By Greg Kwasnik, Jen Judson and Antoinette Pizzi
BOSTON — In the darkening recession, Gov. Deval Patrick and the Legislature have dialed back funding for education, social services and local aid. But energy efficiency and renewable energy development – promised as a salvation for economic growth – have been spared.
“We are in very difficult times, as you know, but we cannot afford to slow down or think small, especially in the clean energy field,” Patrick told a conference of 400 energy entrepreneurs and investors in Boston earlier this month.
Over the last decade, Massachusetts has instituted dozens of tax incentives, loans and grant programs to encourage development of renewable energy. But in this withering financial climate, with Massachusetts facing a potential $600 million budget deficit, is the state’s investment still on track to reap a bright, green economy?
The Patrick administration has set a goal of making Massachusetts No. 1 in the nation in producing and consuming renewable energy. The Legislature is on board with the plan, yet there have been pitfalls with the ambitious program.
In 2008, the Legislature showed its commitment to renewable energy with a package of bills that promised jobs and a stronger state economy. The legislation carried a total price tag of $118 million in loans and grants over five years. Supporters said the bills would create an estimated 14,000 to 17,000 jobs.
But timing was not kind to the programs. Nick d’Arbeloff, president of the New England Clean Energy Council, said the estimates of jobs and revenues were made shortly before the credit market collapsed, leading to a drop in private investment in renewable energy.
“In 2008 the whole sector started to just explode in terms of investment and in 2009 there was a pullback,” d’Arbeloff said.
Money promised to some of the programs had to be trimmed. D’Arbeloff said that the Green Jobs Act, originally allocated $68 million, ended up receiving around $20 million.
“No secret here, the economy forced the Legislature to scale back on every allocation possible,” he said.
Now, looking to incentives to prod private investors back into action, the state has announced plans to foster three main categories of renewable energy: wind, solar and efficiency.
– Wind power: The state plans to make wind power a top priority by building wind generators on state property. The goal is to save the state budget nearly $342 million in energy costs annually, according to the state energy office.
Under the plan, small-scale wind turbines on state land would produce enough electricity to power the equivalent of 6,900 homes. Large-scale projects of 7.5 megawatts or greater would produce enough to power 194,615 homes. Whatever self-generated power the state does not use will be sold to the electrical grid.
– Solar power: The state launched its popular Commonwealth Solar Rebate program in January 2008. By last month, the program had awarded an average of nearly $43,000 in cash rebates to 1,018 commercial, residential and public solar construction projects. The $68 million program has since stopped taking applications because the state has already met its goal of creating 27 megawatts of solar energy by 2012.
– Energy efficiency: The state anticipates $6.5 billion in savings for electric and natural gas customers over the next three years through public utility energy efficiency programs. The programs would also create or save 4,000 jobs while increasing the gross state product by $2.4 billion, the energy office reported this month.
If successful, the state’s energy efficiency programs would lead the nation in energy efficiency. In 2009, the American Council for an Energy-Efficient Economy ranked Massachusetts second, behind California, for energy efficiency.
But there have been some short circuits in the state’s renewable energy plan.
Evergreen Solar, a photovoltaic company based in Marlborough, had been the state’s poster child for renewable energy. In 2008, the company received a $58.6 million state grant to build a solar panel manufacturing plant in Devens, creating 700 full-time and 300 temporary jobs, three times more than the 350 the company had originally announced.
But after the company posted a loss in 2009 it announced plans to begin manufacturing panels in China. The company has not announced if there will be any layoffs at its Devens plant, but it is unlikely the state will see any new jobs at the facility.
State Energy Secretary Ian Bowles maintains the state made a wise choice by supporting the company and contends the energy program remains a “real success story,” with a 15-fold increase in solar installations after four years.
“That creates a lot of jobs and diversifies our energy away from fossil fuels,” he said.
Neither the energy office nor the Clean Energy Council could give estimates for overall green job creation in the near future, but both expressed confidence that job growth will be seen in 2010.
Since the state started its Solar Rebate program, solar manufacturing jobs in the state have doubled, from 1,086 in 2007 to 2,075 in 2008, according to Lisa Capone, an energy office spokeswoman. The energy office expects the industry to add 960 employees this year.
But the Solar Rebate program, which ran through its $68 million of funding in less than a year, was “a victim of its own success,” said d’Arbeloff. “Ultimately to extend that to a long term of time would be too expensive to the state.”
Instead, the state will institute a solar credit market, guaranteeing solar power producers a set energy rate. D’Arbeloff said the program, which will begin in January, is a more logical, free-market mechanism than the Solar Rebate program.
The state still has a way to go in wind power. There are just three wind installations on state properties, including the Massachusetts Maritime Academy, Logan Airport and UMass-Lowell. The total electricity generated by these facilities amounts to 682 kilowatts, .07 percent of the 989 megawatts the state hopes to generate in the future.
Wind power is far from becoming an everyday reality, despite the state’s tax incentives. It would take 15 years for a small business owner who constructs a wind turbine to realize the $40,000 investment for a 10 kilowatt installation, according to the American Wind Energy Association.
With a rebate, savings could come sooner. The state’s rebate for a 10 kilowatt wind turbine runs about $7,800, according to a calculator on the state’s Commonwealth Wind Incentive Web site.
Even with incentives, questions remain about available funding for renewable energy projects in the current economic climate.
Meg McIsaac, senior commercial lending officer for TD Bank USA, which specializes in renewable energy lending, said investors and lenders are looking to support proven technologies like wind and solar before taking a risk on deepwater wind power, tidal power and other new energy sources.
“We tend to be backwards-looking thinkers, so if we can get our arms around something that has been up and running and there is a track record, we can understand that all day long,” McIsaac said.
Despite these uncertainties the Patrick administration has urged investors to remain forward-thinking. Patrick even uses the recession to argue that more investment is needed to ensure that Massachusetts does not lose clean energy jobs to other states.
“We can invent our own clean energy future and have the whole world as our customer,” Patrick said. “That is where I want Massachusetts to be.”
(link to original article)