The draft rules governing the programs that replace Oregon’s drew ire of some stakeholders in the renewable energy sector, but now they are cautiously optimistic.

The Oregon Department of Energy posted the draft rules on Sept. 19, but after several groups lobbied for more time and more openness in the rulemaking process, the agency extended the deadline for public comment from Oct. 21 to Nov. 4.

The ODOE met with industry members on Monday to discuss the draft rules for the renewable energy grant program known as “Gennie.” The small group of developers, lobbyists and trade association heads argued that the draft rules impose too many stipulations for new projects. And ODOE representatives on Monday indicated they would take steps to tweak the draft rules.

“The initial rules they issued were awful,” said Alan Hickenbottom, president and founder of and one of approximately 10 attendees at Monday’s meeting. “But I thought we had an open dialogue and I’m cautiously optimistic that we will see decent improvements to the program.”

The executive director of the , Glenn Montgomery, said the initial draft rules put the cart before the horse. Monday’s meeting was an attempt to turn it around.

Gennie, which is capped at $3 million for the 2011-2013 biennium and limits awards to $250,000 per project, targets smaller (capped at 35 megawatts) commercial projects. But the initial draft rules established criteria for grant applications that Hickenbottom and others said would have discouraged smaller businesses from applying altogether.

“We (various stakeholders) are all consistently in agreement that they’ve gone above and beyond what we believe are appropriate eligibility and prioritization criteria,” Montgomery said of the initial draft rules.

The ODOE laid out a system to assess grant applications based on factors including strength of the applicant’s business plan, experience of the project team and community support.

In comments he submitted to the ODOE on Oct. 21, Montgomery called these and other grant criteria “ill-suited for the evaluation of grant applications and overly burdensome for the applicant to complete.”

Hickenbottom, who cited his own experience, also said the business plan criterion is “ridiculous.”

“Virtually no one has an up-to-date business plan that’s ready to print,” he said. “But they (ODOE rule-makers), not being business people, didn’t understand that asking for a business plan wouldn’t give them what they wanted anyway.”

And the ODOE now seems to be taking its rule-making cues from the industry.

“The lesson is that it really should have been a more open process,” said Robert Grott, executive director of the . “We’re hoping the next draft takes into account the changes we recommended that would make the program more effective.”

After Friday’s extended deadline passes, the ODOE will review all comments, and then produce another set of draft rules – probably in the next couple of weeks.

“What we have to do now is basically create three new programs from the 32-year-old BETC program,” said Diana Enright, a spokeswoman for the agency. “After a program sunsets after that long, of course, we had a lot of public interest.”

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After the was sent to extinction last month by Gov. John Kitzhaber and the state legislature, a number of businesses who had applied for the tax credit had their applications returned. At least they got their application fee back.

The Energy Trust of Oregon has announced that it will offer bonus cash incentives for lighting upgrades and energy-efficiency programs to businesses in light of a host of to energy tax credits signed into law last month that will go into effect . Among the changes spelled out in the is a measure to auction off energy tax credits to pay for projects selected by the Oregon Department of Energy, which will specify the conditions of the award.

To be eligible for the Energy Trust , projects must be enrolled with Energy Trust between Sept. 1 or later and be completed be completed by Dec. 15. Upgrades to commercial and industrial lighting systems may be eligible for cash bonuses of up to 50 percent. Custom capital energy efficiency improvements that save electricity and natural gas, such as boiler retrofits and more efficient air conditioning systems, may qualify for a bonus of 20 percent.

Photo by via Flickr

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Interest in renewable energy and green retrofits is rising in Oregon’s religious community. Some congregations have struggled to navigate complicated processes, but others are finding ways to achieve sustainable projects.

Oregon’s has helped some congregations, including First United Methodist in Eugene and Hood River Valley Christian Church, finance solar projects in the past couple of years.

Ten members of the First United Methodist congregation formed a Special Purpose LLC to purchase a 28.3-kilowatt system. In exchange for supplying the capital for the panels, the members of the LLC will reap associated tax credit benefits for at least five years. Then, final ownership will be transferred to the church.

