructure ordinance are models for the nation.

A recent report provides a roadmap for EV deployment in Illinois and summarizes the benefits:
"…environmental benefits from reduced emissions, economic development and job creation from the growth of EV‐related technologies and services, decreased reliance on imported petroleum, and opportunities to integrate and leverage renewable energy resources and smart grid deployment."

In the spring of 2011, the General Assembly passed legislation to encourage car‐sharing organizations to purchase EVs in fiscal years 2012 and 2013. Two known car‐sharing organizations, I‐GO and Zipcar, will be eligible for up to 25 percent of project costs involving the purchase of new EVs and new charging infrastructure.  The funds can only be used to purchase new EVs from Illinois car dealerships.

Two Chicago-based entities support renewable and clean energy businesses. The Clean Energy Trust, a non-profit corporation, helps connect entrepreneurs, researchers and early stage companies to accelerate business development, and the Illinois Clean Energy Community Foundation provides clean energy grants.

Rio + 20: International Goals and Subnational Actions

 

In June 2012, the United Nations Conference on Sustainable Development met in Rio de Janeiro to take stock of the progress achieved since the 1992 Earth Summit and to chart a new path for the future.  In advance of the summit, the Georgetown Climate Center was joined by White House Council on Environmental Quality Chair Nancy Sutley and numerous states and provinces to discuss sustainable activity happening in states, provinces, and regions across the U.S., Canada, Germany, and Brazil.  The event was co-sponsored by the Province of Quebec's Washington Bureau.

As the keynote speaker, Sutley discussed the Obama Administration's commitment to supporting healthy and sustainable communities and clean energy job growth while acknowledging that we still have a lot of work to do. She also emphasized the important role that states play in advancing environmental goals in the United States.

"I know that we, as a nation, have made the progress we've made on the environment not just because of federal laws, but certainly because of the incredible work at the state and local level.  

"Sustainability –  I think as we've learned over the last 20 years – is about protecting the environment, but it's more than just that.  Certainly, from where I sit, and I think all of you sit, it is essential that we protect our natural resources, and that we understand the link between our natural resources and the health of our economy and our society."  

States and provinces also weighed in and discussed an array of initiatives that are underway – including everything from conservation to energy efficiency to clean technology development to higher fuel efficiency standards.

Dan Esty, the Commissioner of the Connecticut Department of Energy and Environmental Protection,  who was also with the Environmental Protection Agency at the Earth Summit 20 years ago, praised the outcomes of the original summit, but also underscored the large amount of work that still must be done.

"We are at a very, very awkward moment, and I do think it is critical that we recognize that it is important...to focus on getting the job done on the ground," he said.

 

More coverage:

Watch a video feed of this event.
E&E TV Discusses Sustainability with Vicki Arroyo and Maryland's Kathy Kinsey in the Lead Up to Rio+20

 

Event Agenda and Participants:

 

Welcome:
Edith Brown Weiss, Francis Cabell Brown Professor of International Law at Georgetown Law

Keynote Address:
Nancy Sutley, Chair of the White House Council on Environmental Quality (CEQ)

Subnational Panel:
Discussion of efforts to promote sustainability and address climate change through clean energy development and promoting innovation (e.g., renewables, electric vehicles), emissions trading programs, and multistate and cross-border collaborations.  These initiatives and collaborations provide important examples of successful approaches to sustainable development.

  • Doug Scott, Chairman, Illinois Commerce Commission
  • Dan Esty, Commissioner of the Connecticut Department of Energy and Environmental Protection 
  • Kathy Kinsey, Deputy Secretary, Operations and Regulatory Programs, Maryland Department of the Environment
  • Alain Olivier, Director, Québec Government Office in Washington, DC
  • Brian Turner, Deputy Director, Washington DC Office of California Governor Edmund G. Brown Jr.
  • Marianne Rude, Washington Representative, Province of Manitoba, Canada
  • Mark Rupp, Director, Washington DC Office of Washington Governor Chris Gregoire
  • Vivian Thomson, Associate Professor, University of Virginia and Former Vice Chair, Virginia Air Pollution Control Board  (discussing work of Brazil and German states)

Moderator: 
Vicki Arroyo, Executive Director, Georgetown Climate Center & Visiting Professor, Georgetown Law
 
  
 

 

Ohio Clean Energy and Economic Development Policies

 

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Ohio’s historical strength and one of its largest industries is manufacturing.  In recent years, the state has supported companies moving from traditional to advanced manufacturing, particularly in the wind, solar, and energy efficiency sectors.

