Oregon business groups unite to save incentives for renewable energy

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The crystal hall at SolarWorld's plant in Hillsboro.

Business leaders are weighing ideas to keep the fledgling renewable energy industry inching forward in Oregon, despite an economic downturn and policy changes that threaten the incentives that have funded its growth so far.

The Northwest Environmental Business Council is partnering with Climate Solutions, Renewable Northwest Project and other organizations for the effort. In talks with businesses and state officials, organizers have developed draft versions of policies they say are boilerplate ideas for a legislative strategy in 2011.

“We are trying to maintain some incentive structure that keeps Oregon on the map for energy developers,” said Robert Grott, executive director of Northwest Environmental Business Council. “We want to assure that whatever funds the state does have for economic development are used in the most effective way possible.”

At issue is funding for developing new renewable energy projects in Oregon, which comes primarily from utility-funded efforts to meet their own renewable energy requirements, and from federal and state incentives intended to make renewable energy projects pencil out for investors.

In Oregon, incentives come from the Business Energy Tax Credit, credited for bringing companies such as Iberdrola, Vestas and SolarWorld to Oregon and spurring considerable growth in the renewable energy sector. The BETC found dubious fame, however, when the broad-stroke program caused the state to allocate more money than planned to renewable energy development.

Efforts to improve it since then have essentially left the BETC unworkable as a development tool, critics say. There is little money set aside for the tax credits, and what’s left is metered out in a competitive process that’s expensive for developers and offers uncertain odds.

Without BETC improvements, business leaders caution the renewable energy industry is unlikely to see new growth in Oregon —growth they say has significant benefits for the state’s economy and long-term energy independence.

“Clean energy projects still cannot compete against traditional fossil fuels, which have been subsidized for many years and in many ways,” said Lisa Adatto, Oregon director for Climate Solutions. “I think Oregon has been a leader and now it is starting to fall a little bit behind.”

Creating new incentives for renewable energy development, however, will come with challenges. Oregon faces a significant budget shortfall in the next biennium and has limited funding for economic development. Supporters eager for new incentives for renewable energy want to avoid a battle that pits development against social programs also in need of money.

For the industry to move ahead, however, the BETC needs retooling. Experts say its procedural hurdles must be smoothed out and the credits should be issued with renewable energy outcomes in mind, along with other value-based goals (such as job creation), instead of the program’s current focus on project cost.

Also percolating are ideas that could lower debt hurdles for renewable energy development, said Grott, without significant costs to the state.

Suggestions so far have included retooling the State Energy Loan Program, which promotes energy conservation and renewable energy resource development but isn’t particularly geared toward project developers. The loans aren’t viable for construction, for example, and they aren’t aimed at risky endeavors such as unproven technology.

Though other ideas are also on the table — such as offering forgivable, interest-free loans to small projects and leveraging the state’s bonding authority to provide longer-term loans in partnership with banks — organizers caution the ideas are preliminary only, meant to tease out a common position for the 2011 legislative session.

They plan a series of workgroups, followed by position papers in August, and meetings with legislators and other stakeholders to present the concepts.

“What will be critical is a package of options for funding clean energy,” said Adatto. “We’re seeing general agreement, at least in the basic concepts that we’ve been discussing.”

Lee van der Voo, lvdvoo*at*gmail.com, is a freelance writer for Sustainable Business Oregon.