“There are a lot of twists and turns navigating the tax code to keep solar power affordable,” said Steven McGrath, president of Sustainable Solutions Unlimited, an energy efficiency and renewable energy contractor that has worked with several churches on solar projects. “But it’s working – First United has the first community-owned solar installation in Oregon.”

Sustainable Solutions found a niche working with congregations through a request for proposals that was issued by Oregon Interfaith Power & Light, a nonprofit that aims to generate “a religious response” to climate change. The group, which is affiliated with Ecumenical Ministries of Oregon, provides energy audits, educational resources, financial consulting and public policy advocacy on a number of issues.

More than 60 congregations have expressed interest in solar, according to Jenny Holmes, director of OIPL. The nonprofit helped many interested groups fill out applications for BETCs, but First United was one of the few to achieve precertification in the last round of the program, which recently passed its sunset date.

“It’s very disappointing,” Holmes said. “Community-based projects can take some time to get all of the permissions in order and to figure out plans, and then you only have a gambler’s chance to get allocation for all of that work.”

OIPL is working with Sustainable Solutions to come up with strategies that will make renewable energy more financially feasible for nonprofits. But for now, Holmes and McGrath say fewer green projects are moving forward because the money just isn’t there anymore.

“There are hundreds, if not thousands, of groups that would like to do something similar to First United; if BETC was still available, we’d be running them forward,” McGrath said.

Many congregations need years to align plans, and thus struggle to reap benefits from tax incentives that evolve constantly. Westminster Presbyterian Church in Eugene wanted a rooftop solar project and spent years gaining necessary approvals in order. In its case, the Presbytery trustees had to approve the idea before it went forward. By the time they filed for a BETC, the program was on its way out.

“Working with a congregation is like herding cats sometimes,” Holmes said. “Community groups need a long timeline and some certainty to access those incentives, but they’re really set up for a business where you can just ask one person and move forward. There is a lot of potential investment in Oregon that’s being left on the table because it’s so cumbersome for nonprofits to work through the tax systems as they are now.”

Contractors also can be challenged to deal with a whole congregation, rather than a single owner.

“There’s a lot more involved in up-front planning and changes, which slows things down,” said Carrington Barrs, principal at B&G Builders. It is the contractor for a $175,000 energy upgrade at the Interchurch Center, which houses OIPL.

“I like working with nonprofits,” Barrs said. “It’s more challenging up front, but more rewarding in the end because a lot of different people are really happy with how the work impacts the space.”

Several parishes have established “green teams” to focus on sustainability issues. The green team at St. Andrews Lutheran Church in Beaverton is helping construct a new sanctuary slated to open in March 2012.

Triplett-Wellman is the general contractor for the project, but volunteers from the church assisted soft demolition of the old structure by pulling up the oak flooring one board at a time and taking old light fixtures to a Habitat for Humanity ReStore. Now volunteers are performing mitigation in surrounding wetlands.

First Congregational United Church of Christ in Salem financed its new solar panels through a pilot program offered through Portland General Electric, Pacific Power and Idaho Power. McGrath cautioned that program money is difficult to obtain – statewide, only 25 megawatts can be installed.

McGrath said the incentive structure should account for challenges that nonprofits are facing. Expanding the volumetric incentive rate, which is the model used at First Congregational in Salem, might be the most sustainable, long-term approach, he said.

“Nonprofits are not on a level playing field,” McGrath said, “which is good for my business because I know how to navigate the system. But it’s not good overall. We need to unleash the people who want to do these (solar projects) the most. It has put a lot of people to work, but after the jobs we’re working on now are done, we may not have any more work for that crew.”

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In the energy industry, everyone is re-evaluating Oregon’s new, BETC-free climate, with the resulting reactions spanning from frustration to resignation. The state legislature voted overwhelmingly in June to phase out the program, which had a hefty price tag but was also credited with bringing to Oregon thousands of jobs and millions of dollars in revenue.