After a September 2011 Energy Summit, Governor Kasich said in a letter to attendees: "… one of our biggest challenges is to get all the parts working together for a unified purpose instead of just the pursuit of siloed self-interests…the pursuit of the future and our commitment to them shouldn’t waiver despite the fact that their costs aren’t yet where we want them to be."36

Several economic development programs help encourage green manufacturing.

  • Ohio Third Frontier, begun in 2002, has helped create, attract, and capitalize over 600 businesses and over 55,000 direct and indirect jobs.37  The $2.3 billion initiative supports R&D, early-stage capital, product innovation and research and development through 2012, and encompasses ten clean energy grant programs and loan funds.38   In May 2010,39  the middle of the recession, Ohio voters overwhelmingly approved a $700 million extension of the program.
  • An Energy Loan Fund launched by Ohio Department of Development at the end of 2011 will provide low cost financing to projects40 such as such as insulation, new lighting, more-efficient heating and cooling systems, renewable-energy projects and improved production processes that could cut energy consumption.  It utilizes funds from the Advanced Energy Fund (loan program proceeds) and federal funds from the State Energy Program.41
  • The Energy Loan Fund succeeds the Advanced Energy Fund that distributed more than $50 million in grants from 1999-2010, assisting more than 600 renewable energy and energy efficiency projects.42  Grants were funded through a $0.09/month charge to customers of the state’s four investor-owned electric utilities.  The popular grant program helped smaller wind and solar projects.
  • In 2008, SB 221 created the state’s renewable portfolio standard, or Alternative Energy Portfolio Standard.  It sets annual benchmarks for renewable energy and energy efficiency for the state’s utilities, which has driven wind and solar projects.  It mandates that 25% of Ohio electricity come from advanced energy by 2025 with a 0.5% carve-out for solar.  This led to the approval of about 1700 renewable energy projects and the retooling of manufacturing companies.43
  • SB 232, enacted in 2010, reduced property taxes for eligible projects, leading to an increase in the number of solar and wind installations through the state.  In June 2011, the legislature extended SB 232, which was set to sunset in 2011, for two years.44   Projects must be in construction by end of 2013 and placed in service by end of 2014.

Fuel Cells:

Ohio’s fuel cell industry of nearly $80 million has leveraged over $177 million in additional federal and private investment that has helped grow a thriving cluster of over 40 fuel cell companies.45   In 2006, Rolls Royce Fuel Cell Systems, Inc. decided to locate its North American headquarters in Ohio on the campus of Stark State College of Technology.  A year later it acquired SOFCo, a startup fuel cell company in Alliance, Ohio. In 2009, Rolls-Royce Fuel Cell Systems consolidated their global fuel cell operations in Ohio from England and Singapore.

Crown Equipment Corporation, based in New Bremen, Ohio, and one of the world’s leading forklift manufacturers, has been researching fuel cell forklift applications and in 2008 set up its own dedicated fuel cell research and test center.  To date, Crown has qualified more than 20 of its electric forklift models to operate with various fuel cells, offering an unprecedented 29 qualified combinations of fuel cell packs and lift trucks.  Applications have varied from Walmart Canada’s sustainable distribution center in Alberta to the Coca-Cola Bottling Co. Consolidated production center in North Carolina.  In 2008, the Public Utility Commission of Ohio determined that fuel cells were a renewable energy source, and were included in Ohio’s energy portfolio standard.

