- Advances Legislative Agenda and DOD Partnership
- Proposed energy bill may improve outlook for renewables
- A Conversation with the Managing Partner of DBL Investors
- E2 Delegation attends summit
- Network, Learn, and Discuss E2's Issues with Other Members
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| ||Nicole Lederer and James Marvin, Mission Critical Ecosalon, March 15 2012 |
At E2 Pacific Northwest, early 2012 has seen vigorous legislative efforts, continued advocacy on coal export, and an EcoSalon featuring Members of Congress and representatives of the Department of Defense on the critical importance of clean energy to the United States Armed Forces. Oregon Legislative Initiatives
In January, E2 held a Focus meeting, “Defending Clean Air & Water, Innovating for the Future,” where we discussed the need to protect crucial state agency budgets while simultaneously innovating to spur green economic growth in Oregon.
Oregon's Department of Environmental Quality (DEQ) faced unprecedented and disproportionate budget cuts in this year’s legislative session. E2 submitted a letter to all Oregon state elected officials opposing DEQ cuts.
Our letter, together with emails and phone calls prior to session, was part of a groundswell of support for DEQ’s budget that was a huge success in raising the issue with legislators. Furthermore, our efforts helped raise the profile of this concern among many other natural-resource-related issues.
Pacific Northwest Chapter Director Chris Dennett describes the impact of E2's efforts: "DEQ had never before had champions for its budget and this alone was a huge success. Having a concerted effort on the natural resource agency budgets—and DEQ’s in particular—was very helpful in a session where legislators had to make over $300 million in budget cut decisions. In the end, DEQ did receive a budget cut, but a reasonable and proportionate reduction in comparison to other state agencies."
E2's relationships with Oregon businesses helped us rally voices in support of the Healthy State Purchasing
policy, resulting in contacts with the Republican Caucus and its co-chairs that proved to be very important in introducing a brand new innovation concept for Oregon. Several legislators expressed interest in working on this piece of legislation; E2 will continue to support them and encourage their colleagues. Opposing Coal Exports to Asia
The Pacific Northwest chapter is closely monitoring proposals to export Powder River Basin coal out of Oregon and Washington, and is documenting the negative impacts increased coal train traffic would have on the region's businesses and citizens. On March 15, E2 joined with the VOIS Alliance
and Climate Solutions
in an event to raise awareness of coal companies' plans to ship coal through the Columbia Gorge and the potential consequences for Portland and Lower Columbia communities.
"Mission Critical": March EcoSalon in Seattle
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| ||Adam Smith, Jay Inslee, Mission Critical Ecosalon, March 15 2012 |
On March 15, E2 presented an EcoSalon in Seattle: "Mission Critical: Clean Energy and the U.S. Military". The event was introduced by Nicole Lederer
, E2's co-founder, and featured presenters Congressman Jay Inslee
(D-WA), Congressman Adam Smith
, ranking member on the Armed Services Committee, Ray Smalling
, Utility and Energy Manager at Naval Air Station Everett, and E2 member James Marvin
, retired Navy SEAL and the founder of Federal Green Solutions. E2 Executive Director Judy Albert
was in attendance. The EcoSalon generated high interest; 130 responses filled the One Union Square Boardroom to capacity and pushed a few people onto a wait list.
Ms. Lederer opened the meeting by laying out the powerful drivers behind the U.S. military's commitment to clean energy: "The Defense Department has determined that our current fuel mix is a national security threat, making Americans vulnerable overseas and at home. Furthermore, the DOD warns that global warming is a threat multiplier which will heighten geopolitical instability and create both military and humanitarian challenges beyond the services' capacity to respond. In a time of political gridlock, the military says we must face this issue now."
The presenters reinforced the imperative nature of this challenge from several angles. Congressman Inslee noted that our region hosts a robust community of businesses ready to provide solutions, but called for policies to create incentives for clean energy investment. Congressman Smith echoed this call and added that procedural and administrative obstacles stand in the way of accelerated adoption. For instance, five-year contracting limits prevent the procurement marketplace from appropriately recognizing the value of technologies that are early in the adoption cycle.