Under , BETC will be replaced by three separate programs that keep the structure of the old credits for renewable energy generation, conservation, and manufacturing, but with drastically smaller pots of money than in the past, including the $300 million dedicated during the last biennium.

The new energy generation credit, “Gennie,” will significantly impact emerging renewable energy industries and large-scale solar projects. The entire grant fund now has relatively paltry $1.5 million to distribute each year.

In the old program, renewable energy projects could earn tax credits for 50 percent of eligible costs. Now, individual awards may not exceed $250,000 or 35 percent of a project’s cost. Projects will be capped at 35 megawatts.

Critics of the restructure say overcoming the changes in legislation will be especially hard for emerging industries.

Tax credits on the state and federal levels helped Oregon’s biodiesel industry move forward, but none of the policies have had much staying power, said Tyson Keever, general manager of SeQuential-Pacific, an Oregon-based biodiesel company. The lapsing of a federal excise tax credit in 2009 caused about 80 percent of national biodiesel facilities to close or furlough. Although that credit has returned, Keever and others in the biodiesel market say the future of biodiesel is still uncertain.

“The atmosphere for biodiesel in Oregon has totally changed place since 2005 when we opened our first plant,” Keever said.

Due in part to a business model that ties local feedstock to the biodiesel’s end-user at the gas pump, Sequential-Pacific is faring well, Keever said. He’s less optimistic about investor confidence in Oregon, though.

“BETC was an element that helped get us in, but now there will be a barrier to entry for others, unfortunately,” Keever said.

On the other end of the spectrum, BETC also made the financing of commercial-scale projects feasible in Oregon.

“The state of Oregon is no longer capable or interested in providing incentives to industrial scale projects,” said John Audley, deputy director of Renewable Northwest Project.

The clearest effect will be on commercial-scale solar projects because the tax credits under the old BETC reduced the price of solar energy enough to sell it to a utility, Audley said. Now, many solar companies are readjusting their business plans and may be ending plants to site projects in the state.

“The economics have to be compelling for commercial scale projects, and BETC was the thing making Oregon more compelling,” said Matt Ziskin, senior marketing director at SunWize Systems. “Now you will see a very substantial slowdown on the commercial side of solar, at least until BETC is revisited and funded at a more substantial rate.”

SunWize now plans to focus on residential business in Oregon, which means fewer potential jobs. It’s a move that Ziskin thinks may become more common among solar companies.

“Obviously if we’re not doing large-scale projects, we’re not employing local labor to do that construction work, those jobs just won’t exist,” he said.

Ultimately, those in the solar industry considered BETC one of the main tools in building larger projects . With the program at its previous levels, the prospects of those projects getting done are slim to none.

“I don’t think there’s any question within the industry that the decision (the legislature) has made will have a negative impact in terms of renewable energy generation,” said Glenn Montgomery, executive director of the Oregon Solar Energy Industries Association. “We will see less generation and job losses as a result. Hindsight will prove whether or not this was a wise choice or perhaps there could have been a better choice.”

Industrial-scale wind, on the other hand, is facing a completely different set of challenges in Oregon, ranging from uncertain markets in California to curtailments from the Bonneville Power Administration’s transmission system.

“Figuring out the whole set of reasons for impacts on the wind industry will be more complicated,” Audley said.

For biogas projects, the changes to BETC will make construction financing more difficult, but a new biomass tax credit within HB 3672 may help on the revenue side, according to Ben Vitale, president of the Climate Trust.

“Some was taken away and some was given back,” Vitale said. “We’ll have to see how it pencils off for different types of projects.”

Ultimately, there seems to be a concern about Oregon slipping from its leadership position in renewable energy across industries, coupled with an acknowledgment that the legislature was faced with massive budget issues that left them with few choices.