Wind:

Ohio ranks second in the nation in wind component manufacturing with over 600 established and emerging companies in the Ohio wind supply chain.46   According to the American Wind Energy Association, Ohio was the fastest growing state for new wind energy installations in 2011.47

Timken Company, Stark State and the Stark County Port Authority are building a Wind Energy Research and Development Center, the first of its kind in the U.S. Timken will use the facility to develop ultra-large bearings and seals on sophisticated equipment that replicates the operating environment of large multi-megawatt wind turbines. The $11.8 million research and development center will anchor Stark State’s new Emerging Technologies Airport Campus on 15 acres of property adjacent to the Akron-Canton Airport.  Joint funding for the project combines more than $6 million invested by Timken, $2.1 million from the Ohio Third Frontier, and $1.5 million in loans from the Ohio Air Quality Development Authority's Advanced Energy Jobs Stimulus Program.48

Solar Energy:

Toledo has reinvented itself as the solar capital of Ohio, with its history in glass manufacturing and research at places like the University of Toledo.  Four Toledo-area solar manufacturers will start or increase production in the next year:  Xunlight, Isofoton, Willard & Kelsey Solar Group LLC and First Solar Inc.49

The firms received federal and state money and tax breaks:  Xunlight nearly $50 million, Willard & Kelsey at least $19.5 million, and First Solar recent approval for a $455.7 million loan from the U.S. Export-Import Bank and has received $16.3 million in federal tax credits for plant expansion.50

In 2008, First Solar announced a major expansion of its manufacturing and R&D facility in the Toledo area.  State and local leaders worked with the company on an incentive package.51   One of the largest thin film solar module manufacturers in the world, First Solar employs over 1,000, making Ohio the number 2 U.S. producer of solar modules behind Oregon.  The University of Toledo provides research support and a technical workforce and obtains federal funding for complementary solar initiatives.

Turning Point Solar plans to build one of the nation’s largest photovoltaic solar facilities, 49.9 MW by 2014, on reclaimed strip-mined land owned by American Electric Power (AEP) in southeastern Ohio.  The project’s drivers are the solar energy carve-out in the state RPS, creating sustainable jobs, modest state grants and a commitment to an Ohio-based supply chain.52   The project depends on the outcome of an AEP rate case settlement as well as a future cost recovery case.  In July of 2011, European panel supplier Isofoton received $15.8 million in state incentives for a Napoleon, Ohio plant that will include a 50 MW crystalline silicon solar module assembly line and an expedited 100 MW assembly line and create 300 jobs.53

 


36 October 3, 2011, http://www.ohiogreenstrategies.com/.
37 Ohio DoD March 24, 2010 press release, http://development.ohio.gov/newsroom/2010PR/March/13.htm  
38 http://thirdfrontier.com/ProgramDescriptions.htm  
39 http://www.development.ohio.gov/newsroom/2010PR/May/GovernorsOffice/6.htm
40 http://development.ohio.gov/Energy/Incentives/EnergyLoanFund.htm.  
41 http://www.development.ohio.gov/energy/Incentives/EnergyLoanFund.htm.
42 Ohio’s Advanced Energy Fund was created by legislation.  http://www.bricker.com/publications-and-resources/publications-and-resou... and http://development.ohio.gov/ohiothirdfrontier/MakingMaterialDifferenceAd...
43 http://development.ohio.gov/Energy/Tools/AdvancedEnergyPortfolioStandard... Feist, Larry, “Ohio’s energy efficiency law effective, creates jobs,” May 11, 2011, http://bit.ly/im6CYL.
44 See June 9 post on SB 232, http://www.ohiogreenstrategies.com/.
45 “Making an Impact,” SRI, September 2009, Appendix, p. 20-24, http://www.development.ohio.gov/ohiothirdfrontier/MakingAnImpactReport.htm .
46 http://development.ohio.gov/wind/ManufacturingSupplyChain.htm; Environmental Law & Policy Center, http://elpc.org/wp-content/uploads/2011/01/OhioWindSupplyFinal_HQ.pdf .
47 As of January 2011, Ohio has 10 MW of installed wind capacity with 1282 MW of wind in the future, and more that 20.2 MW of solar and a 50 MW solar plant in the works (ODOD).
48 http://www.hivelocitymedia.com/innovationnews/Timkenwindcenter10_20_11.aspx
49 “Ohio Solar Manufacturing Outlook,” Bricker & Ecker, September 21, 2011, http://bit.ly/rhhDli.
50 “Toledo-area solar firms shining bright through some dim spots in market,” September 25, 2011, http://bit.ly/nU6yni.
51 First Solar press release, August 18, 2008,  http://bit.ly/m7DnJ0.
52 http://www.newharvestventures.com/portfolio.html.
53  “Anatomy of a 50 MW Solar Project:  Agile Energy and Turning Point Solar, greentechsolar, Oct 28, 2010, http://bit.ly/8ZVPf1 and “Turning Point Solar, 50 MW Project, Slated for Cumberland, Ohio, area,” Oct 6, 2010, http://bit.ly/cCC5X7.   American Municipal Power will purchase 200 MW of solar panels from the plant over five years. http://bit.ly/onh6b8.
54 Special thanks to Christopher Montgomery at Columbus, Ohio-based Bricker & Ecker for his help and insights.

