Layoffs in Colorado New Energy Economy

The resilience of Colorado's vaunted "new energy economy" is being tested after a series of job cuts, financial setbacks and political firestorms. The latest loss was Phillips 66's announcement last week that it is pulling the plug on a major alternative-fuels research-and-development center that was planned on the former StorageTek site in Louisville. That followed the recent news that Vestas Wind Systems was making its biggest round of Colorado layoffs, bringing the job-cut tally to about 500. The Weld County district attorney's office is investigating the failure of Colorado solar-panel manufacturer Abound Solar, and congressional Republicans are asking tough questions about Abound's federal loan guarantees. Also in the loss column is General Electric's recent decision to suspend development of the proposed $300 million PrimeStar Solar plant in Aurora that would have employed 355 workers. At the least, the setbacks are a speed bump in Colorado's effort to maintain a leadership status in renewable energy. At worst, they could significantly impair growth of the industry. The combined layoffs, plant closure and mothballed projects in Colorado represent the loss of more than 1,000 existing and projected jobs, plus millions of dollars of tax revenue and spinoff economic activity. Hard times for the green industries stem from a combination of technical challenges, low-cost foreign competition and an uncertain outlook for government support of alternative energy. "It's not just Colorado," said William Yeatman, an energy analyst with the Competitive Enterprise Institute, a Washington, D.C.-based free-market think tank. "Renewable-energy manufacturing is taking a beating across the country, primarily due to the fact that federal subsidies have run their course," he said. "The 2009 stimulus has been spent, and the wind production-tax credit is set to expire in December. Without taxpayer handouts, these green industries simply cannot compete." Volatility expected Advocates for renewable energy say tax credits and loan guarantees are necessary tools for the wind and solar industries to survive and grow until they reach scales to compete with other power sources. Former Colorado Gov. Bill Ritter, who coined the term "new energy economy" during his 2006 gubernatorial campaign, said he remains convinced that Colorado will be a center for renewable-energy commerce and research despite the recent spate of layoffs and bankruptcies. "People still see Colorado as a state that moved forward with an aggressive agenda," said Ritter, a Democrat who now serves as director of the Center for the New Energy Economy at Colorado State University. "There is going to be some volatility within this industry," he said. "But what I would argue is that we will not go backwards. The public demand for clean energy is very strong. And our R&D corridor is as strong as any place in the nation." Ritter blamed layoffs at manufacturer Vestas Wind Systems on "congressional inaction" to extend the expiring wind-energy production-tax credit, or PTC. "If the PTC comes back for three years, Vestas would be at full-tilt boogie," he said. Failure to extend the PTC would devastate the wind-energy industry, according to a report by Navigant Consulting, commissioned by the American Wind Energy Association. Wind-supported jobs in the U.S. would drop nearly in half, from 78,000 in 2012 to 41,000 in 2013, the report said. Installations of wind generation would decline from 12 gigawatts this year to 2 gigawatts next year. Investment in wind energy would fall from $15.6 billion in 2012 to $5.5 billion next year. While solar energy is not affected by the production-tax credit — solar has its own investment-tax credit through 2016 — the industry is not immune from problems. The Chapter 7 bankruptcy and subsequent closure of solar-panel manufacturer Abound Solar this year has become a hot issue in political and government circles. While Abound officials blamed the shutdown on crippling competition from low-cost Chinese manufacturers, others — chiefly Republicans in Congress — say Abound was selling faulty equipment. They are investigating to determine if the U.S. Department of Energy was aware of Abound's technical problems before it authorized a $400 million loan guarantee in 2010. Abound drew about $70 million in guaranteed loans. The DOE has estimated that U.S. taxpayers will be on the hook for about $40 million to $60 million following Abound's liquidation. The Weld County district attorney's office is saying little about its investigation of Abound, reported this month by 7News. "I can confirm that there is an investigation into Abound Solar from our office," said spokesman Heath Montgomery. "As it pertains to the nature of that investigation, I can't comment on that." House investigation U.S. Rep. Cory Gardner, a Colorado Republican whose district includes Abound's former office and manufacturing sites, serves on the House Energy and Commerce Committee, which is investigating the Abound loans. "Did the DOE rush to issue a loan guarantee on a product that wasn't ready for prime time?" Gardner said. "We need to know what the DOE knew and when they knew it." He said the investigation seeks to address the issue of the government "picking winners and losers" through the issuance of loan guarantees to a handful of companies. Gardner said he supports a short-term extension of the wind-production tax credit because, unlike selective solar loan guarantees, any company producing wind power can claim the tax credit. DOE spokesman Damien LaVera declined to comment specifically on the House investigation. He noted that Abound, since its founding in 2007 under the name AVA Solar, had Republican and Democratic backing as it requested government incentives for operations in Colorado and Indiana. "Abound had strong bipartisan support — first in the form of a grant from DOE under the Bush administration, and later in the form of letters and public statements from members of Congress from Colorado and Indiana and the governor of Indiana," LaVera said. Namaste Solar of Boulder, one of Colorado's largest solar-system installers, has used Abound panels for two projects. On one of the installations, using an early version of Abound panels, the equipment malfunctioned and needed to be replaced. The second project using a later version operated normally. Blake Jones, president of Namaste, said he was intrigued with the idea of using a Colorado-based supplier. But Abound was "late to the game" compared to more established panel manufacturers, Jones said, and had difficulty scaling up its production enough to be cost-competitive. Jones said the failure of Abound is not representative of the solar manufacturing sector, nor should it be used as a reason to curtail financial incentives to the industry. "Oil and gas is subsidized; nuclear is subsidized," he said. "The playing field needs to be leveled in order to support the solar industry during its maturation phase. I do believe we'll reach a point where unsubsidized solar can compete with other technologies."