“I have kids in public schools and I drive down these roads, so I see what the state’s fiscal house looks like and it’s not pretty,” said Chris Taylor, chief development officer of Element Power. “I don’t think renewable energy should be exempt from the state’s broader problems, but renewable energy has been a bright spot in fairly gloomy economy – it would be unfortunate if as a result of this we end up with declining investment.”

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A scaled-down program that will replace the current conservation and generation was passed by the Oregon House of Representatives this morning with a vote of 57-2.

extends the sunset date of the tax credit programs that are designed to support development in the green technology sector in Oregon. The bill’s passage comes after many months of lobbying on behalf of renewable energy companies concerned that the end of the credits could slow or stop the momentum of Oregon’s clean energy sector.

The BETC program is expensive and has been criticized for incentivizing projects that would have happened anyway. Under the current BETC program, renewable energy projects are eligible for tax credits up to the amount of 50 percent of a project’s cost. Under the new program, there are significant cutbacks.

The generation tax credit program is “dramatically different” under the new legislation, according to Rep. Jules Bailey, D-Portland. The new “Gennie” is a cash grant pilot program, limited to $250,000 per grant and capped at $3 million for the biennium. “Gennie” programs will only be granted to projects generating 35 megawatts or less.

“(Gennie) will incent the kind of small and community-scale projects that these grants will really make a difference on,” Bailey said.

The conservation tax credit will see less dramatic changes in the new program, but Bailey said the legislature ramped up the standards for the kind of projects that will be eligible.

“You can’t just install something that would pay for itself within a year without the credit,” Bailey said. “(Awarded projects) will go above and beyond, have at least a 3-year payback and be a high energy saver.”

The conservation tax credit program will be allocated a maximum of $28 million for the biennium. Both programs will sunset in 2018.

HB 3672 will next head to the state senate and may be heard as early as this afternoon, Bailey said.

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A bill that would move the administration of the for manufacturing passed the Oregon House this week and is on its way through the Senate.

would make changes to the way the credit is administered, but most of the changes codify practices already in place, said Rep. Tobias Read, D-Beaverton. The major change will move the program from the state Department of Energy to the Oregon Business Development Department, also known as Business Oregon.

“The bill codifies some things that Business Oregon is already doing, in terms of requiring that there be performance agreements made with credit recipients,” Read said. Recipients will be held to agreements about job creation and the amount that employees are paid.

The bill doesn’t change the sunset date for the manufacturing BETC, which is still December 31, 2013. There is a cap on credit allocations of $200 million per biennium, and an additional $50 million for the time between the biennium that ends in June 2013 and the credit’s sunset on Dec. 31 of that year.

Discussions are ongoing in the joint tax credit committee about the conservation and generation BETCs, which are scheduled to sunset next year.

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The future of Oregon’s has spurred debate in public hearings in the Legislature recently. And at least one thing is certain about the program that provides incentives for conservation, manufacturing and renewable development projects: It will soon be much smaller.

“It’s basically nothing,” said Alan Hickenbottom, general manager of commercial solar company Tanner Creek Energy.

By “nothing,” Hickenbottom referred to $10 million – the amount of money the joint tax credits committee has to allocate for the next biennium for BETC and other tax credits set to sunset in 2012, including the Residential Energy Tax Credit, the Film and Television Tax Credit, and the Research and Development Tax Credit.

“We’re talking about keeping programs on life support,” said Rep. Jules Bailey, D-Portland. “The reality is now starting to hit home for people: We don’t have dollars to spare, regardless of how important the program is.”

The BETC program alone had worked with up to $150 million per year. Advocates say the decrease in funding is bad news for sectors such as solar.

“We will lose the momentum that we’ve built over the past 10 years or so in solar in Oregon,” said Sandra Walden, president and owner of Real Energy Solutions, which develops commercial solar projects.

Uncertainty about BETC’s future forced Real Energy Solutions to diversify; it has picked up work such as feasibility studies to compensate for cutbacks in the commercial solar installation business. Walden said that some planned projects were killed when BETC money ran out or when projects didn’t score high enough to be awarded the credit.

Tanner Creek Energy, meanwhile, was acquired by Christenson Electric in March.

