Why Doesn’t Central Oregon Have a Renewable Energy Zone?

Five Oregon and Washington counties that straddle the Columbia River have joined forces and become the Columbia Gorge Bi-State Renewable Energy Zone. Those counties are: Hood River, Sherman and Wasco Counties in Oregon and Klickitat, Sherman and Skamania Counties in Washington.

They claim that because it’s “centrally located in the Pacific Northwest, the Columbia Gorge is an ideal location for renewable energy production, manufacturing, and research. They go on to say that “The area offers qualities such as a broad inventory of industrial property, mutli-modal transportation, renewable energy technology training, a favorable business climate, and an unbelievable quality of life.” They go on to invite the reader to “explore the links above to learn about this world-class renewable energy region and opportunities to invest your business.  Including:

Workforce training – Affordable industrial lands – Quality of life
Favorable business climate – Multi-modal transportation”

Why Not Central Oregon?

Is there any reason why the counties of Central Oregon (Crook, Deschutes, and Jefferson) couldn’t join forces and do the same?  It would be so easy to simply reword the above description/sales pitch to read:

Located in the heart of  Oregon, Central Oregon is an ideal location for renewable energy production, manufacturing, and research. The area offers qualities such as a broad inventory of industrial property, mutli-modal transportation, renewable energy technology training, a favorable business climate, and an unbelievable quality of life. Explore the links on our website to learn about this world-class renewable energy region and opportunities to invest your business. 

It should be noted that Central Oregon does have one county – Crook – that has a Rural Renewable Energy Development Zone designation.  Although that is an admirable effort much more could and should be done to establish Central Oregon – and all of its counties –  a leader in renewable energy development and education.

Central Oregon Positioned to Become Solar Power Hub

Daniel Pearson - Cascade Business News – September 3, 2008

Last month, when local solar power inverter manufacturer PV Powered announced it had to layoff a handful of employees the move appeared on the surface to indicate the solar power industry was feeling the effects of the current recession and that troubled times might lay ahead for Bend-based companies.

Industry insiders say that couldn’t be farther from the truth.

In fact, the sun is just beginning to rise on the solar power industry in Central Oregon, where both regional and state officials are in the middle of a huge push to attract more companies to the region, and where a handful of scrappy startups are trying to carve their own niche in the early days of this burgeoning sector.

Solar power across the state

In the four-state region that consists of Oregon, Washington, Idaho and Montana, more than $3 billion has been invested into solar-related projects since the beginning of 2006, according to Marple’s Pacific Northwest Letter, a monthly publication that has tracked trends in the Pacific Northwest economy since 1949. Those projects include:

Intel Corp. investing $50 million in a project led by ­SpectraWatt, a new company developing a 60,000-square-foot manufacturing plant in Hillsboro where 80 employees will make photovoltaic cells used in solar modules.

A factory making low-cost high-efficiency silicon wafers run by California-based Solaicx opened at the Port of Portland with more than 100 employees.
SolarWorld AG purchasing the shuttered Kamatsu plant in Hillsboro with plans to consolidate it with the Vancouver operation of Siemens Solar and spend more than $400 million upgrading a combined facility for solar-grade output.

Portland General Electric (PGE), US Bank and the Oregon Department of Transportation (ODOT) spending $1.3 million to erect solar panels at the Interstate 5 and Interstate 205 cloverleaf in Tualatin as part of the greater Oregon Solar Highway Project with materials and installation being provided by Oregon-based companies, including PV Powered.

Based on these events, state officials have declared solar energy a priority sector in developing the Oregon’s economy, and they are out trying to recruit solar companies to come here and set up shop. One of the key regions for developing the solar power industry is Central Oregon, due in part to its plentiful cool and sunny days, and the number of solar power companies already doing business here.

Local companies in the solar mix

There are five active solar power contract companies in Central Oregon – Abney Solar Electrix, Cascade Sun Works, E2 Powered, Startronics Solar Lighting and Sunlight Solar Energy, Inc. – as well as PV Powered, which is the largest manufacturer of solar power inverter technology in Oregon – at least until SpectraWatt’s Hillsboro facility comes online.