Michigan Clean Energy and Economic Development Policies

 

 

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Five years ago, Michigan studied growth industries and identified advanced battery, wind, solar and bioenergy as sectors of opportunity given the state’s core competencies of advanced manufacturing work force and infrastructure.  The Michigan Economic Development Corporation (MEDC)21  hired experienced talent, and each sector determined the best approach given needs, gaps, funding and capabilities.

Michigan is positioning itself to become the advanced battery capital of the world22 and has attracted an extensive network of wind and solar companies, both power generators and parts manufacturers.  A local CEO refers to Michigan’s trifecta:  great wind, manufacturing capability and need for electricity in-state.23  The state, being a peninsula, tends to use the power it generates since access to the transmission grid is difficult.

Michigan offers R&D, manufacturing expertise, award-winning university training programs, a highly-skilled tech-savvy workforce, and business financing, retention and relocation tools. In 2011, Governor Rick Snyder enacted a flat 6% corporate tax for C corporations.24  The state has a number of business development programs; some have allocated all their funding.

  • Since 2006, the 21st Century Jobs Fund has helped reshape and grow the high-tech economy through investment to rapidly create companies and jobs in four areas. From 2000-2009, $15.7 million went to Alternative Energy companies and $46.2 million to Advanced Automotive, Manufacturing and Materials companies.25  The state invested $500 million in the 21st Century, Venture Michigan and InvestMichigan! Funds.  A “pre-seed” fund provides help to start ups in automotive, alternative energy, and other high-tech areas.
  • The Centers of Energy Excellence (COEE) support development, acceleration and sustainability of Michigan’s energy sector by leveraging state-appropriated dollars with private. The two rounds of funding include allocations through 2011.  Program benefits include a 1:1 match for federal funding of up to 50% of the total project’s cost.26
  • The state has designated Renaissance Zones that allow a company in the zone to operate free of virtually all state and local taxes over the life of the designation.27
  • The 2009 Michigan Supplier Diversification Fund loaned more than $191 million to 23 companies and created or retained 1,800 jobs overall.28   In 2011, three new business growth funds replaced the fund with the approval of $79.1 million from a new federal program Michigan officials championed.29

Advanced Batteries:

Ann Marie Satry, CEO of Sakti3 and COEE recipient, says “The concept behind the Centers of Energy Excellence is simple: to locate a strong cohort of young and existing companies to capitalize on our existing strengths and to grow them in the alternate energy domain.  There’s no clearer intersection of those two things than in electric vehicles because of our strong automotive R&D and execution and our strong interest in clean tech.”30

Eric Shreffler, Advanced Energy Storage Director for the MEDC, said that job creation and diversifying the state’s most important industry, automotive manufacturing, were key drivers for the battery sector focus, although electric vehicles also help lessen dependence on foreign oil and reduce greenhouse gas emissions. Based on MEDC’s research, the state developed and in 2008 passed the nation’s first battery tax credit legislation amending the Michigan Business Tax Act to provide four tax credits to stimulate the development of high-power energy batteries needed by hybrid, plug-in hybrid and fuel cell vehicles.31  The credits helped attract vertically integrated businesses, minimizing shipping, and supporting innovative products such as electric vehicles. The state expanded the credit program twice since its authorization.  As of early 2011, the state has allocated all of its cell battery credits.

In Michigan, a combination of state and federal incentives and the proximity to customers helped attract six advanced battery companies: A123, LG Chem, Dow Kokam, fortu Power Cell, Johnson Control-Saft and Xtreme Power received $100 million state battery cell manufacturing credits.32   Michigan companies A123, LG Chem, Dow Kokam, and Johnson Controls-Saft (JCS) received four of the six federal cell manufacturing awards from the American Recovery and Reinvestment Act (ARRA), which made $2.4 billion available nationally. DOE’s ARRA support helped jumpstart and grow this sector in the U.S. and make Michigan the center of American cell manufacturing.