Ray Smalling spoke from the perspective of an official who buys energy for a major Navy installation as a day-to-day part of his job. He showed a matrix of mandates calling for energy mix improvements, and described considerable progress the Everett facility has made. However, he also noted other policies that are at cross-purposes to clean energy goals, including the same concerns raised by the Congressmen.
James Marvin described the impact of energy dependence on units in the field: massive facilities and resources devoted to the distribution of fossil fuels provide no direct operational payoff, expose large surfaces of vulnerability, impact local populations, and reduce the agility of forward units by tethering them to a long-distance supply chain. He spoke from personal deployment experiences about the costs of this dependence, costs that at times include the shedding of American blood.
Mr. Marvin closed the event by leading a Q&A session in which numerous attendees reinforced points that had been made by the speakers; in particular, many spoke of having been impeded by the five-year contracting limit. Another lively exchange concerned the value of involving veterans in the process of doing business with the military services. In response to a question from one audience member, Mr. Marvin noted that veterans can be especially effective in any transaction with the military because of their understanding of commanders' intent. He urged businesses interested in working with the services to seek out programs that exist for connecting veterans with employers.
The Mission Critical EcoSalon has earned positive coverage from multiple bloggers including Cleantech Open
, and Climate Solutions's Chris Bast
Warm thanks go to Climate Solutions
for co-sponsoring this event and to Stoel Rives LLP
for hosting it. Presentation slides from the event can be found here.
The Massachusetts’ Senate is considering an energy bill with several potential positive features: a requirement for utilities to purchase more of their renewable energy via long-term contracts; an increase in the minimum term of those contracts; a lower tax burden on solar installations; and a study of the potential benefits of a Clean Energy Performance Standard. Over 50 amendments to the bill, S. 2200, were filed and considered on the Senate floor on March 29. The bill will be up for debate again on April 5. Together with H. 1776, which expands “net-metering” programs that allow small-scale renewable energy generating facilities to receive credit for the electricity they generate, the bill has the potential to remove barriers to the expansion of the Massachusetts’ clean energy sector.
Proposals from powerful opponents that would have significantly weakened the Green Communities Act were not included in the Energy Committee draft but several were brought up as amendments for the full Senate to consider. E2 is working together with a GCA coalition of business, environmental, health and labor organizations to convince lawmakers that including large existing hydro or energy efficiency in the Renewable Portfolio Standard (RPS) or making lowest cost the only criteria for competitive bids on renewables, would negatively affect the State’s clean energy sector, the economy and ratepayers and would not improve the State’s capacity to meet its renewable objectives.
Qualified improvements for renewables
The bill under consideration removes some barriers to renewable energy that could impair growth in this emerging sector. For example, the draft bill expands the long-term renewable energy contracting program by an additional 4% to bring it to a total of 7%. Long-term contracts reduce project financing costs for developers and thereby reduce costs for customers. E2 and the GCA coalition would have liked the bill to go further by adding a second step increase of 2 to 3% in future years to keep pace with growing RPS goals.
In addition, the draft bill extends the minimum term of these contracts to 10 to 20 years (from 10 to 15 years). Though a step in the right direction, we advocated for a longer minimum period of 20 to 25 years, a more typical term for renewable energy project financing. As part of the long-term contracting provision, the bill under consideration adopted a suggestion from the coalition to establish tranches or categories within which small, emerging or diverse projects can compete with each other, providing an opportunity for emerging technologies to compete fairly and provide the fuel diversity and economic development benefits they bring to Massachusetts.
For solar developers and municipalities, the bill addresses a persistent source of confusion by updating the current exemption from property taxes for solar energy facilities. The bill clarifies that certain types of projects (those that serve the energy needs of host municipalities and those that primarily supply the energy needs of the facilities on which they are located) are exempt from local property taxes. For projects that are not categorically exempt, it provides developers with a simple formula to calculate a payment in lieu of taxes to the town or municipality to gain an exemption.