Those contract companies, with an average of four employees, provide solar electric power systems to businesses and homeowners who want to take advantage of the numerous tax credits and incentives offered by the state and use their own solar electric power systems. The systems they install connect users to the existing utility grid and allow them to trade power with the utility. When excess power is made it is exported back to grid and the user gets a credit on their monthly bill. Any excess energy created is used by other nearby homes and businesses, helping neighbors to save energy too, said Chance Currington, project manager for Sunlight Solar.

“Most homes have an analog meter, and on really sunny days you’ll see it spin backwards when they are using solar power,” Currington said.

One local business taking advantage of solar power electric systems is Community First Bank. When it opened its new Mill Quarter Branch at the corner of Arizona and Colorado streets, the bank installed 15-square-foot solar panels on the roof. In July, the bank’s main building used 3,840 kilowatt hours of electricity while generating 1,310 kilowatt hours (the average amount consumed by a house over one month). That means it generated 34 percent of the electricity it used with the panels. CFB’s small drive up building used 1,444 kilowatt hours in July and generated 276 kilowatt hours in the past month, accounting for 19 percent of the building’s demand, according to CFB President and Chief Executive Officer Robin Freeman.

“Since it is summertime, the panels are operating at peak capacity,” Freeman said. “I would expect these numbers to fall as shorter days and cloudy weather reduces production. Sunlight Solar estimated about 20 percent of our electrical consumption would be generated annually from the arrays.”

Currington says Sunlight Solar completed a new installation every week this summer, and that current incentives for businesses to start using solar electric power systems are spectacular; it’s something people should really consider taking advantage of with electric utility rates set to increase dramatically this fall.

“That’s going to spark our industry, and allow a new installation to pay for itself that much quicker,” he said. “We’ve been getting a lot of calls since the rate increase was announced. The same thing is happening with electricity that happened already (with gasoline).”

Solar tax credits and incentives

There are literally dozens of tax credits and incentives available in Oregon to businesses that want to go solar. However, the main ones of interest are:

Energy Trust Incentive: Customers of Pacific Power receive $1.25 per watt with a maximum incentive of $100,000. Funding is capped at systems 100 kilowatts in size, but larger systems may be installed.

State Business Energy Tax Credit: Oregon Department of Energy income tax credit for businesses covering 50 percent of installed system costs. If the project exceeds $20,000 it can be claimed over five years at 10 percent a year.

Modified Accelerated Cost Recovery System: Allows businesses to recover investments in solar over five years through rapid depreciation deductions on federal tax returns.

Federal Investment Tax Credit (ITC): Available to businesses for projects installed by December 31 and covers 30 percent of installed system costs.

That last one is a major sticking point in the industry at the moment because Congress is on the verge of letting it lapse, which resulted in decreased business and canceled projects for many Central Oregon solar companies, and led to the layoffs at PV Powered.

Solar projects put on hold

Congress is set to vote on renewing the tax credit this month, but some observers say it could hold off voting on the issue until a new administration takes office.

Erick Petersen, vice president of sales and marketing for PV Powered, said layoffs at his company were directly tied to Congress’ indecision regarding the ITC — which totals as much as $2,000 for residential projects and 30 percent for commercial projects — but many projects are being put on hold or canceled as business owners take a wait and see approach before investing in new solar electric power systems. Observers say solar power projects across the U.S. are being delayed in anticipation of Congressional action.

“We are already seeing an impact — this is happening in real time,” Petersen said. “We are expecting a 50-60 percent decline in business, and people are already canceling jobs. Even if Congress comes back in September and extends the ITC before the (presidential) election, the damage really has been done. It’ll be shorter lived if it’s passed again, but a lot of these big projects take months of planning and then weeks or months to do the installation work.”

Petersen said PV Powered’s status as a small company means it can’t afford to wait out the Congressional vote any longer, and that it was forced to make a decision about how to reserve working capital while demand for its products was suspended.