Government to streamline solar development in West

SAN FRANCISCO – Federal officials on Friday approved a plan that sets aside 445 square miles of public land for the development of large-scale solar power plants, cementing a new government approach to renewable energy development in the West after years of delays and false starts. At a news conference in Las Vegas, Interior Secretary Ken Salazar called the new plan a “roadmap ... that will lead to faster, smarter utility-scale solar development on public lands.” The plan replaces the department’s previous first-come, first-served system of approving solar projects, which let developers choose where they wanted to build utility-scale solar sites and allowed for land speculation. The department no longer will decide projects within the zones on a case-by-case basis as it had since 2005, when solar developers began filing applications. Instead, the department will direct development to land it has identified as having fewer wildlife and natural-resource obstacles. The government is establishing 17 new “solar energy zones” on 285,000 acres in six states: California, Nevada, Arizona, Utah, Colorado and New Mexico. More than half of the land – 153,627 acres – is in Southern California. Interior also established 19 million acres – nearly 30,000 square miles – of so-called “variance zones” that will allow developers to propose solar projects in those areas. Environmental and other review of projects proposed in variance zones would be handled on a case-by-case basis. The Obama administration has authorized 10,000 megawatts of solar, wind and geothermal projects that, when built, would provide enough energy to power more than 3.5 million homes, Salazar said. Secretary of Energy Steven Chu said the effort will help the U.S. stay competitive. “There is a global race to develop renewable energy technologies – and this effort will help us win this race by expanding solar energy production while reducing permitting costs,” Chu said. The new solar energy zones were chosen because they are near existing power lines, allowing for quick delivery to energy-hungry cities. Also, the chosen sites have fewer of the environmental concerns – such as endangered desert tortoise habitat – that have plagued other projects. Environmental groups such as the Nature Conservancy that had been critical of the federal government’s previous approach to solar development in the desert applauded the new plan. “We can develop the clean, renewable energy that is essential to our future while protecting our iconic desert landscapes by directing development to areas that are more degraded,” said Michael Powelson, the conservancy’s North American director of energy programs. Some solar developers that already are building projects were complimentary of the new approach, saying it will help diversify the country’s energy portfolio more quickly. Still, some cautioned that the new plan could still get mired in the same pattern of delay and inefficiency that hampered previous efforts, and they urged the government to continue pushing solar projects forward. “The Bureau of Land Management must ensure pending projects do not get bogged down in more bureaucratic processes,” said Rhone Resch, president of the Solar Energy Industries Association. Salazar said the country four years ago was importing 60 percent of its oil, and that number has dropped to 45 percent today. “We can see the energy independence of the United States within our grasp,” he said.