Another positive proposal that E2 and the coalition supported is the section of the bill that calls for a study of the potential benefits, and appropriate design, of a Clean Energy Performance Standard encompassing low- and zero-emissions technologies and programs outside of the RPS and the energy efficiency programs.
The bill also increases the level of net metering from an overall level of 3% for both independent distribution companies and municipal utilities and adds anaerobic digestion to the list of technologies that qualify for net-metering.
Central procurement proposal needs more study
One proposal that emerged at the 11th hour provides for central procurement of renewables and transmission resources if an annual independent study showed that the state would fall short of its Class I renewable portfolio goals. E2 and the GCA coalition believe that while the goals of the proposal are laudable, the current version could have unintended consequences such as reducing the state's potential for homegrown renewable energy. Since this proposal has not been fully vetted and has never been debated in a public hearing, we believe that there are too many unanswered questions to move forward at this time. The coalition is proposing that the issue be formally studied by the Department of Energy Resources (DOER) rather than enacted in haste.
Some moves in the wrong direction
Though we are happy to see that the worst of the proposed changes were not adopted, there are still some troubling provisions in the bill. For example, one section could undermine Massachusetts’ highly successful energy efficiency programs. It would allow five of the largest commercial and industrial (C&I) electric and gas customers in each utility service territory to “opt out” and pursue an “accelerated rebate program.” This would draw funds away from the proven, successful programs carried out by the utilities and create inequities between different classes of customers. It would also reduce the state’s capacity to leverage efficiency program dollars via economies of scale to maximize reductions in energy waste and customer savings.
Another section would prohibit use of energy efficiency program resources to support compliance with federal or state building or energy codes. Because the language is ambiguous, we are concerned that this section may create confusion and have a chilling effect on communities that have adopted building “stretch codes” that go well beyond the standards for efficiency as part of meeting the GCA’s requirements for green communities. We are pushing to ensure that those programs will still qualify for funding.
E2 helps brings the message to Beacon Hill
E2 played an active role in helping to bring the message to key legislators that the Green Communities Act was working and that their first obligation was to “do no harm” while still making targeted improvements. Through numerous meetings, testifying at hearings, and a letter
that was hand delivered to every member of the state senate and house energy committees, E2 made the economic case for improving the Green Communities Act by removing barriers to clean energy.
On March 8th, E2 members Berl Hartman, John Harper and Dan Goldman spoke at a Massachusetts’ Statehouse hearing on the bill and made the case that increasing the percentage of long-term contracts would help developers get renewable energy financing, reduce the cost to ratepayers and help the state’s growing clean energy cluster.
E2, along with other members of the GCA coalition, also proposed that the criteria for such contracts should be “cost-effective” rather than “least-cost” pointing out that renewable energy projects are not commodities that are interchangeable and lowest cost does not necessarily provide the best return on investment. A least-cost approach would allow resources far from Massachusetts to satisfy most, if not all, of the RPS requirement and would ignore important non-price attributes such as locational benefits and contributions to electric system reliability. Moreover, it would limit electricity supply diversity from resources such as solar power, offshore wind, geothermal, fuel cells, anaerobic digestion as well as an array of innovative technologies entering the market. We are pleased that the bill as currently drafted adopts the “cost-effective” criteria rather than “lease-cost.”
The bill is still most definitely a work in progress and it remains to be seen how several key amendments will fair over the coming weeks. Further amendments are scheduled to be debated on the floor of the Senate on April 5 and it is unclear what action, if any, the House will take.
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| || Nancy Pfund |
Nancy Pfund is a Managing Partner of DBL Investors and an E2 Member. Ms. Pfund currently sponsors or sits on the board of directors of a number of private companies, including Primus Power, SolarCity, Solaria, Brightsource Energy and Pandora. Ms. Pfund also worked closely with exited portfolio company Tesla Motors.