“No matter what happens with the ITC, this is a short-term problem,” he said. “The solar power market is still an incredible opportunity with long-term potential, and there is no real concern that the ITC will not get passed (eventually). In fact, we might even get a better ITC next year. PV Powered remains bullish on where all this is going long term — plenty of opportunities remain here in Bend — but unfortunately in the short term we are experiencing a squeeze.”

Bruce Laird, a consultant with the Oregon Economic and Community Development Department who is working to attract companies here, agrees with Petersen, saying the ITC will eventually be renewed and that current negative effects felt by the industry are nothing more than a hiccup.

“The tax credit is a sore subject in the renewable energy world,” Laird said. “It’s being held up in Congress by certain parties who attached it to a bill on drilling in Alaska, and it is materially harming the development of the industry. It’s really unfortunate because renewable energy, and especially solar power, is one of the brightest sources of new job creation here in Oregon. Not only that, but it would allow the population here to begin generating its own electricity rather than buying and importing it.”

The future looks bright

Right now, the focus in renewable energy across Oregon is existing projects in wind, geothermal, and hydro-electric power, but with the tax credits and incentives that are available, small contract companies on the rise, and an existing “green” mode of thought prevalent across Oregon, the solar industry is on the rise, Laird said.

“Oregon is the leading contender in environmental consciousness, and that matters a lot to the solar industry,” Laird said. “We also have an aggressive renewable energy policy where we want 25 percent of all power generated in the state to come from renewable sources by the year 2025. That creates demand for the product, which in turn creates the need for industry. Oregon is using all of these things to pull solar power companies in.”

Governor Ted Kulongoski recently held an energy summit to discuss the state’s energy future. Gov. Kulongoski brought together leaders from the business community, energy suppliers, consumer advocates, the environmental community, labor leaders and economists to provide their perspectives on Oregon’s needs as the state transitions to a renewable energy economy. At the summit he announced his intention to create an Oregon planning and energy council through executive order in the coming months. The council will meet and report regularly to the governor and legislature with recommendations for legislative and budgetary needs to secure Oregon’s energy future.

Meanwhile, here in Central Oregon economic development leaders are using all of these points to attract new companies to the region. With this in mind, Roger Lee, executive director of Economic Development for Central Oregon, joined state officials this week (Sept. 1-5) at the European Photovoltaic Solar Energy Conference & Expo in Spain, where he plans to tout his home region as the perfect place for companies to come and establish themselves.

“A lot of our effort centers around working with people from the solar industry we already know because they know a lot of leaders in the solar industry and when they talk about what its like doing business in Central Oregon it helps our efforts to attract new companies here,” said Eric Stroble, director of business development for EDCO. 

What’s really needed at this point to attract larger solar power companies to Bend is land zoned for industrial development, Strobel said. The region has been overlooked for a lot of solar projects in the past because there have not been any open land parcels big enough for a large company to come here and build a manufacturing plant, research and development facility or a testing center, Strobel said.

“When Juniper Ridge eventually opens up for industrial development there will be some larger parcels that facilities of these kinds of companies can use because they need a lot of space,” he said. “But there are other features unique to Central Oregon working in our favor. For instance, one of the best ones is that we already have (PV Powered) a first class solar company operating here. And we have an available workforce, relocation incentives, and plenty of sunshine. Businesses are starting to take notice, and I think that eventually, possible sooner rather than later, we could become the leading solar power region in the U.S.”

‘Enterprise zones’ may boost High Desert economy
By Tony Fuller – KTVZ.com – April 30, 2008

Property tax breaks can lure more business – and jobs

It’s something we all like to hear, two words: tax break!

For major manufacturers and trade sector employers, it could be exactly what they want to hear when they plan on bringing their company to Central Oregon.

Take companies like T-mobile for example, which qualified for an “enterprise zone” in Redmond, which gives them a break on property taxes. Now the company has become a major employer in the region.

So by designating three new areas throughout the region, as the state did this week, in five or 10 years, hundreds, even thousands of jobs could be on the way.