A123 is one of the world’s largest suppliers of high-power lithium-ion battery cells and packs.  In 2008, Michigan convinced A123’s Watertown, Mass.-based management to locate its operations in Michigan rather than Asia.  In 2009, A123 received the second-largest DOE stimulus grant, $249 million, to build battery plants in Michigan.33   The company has invested more than $600 million in manufacturing operations in Livonia and Romulus, creating more than 800 jobs. Their Michigan office is located in a building that was vacant for 10 years, right across from the MEDC.  The state approved-Renaissance Zone in Romulus allows the company to operate free of virtually all state and local taxes over the life of the designation.

Wind and Solar Energy:

Michigan’s renewable portfolio standard requires 10 percent of utilities’ electricity to be renewable by 2015. Passed in 2008, the RPS has been critical in moving renewable energy forward according to Loch McCabe of Shepherd Advisors.  The state has about 200 solar and wind supply chain companies, about 50 of which supply both industries.34  Solar is eligible for an additional two Renewable Energy Credits (RECs) for each MWh generated.  Hemlock Semiconductor and Dow Corning, its majority owner, have made a huge investment in Michigan solar; Hemlock is the world’s largest manufacturer of polycrystalline silicon used in solar cells and modules.

Given the state’s automotive expertise and its good onshore wind resources, Michigan attracts wind generators and manufacturers of wind turbine parts and structures. The MEDC strategy focuses on the state’s manufacturing strengths and filling gaps to attract wind energy companies. The state has developed a wind supply chain of over 100 firms in the last four years through a public/private partnership with the assistance of NextEnergy and Kinetik Partners and manufacturing and technology innovation support. From 2010-2011, the state awarded over $45 million for process improvements and solutions to fill critical value chain gaps and created over 4,700 jobs.35  The large size of some wind turbine components makes geographic proximity a major advantage. 

 


21  http://www.michiganadvantage.org/ 
22  http://www.michiganadvantage.org/Advanced-Energy-Storage/, “Granholm signs legislation positioning Michigan to become advanced battery capital of the world,” January 14, 2009 MEDC press release, http://bit.ly/kPqjbs, and “ State approves Renaissance Zone to support A123 Systems’ Advanced Battery Facility,” May 26, 2010 MEDC press release, http://bit.ly/isrfGu.
23 Cascade Engineering’s CEO in MEDC video, http://www.michiganadvantage.org/Targeted-Initiatives/Wind-Energy/Default.aspx
24  http://www.michiganadvantage.org/New-Tax-Cuts/
25  P. 3 http://www.michiganadvantage.org/cm/Files/21st-Century-Jobs-Fund/21stCJF_invest_portfolio.pdf ;
http://www.michiganadvantage.org/21st-Century-Jobs-Fund/
26  http://www.michiganadvantage.org/Centers-of-Energy-Excellence/
27  A123’s Romulus facility is in a Renaissance Zone.  http://www.michiganadvantage.org/cm/Files/Fact-Sheets/GeographicRenaissanceZones.pdf .  Michigan has designated over 150 Renaissance Zones, including some for renewable energy, http://bit.ly/cX9R7l.
28  http://www.michiganadvantage.org/Access-to-Capital/
29  The three new programs are part of the Michigan Business Growth Fund. Ibid.
30  Sakti3 is developing rechargeable lithium-ion battery technology.  Their CEO is quoted in a video on the MEDC website, http://www.michiganadvantage.org/Alternative-Energy-Sectors/.
31  MEDC factsheet, “Michigan, Battery Capital of the World,” May 2009 and http://www.michigan.gov/documents/recovery/Timeline_308823_7.pdf.
32  http://bit.ly/fnOV2l.
33  http://nyti.ms/fBedIH.
34  http://elpc.org/wp-content/uploads/2011/03/ELPCMichiganSolarandWindReport2011.pdf
35  May 19, 2011 email from Steve Bakkal, MEDC.

 

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