Earlier this month, we sat down with Nancy and had a conversation covering topics ranging from the DBL investing philosophy to the current climate surrounding clean-tech start ups. Here’s what she had to say: On “Double Bottom Line” Investing.
“At DBL, we are focused on accomplishing both financial and social returns. One strategy towards these goals is the investment in and siting of business operations in locations that historically haven’t benefited from investment. This type of siting is made viable partly by securing incentive packages from local governments – loans, for example – to enable the move into those lower-income areas and create jobs. We specialize in providing assistance to companies at the public/private interface - introducing companies to workforce training boards, for example, or educating them in green business certification. We believe there is appreciable value in community engagement – if you give back, you will benefit from positive branding.
Of course, financial success is the key to everything else – companies that do well are ultimately the ones that create jobs. Therefore, financial and social goals enforce each other. This is one reason why we have such a strong focus in clean tech – these types of ventures are capable of satisfying both job creation goals and social/environmental needs. For example, our $75 million first round of funding is projected to create 7000 jobs over the life of the investment. It’s important to get these success stories into the current dialogue, to show that clean tech ventures are a part of the overall successes in this area.” On Tesla.
“While we were looking at siting for a Tesla manufacturing facility, we realized that due to the current level of automation in the manufacturing process, labor costs were not the overwhelming component. With a few incentives, it was viable to stay in CA. Ultimately, Tesla was able to purchase the NUMMI plant in Fremont. For an early company, having manufacturing close to heardquarters has value. Furthermore, Tesla is unique in their supply chain in the sense that they themselves are their supply chain – their batteries are produced in house.” On the State of Solar and Manufacturing Costs.
“Overall, we look at the declining manufacturing costs of solar as a good thing. It has certainly resulted in quite a bit of manufacturing dislocation within the industry, so there are going to be winners and losers. However, downstream players are net beneficiaries: the installation sector is benefiting, and the jobs being created there are all local.
For local companies, innovation will be the key to success in this industry. With the development of new technologies like integrated PV, concentrated PV, and more, we see the beginnings of a whole new chapter for solar innovation. CA companies are pioneering these technologies, and they are going international much earlier in their gestation than before. I think we will see a new crop of companies that will be able to take advantage of global trends and global investments, while thriving locally as well. Solar simply will not be a US-dominated market – China will likely be the largest solar market. A solar company here without a China, India, and/or Europe strategy is not going to maximize its potential.
Take Solaria for example, a company that develops concentrated PV installations that are up to 2.4x as efficient as traditional panels. Solaria produces panels and has installations locally, but they also sell in Italy and throughout Asia. The key to this operations flexibility is the fact that their manufacturing processes are automated enough that labor costs are not a major component.
Throughout the industry, manufacturing processes will eventually become automated to the point where the labor costs per unit will be low enough to give companies flexibility in locating their manufacturing.” On Distributed Manufacturing.
"There is a role for distributed manufacturing, because there are regional markets – India, China, the US. So while you will centralize manufacturing in low cost areas if you haven’t automated yet, as you automate your process, you will begin to have more options. Local manufacturing can provide certain advantages; for instance, having a local manufacturing operation may be key to securing certain incentives or deals, or it can provide for a more efficient supply chain. Having a global strategy is key to the success of US companies." On China.
“The China phenomenon has resulted in companies getting active in China as early as possible – some companies are undertaking joint ventures with Chinese companies, some are setting up manufacturing in China, and some are getting Chinese investments. It makes a lot of sense to embrace China rather than view it is a threat if you’re a clean tech company.
The US – China renewable market is still early in its development, and there will undoubtedly be companies that won’t do it right and others that will thrive, but the level of communication taking place and number of deals getting done is encouraging. It’s still a little early to identify the dominant model for success in China, but there is a lot of interesting activity worth looking at.