It’s one of the oldest and frequently used programs in the state.  A tax break that jumps starts economic development in rural areas like, in this case, La Pine, the Bend Airport and Crook County. 

According to Roger Lee, executive director of Economic Development for Central Oregon, the enterprise zone program will boost the economy.

“For example, if a company wants to come in and invest several millions of dollars in a new plant, we’re able to get them exempted for three years, sometimes five, but mostly three years” worth of property taxes, Lee said.

The program hopes to attract new manufacturers, high technology and other trade sector employers to central oregon. Those types of employers sell goods or services outside the local area, creating more jobs for trade workers.

“Jobs are certainly a portion of the program in order to qualify. They have to be in that sector and ship some sort of service or product out of the area, and the jobs are also a requirement statutorily for enterprise zones,” Lee said.

The enterprise zone label was designated in Redmond more than 18 years ago. Since then, over 1,600 jobs were created and $111 million in capital investments, the kind of boost the new local enterprise zones will seek.

“It’s proven to be very successful in the region on attracting new employers,” Lee said. “For example, T-Mobile in Redmond. I think if you asked the principals who put that together, they would say unequivically, they would not be in Redmond without the enterprise zone benefits that are offered.”

Crook County joins seven other Oregon counties that have been designated as a special type of renewable energy enterprise zone. 

The designation has become a meaningful incentive for renewable energy production, which includes a wind farm along the southern border of the county and two biomass power production plans near prineville.   The combined investment of these projects could attract capital investments exceeding $150 million.

According to earlier news reports (March 1, 2008)  ”Ochoco Power LLC (a division of La Pine-based Sylvan Power), which has plans to build a $40 million biomass power plant, and Pacific Wind Power, a California energy company looking into building a large wind farm – are seriously considering building in Crook County”.

Crook County Rural Renewable Energy Development Zone Approved
Press Release Excerpts – Economic Development for Central Oregon – April 29, 2008

The Oregon Economic & Community Development Department (OECDD) signed into existence a Rural Renewable Energy Development Zone (RREDZ) for Crook County that was effective April 29, 2008.

While offering similar benefits as a Rural Enterprise Zone, a Rural Renewable Energy Development Zone encompasses an entire county for the purpose of attracting new biomass, wind, geothermal, solar and other alternative or renewable energy production projects. RRED Zones were allowed by state statue in 2003 to avoid “gerrymandered” enterprise zones for wind farms.

Crook County initiated the process two months ago in order to provide a meaningful incentive for renewable energy production. Possible projects include a wind farm being considered along the southern border of the county and two biomass power production plants near Prineville. The combined investment of these projects could attract capital investments exceeding $150 million.

Crook County Considers Rural Renewable Energy Development Zone
The Bulletin - March 13, 2008:

With housing projects in a slump and unemployment on the rise Crook County is looking to renewable energy as an industry that can provide a boost to its economy.

Proposed location of Crook County Wind Farm

The Crook County Court is considering a proposal that would make the entire county an Oregon rural renewable energy development zone. The designation, which would give wind, solar, biomass and other alternative energy-producing companies the chance to apply for up to five years of property tax exemptions, would be just the sixth in the state and the first in Central Oregon.

Prineville-Crook County Economic Development Manager Jason Carr, who brought, the idea to the Crook County Court at its regular meeting last week, said the proposal was prompted in part by interest from two businesses – Ochoco Power LLC (a division of La Pine-based Sylvan Power), which has plans to build a $40 million biomass power plant, and Pacific Wind Power, a California energy company looking into building a large wind farm – are seriously considering building in Crook County.

That interest, he said, is part of a larger, statewide movement to boost the economy and the environment with renewable energy projects. The Oregon Renewable Energy Act passed by the state Legislature last year will require large utility companies like Pacific Power, which operates locally, to provide at least 5 percent of their electricity generation from renewable sources by 2011 and 25 percent by 2025.

“There’s a big push by the state of Oregon for the production of renewable energy sources, especially in wind power, geothermal, biomass, solar – any unconventional sources,” Carr said. “And for Crook County, being a rural county that is more economically distressed compared to counties like Deschutes, this is another tool the county can use to help diversify and strengthen its economy.”