“This is no news to me,” Hickenbottom said. “But it’s going to catch a lot of my colleagues flat-footed.”

“Certainly there will be jobs lost and companies will move to other states,” said Walden, noting that her company has searched for work in Hawaii and Southern California. “Staying here will be hard,” she said.

Other renewable sectors, like large wind development and even residential solar installation, will not suffer as much from BETC’s cuts because they have developed to economies of scale or have lower up-front capital costs, Hickenbottom said.

For commercial solar, however, BETC’s incentive was needed to reduce prices to make projects feasible, Hickenbottom said. His company was able to sell solar to businesses and nonprofits because of benefits provided by BETC.

“For any capital expenditure a company is going to make, once you start talking about something under a five-year payback, they’re interested. BETC allowed us to get under five years,” Hickenbottom said. “BETC was everything.”

Though other credits and incentives were available for solar installation, BETC – and its increase to a 50 percent credit – “kicked off the solar gold rush in Oregon,” Hickenbottom said.

He said that BETC helped lower prices, but added that cutting the program down to “basically nothing” is too much, too soon.

“Commercial folks are going to take a hit,” Hickenbottom said.

Nevertheless, there seems to be no doubt that BETC will be different in the future.

“I can pretty much tell you we’re not going to renew BETC as it’s been,” Bailey said. Already, the program has been split between renewable, conservation and manufacturing components. Bailey thinks all of the programs will continue, with some changes, which developers understand.

“We’re hoping, by the end of the day, that more money can be found,” said Robert Grott, executive director of the Northwest Environmental Business Council.

“We’re grateful for whatever can be done,” said Walden, who encouraged legislators to make BETC’s purpose clear.

“Any future allocations need to have clear guidelines for what the funds should do for the state,” she said.

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Oregon’s program for energy conservation and renewable energy generation projects, which has become costly and a target for criticism, is scheduled to sunset in 2012. Conversations are taking place in Salem about possibly extending the program; however, some professionals in the renewable energy sector are concerned about some of the changes on the table.

Draft amendments to bills that would extend BETC would base the credit amount on a project’s amount of energy production instead of project cost, and that change would benefit some technologies more than others.

Biomass and hydropower, for instance, can produce more energy per dollar than solar can, said Glenn Montgomery, executive director of the Oregon Solar Energy Industries Association. Efficiency would be rewarded, but that doesn’t tell the whole story, he said.

“I think Oregonians want to see us taking advantage of all of the different technologies available,” Montgomery said.

Ray Wilkinson, president of the Oregon Forest Industries Council, agreed that the biomass industry would benefit from a production-based credit.

“The wind doesn’t always blow and the sun doesn’t always shine,” he said. “Biomass can outcompete.”

If the goal of the program is to produce “the most bang for the buck,” calculating credit amounts this way makes sense, said Roby Roberts of Horizon Wind Energy.

“It seems like it is good public policy to put your dollars where you get the most megawatts of green in the most efficient way,” Roberts said.

Other amendments being proposed to bills would make part of the BETC program competitive. Only the best projects would be given credits, said Rep. Tobias Read, D-Beaverton. This idea troubles some people in the renewable energy industry.

“I’m completely opposed to a competitive process,” said Robert Grott, executive director of the Northwest Environmental Business Council. He said a competitive process would create uncertainty for businesses, which would need to make significant up-front investments without knowing whether they would get tax credits. This investment could be wasted if the credit were needed and not received; and if the credit wasn’t necessary for the project to pan out, then the purpose becomes questionable, Grott said.

“If what you’re trying to do is provide an incentive that gets us (more projects) we wouldn’t have had otherwise, then you could make an argument that it’s the more expensive technologies that we ought to be providing those incentives, within reason of course,” Montgomery said.

Read, meanwhile, said that giving credits to projects that would have happened anyway was the equivalent of “wasted dollars.”

Rather than having a competitive credit awarding process, Grott said, he would prefer that the state set high thresholds for metrics such as project efficiency and job creation. Projects that met those metrics would be accepted for the credit program, he said.

