Ohio Clean Energy and Economic Development Policies
February 23, 2012
by Ann McCabe
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.
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.
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
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
42 Ohio’s Advanced Energy Fund was created by legislation. http://www.bricker.com/publications-and-resources/publications-and-resources-details.aspx?Publicationid=2007 and http://development.ohio.gov/ohiothirdfrontier/MakingMaterialDifferenceAdvancedEnergy.htm
43 http://development.ohio.gov/Energy/Tools/AdvancedEnergyPortfolioStandard.htm; 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).
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.
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.