China will represent a huge market for everything from clean cars to solar to wind - and there is a way to play that if you are a US company that is seeking to participate in the growth of that market. For any business, you go where the market is, and that is why you will see a large international focus for the renewables industry.” On Subsidies for Renewables.
“Renewable subsidies are part of a long tradition by our government of supporting new energy sources - and that support has worked very well for our country in the past. Coal, oil and gas, nuclear, and renewables have all been subsidized. However, if you compare the level of renewal subsidies to oil & gas subsidies in the early 20th century and nuclear subsidies in the mid – 20th century, you find that renewables are under-subsidized by a factor of 5 and 10, respectively. Also, it is worth nothing that a lot of subsidies still exist for these older sources of energy, including coal.
Should we eliminate all subsidies completely? If it was truly possible, sure, I wouldn’t have a problem with that, though it is realistically unlikely.
Historically, America has benefited from subsidizing the development of new energy sources. Singling out renewable subsidies as a bad thing is not consistent with our history. Moreover, countries around the globe are choosing to invest in renewables - this is a global industry, and America needs to stay competitive if it hopes to be a leader in that industry.” On Supply Chain Improvements for Local Businesses.
"One area where supply chains can improve is in the reduction of waste and carbon footprint. Large companies are capable of making these changes, but small companies are still struggling in this respect. This is one reason why we’ve turned our attention to a company that makes compostable, recyclable packaging, which would eventually allow retailers to turn waste into packaging through a distributed (rather than centralized) supply chain, without the need to haul materials great distances. The “cradle to cradle” packaging concept is one that can be very local.
It seems that almost by chance, existing policy support these efforts quite well –look at Alameda’s “StopWaste” program for example, or CalRecycle’s ” Recycling Market Development Zones” program, which provides loans and other types of assistance to qualifying facilities that hit requisites for diverting waste from landfills. There is no overarching policy supporting these types of efforts, so you have to really hunt and look for these individual programs. While there is a lot of room for policy improvement here, there is still plenty you can do with existing incentives." On Distributed vs Centralized Energy Generation.
“There is an unnecessary distinction between distributed and centralized energy generation; we have the resources to pursue both strategies, and we’ll need to do so to ultimately fulfill our energy needs. If you take solar for an example, we feel that the parallel development of distributed and centralized solar is a good thing. California has one of the best solar resources in the world, especially in our deserts and in the southern portion of the state, and a combination of generation solutions allows us to take advantage of that.”
More information on Nancy and DBL can be found here: http://www.dblinvestors.com/. Interview conducted by Tony Bernhardt, E2 Northern CA Chapter Director and Erik Chen, E2 Program Assistant
E2 Members Attend ARPAE Energy Summit
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| ||(L to R) Michael Rucker, Judith Albert, Elton Sherwin, Senator Christopher Coons, Dave Miller, Berl Hartman, Jonathan Gensler |
Last month, a delegation of E2 members traveled to Washington to attend the 2012 ARPA-E Energy Innovation Summit, which convened key players from across the energy ecosystem - researchers, entrepreneurs, investors, corporate executives, and government officials - to share ideas for developing and deploying the next generation of clean energy technologies.
This year's event featured Bill Gates, Founder and Chairman of Microsoft; Fred Smith, Chairman, President and CEO of FedEx; and Lee Scott, former CEO of Wal-Mart; as well as Secretary Chu and Director Majumdar as distinguished keynote speakers
E2 was a media sponsor for this event.
While at ARPA-E, E2 also arranged for meetings with Richard Kauffman, Special Advisor to Energy Secretary Chu, and Senator Christopher Coons of Delaware, to discuss the the current business climate for clean energy. Discussion topics included Clean Energy Standards, the status of expiring incentives, financing & tax options for accelerating deployment of clean energy, and business activity in clean energy.
|(L to R) Elton Sherwin, Berl Hartman, Michael Rucker, Nicole Lederer, Dave Miller |
More information on ARPA-E's projects can be found here.
| ||Click on the logos above to join the discussions|
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