The existing BETC program awards a portion of credits on a competitive basis, and Montgomery said solar has come up short.

“In the last round the winners were small hydro and biomass,” Montgomery said. “My understanding was that it was in large part because they were able to produce more permanent jobs and they were the most cost-effective in terms of energy produced for dollars requested. There’s the scenario where the chips may fall in one or two baskets at the expense of everyone else losing.”

The permanent jobs metric, in particular, bothers Montgomery.

“There are a lot of people in the construction industry who would take offense at the idea that their jobs are somehow not permanent just because they’ve got a definitive start and end,” he said. “You have people who are installing photovoltaics and they’re going from job to job to job: That’s not temporary; that just means they’re going from project to project to project.”

If the BETC program were extended, it would likely be scaled down. But even that would be something, proponents say.

“Everybody’s hoping that some vestige of BETC will continue,” Wilkinson said.

“We were hoping it would advance to this point, where the conversation is about how we (extend BETC) rather than if we do it,” Grott said.

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There’s never a dull moment in the energy sector around here – here are some of the projects that caught my eye this week.

Clark County will move ahead with planning a proposed downtown Vancouver biomass plant after y. But Vancouver City Council is skeptical of the idea, and it will have to make the zoning change to let the plant move in.

Nissan will resume taking orders for their all-electric Leaf on May 1, . Only 500 of the cars have been delivered in the U.S. so far, though thousands of EV enthusiasts are still on waiting lists. Check out my related story about the proposed road usage fee for electric cars in Oregon.

Newport will be the site of a wave energy research program, . OSU and University of Washington researchers will use the site near the Hatfield Marine Science Center to test some wave energy technology and its impact on the local flora and fauna.

A recent study found that solar panels increase the resale value of homes in California at , as compared to comparable homes without solar arrays. That’s not too surprising, but another interesting trend came out of the study: the value benefit of solar was higher where solar was installed on an existing home than it was for houses that came with the panels.

Finally, an update on the Business Energy Tax Credit: recent amendments to the bills aimed at extending BETC would formally split the credit into its three parts: manufacturing, energy conservation and energy generation, which Rep. Tobias Read wants you to call “Manny,” “Connie” and “Genny” to replace the “Betsy” nickname. The amended bills would also change how “Connie” and “Genny” calculate the tax credit: instead of getting a credit based on project cost, businesses will earn based on how much energy they save or produce.

The post Energy Roundup: BETC, biomass, electric cars and wave energy appeared first on Daily Journal of Commerce.

There’s never a dull moment in the energy sector around here – here are some of the projects that caught my eye this week.

Clark County will move ahead with planning a proposed downtown Vancouver biomass plant after y. But Vancouver City Council is skeptical of the idea, and it will have to make the zoning change to let the plant move in.

Nissan will resume taking orders for their all-electric Leaf on May 1, . Only 500 of the cars have been delivered in the U.S. so far, though thousands of EV enthusiasts are still on waiting lists. Check out my related story about the proposed road usage fee for electric cars in Oregon.

Newport will be the site of a wave energy research program, . OSU and University of Washington researchers will use the site near the Hatfield Marine Science Center to test some wave energy technology and its impact on the local flora and fauna.

A recent study found that solar panels increase the resale value of homes in California at , as compared to comparable homes without solar arrays. That’s not too surprising, but another interesting trend came out of the study: the value benefit of solar was higher where solar was installed on an existing home than it was for houses that came with the panels.

Finally, an update on the Business Energy Tax Credit: recent amendments to the bills aimed at extending BETC would formally split the credit into its three parts: manufacturing, energy conservation and energy generation, which Rep. Tobias Read wants you to call “Manny,” “Connie” and “Genny” to replace the “Betsy” nickname. The amended bills would also change how “Connie” and “Genny” calculate the tax credit: instead of getting a credit based on project cost, businesses will earn based on how much energy they save or produce.

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