Rural renewable energy development zones began to pop up around the state in September 2005, when state officials approved Union County’s zone proposal and opened the doors for renewable energy businesses there to get a break on up to $100 million – the maximum amount allowed by the state – in property taxes over the three- to five year period. The idea was modeled after the state’s enterprise zones, which give tax breaks to businesses that move into areas considered “economically distressed.” Enterprise zones, however, can only cover an area of 12 square miles.

The rural zones, on the other hand, can cover all spaces in a county with an approved zone except for metropolitan areas with a population of at least 30,000. Those rural areas are typically the places fit for a large wind farm, solar project or other renewable energy facility, said Nathan Buehler, the marketing director for the Oregon Economic and Community Development Department.

“Our belief from the department is that the renewable energy projects … aren’t all contained in a finite geographic area,” he said. “The enterprise zone limited some of these newer renewable energy projects because they span out and have a wider space than the standard zone allows for – and that’s something we wanted to capture. The primary purpose of the (rural) development zone was to accommodate that.”
 
In Union County, Commissioner Steve McClure said having the zone in place played a key role in attracting a $175 million, 61turbine wind energy project in 2005. McClure said the company, Horizon Wind, was debating between Union and Baker counties and ultimately went with Union because of the tax incentive. The project has created more than 10 jobs in its first phase and has given the county’s construction industry a boost — last summer, McClure said the company spent more than $10 million in the county on building-related materials and services.

For the most part, the other counties with a rural renewable energy zone already in place – Harney, Wasco, Sherman and Malheur – haven’t yet had businesses apply or be approved for the tax breaks. But officials from several of the participating counties said they decided to apply to the Economic and Community Development Department for the zone to get a head start on the growing competition for business from other rural counties. Crook County is looking to become the sixth to implement a renewable energy zone that would extend countywide.

“It’s a future kind of thing with us,” said Malheur County Economic Development Director Jim Jensen. “As you see the emphasis shift on rural, renewable energy uses, there’s going to be more and more interest in our counties … when companies come and look at particular areas, they’re looking for incentives. And if that’s the game were dealing with today, do you want to delay a project because you have to go through 90 days of hearings just to designate a rural renewable energy development zone? Some companies will look someplace else.”
 
Crook County officials are currently in talks with Pacific Wind Power, a Santa Barbara, California-based company, for a $210 million wind energy project on 10,000 acres in the southern part of the county. John Stahl, the managing partner on the plan, which is being called the West Butte Wind power Project, said the facility would have between 80 and 90,1.5-megawatt turbines and could create 10 to 15 jobs. He said the company is now completing feasibility and environmental studies, negotiating a long-term lease with Bonneville Power Administration and could be ready to build as soon as next year.

The county’s acceptance of a rural renewable energy development zone, Stahl said, would help set it apart from other, more popular wind energy locations, like the Columbia River Gorge.

“These wind projects lose a lot of money for the first eight years or so – they don’t start even breaking even until then,” he said. “It’s competitive, and the renewable energy zone will probably make the difference in whether we can build there or not.”

Carr, Crook County’s economic development manager, said if the county gives the plan its OK, his department will put together an application for the state and eventually take the lead on decisions related to the zone. That decision could be made at the County Court’s next regular meeting on Wednesday.

Crook County Judge Scott Cooper said creating another incentives for nontraditional businesses is particularly important for the county as it looks toward an uncertain economic future. Though the county would lose funds in a new business’ first few years, Cooper said bringing in renewable energy will payoff in the long run.

“People don’t stop burning the lights and energy demand doesn’t cease – it’s pretty much recession-proof,” he said.

“I think (approving the zone) is about recognizing new technologies, getting ready with the economic development tools, getting ready to greet (renewable energy) companies if they come knock on the door.  We want to make the environment here as friendly as possible for all of them, especially as we look at the economic forecast and the job forecast – we need to be reaching out to these industries.”