Cashing in on global warming

December 27, 2007 - 05:00 PM
by Josh Lintereur | Skagit Valley Herald

* Economic adaptation

* State poised to become key player in growing clean-energy industry

It’s a cold December morning on an old dairy farm north of Burlington where a crane has begun lifting a wind turbine toward the sky.

The turbine’s destination is the top of a 175-foot steel tower adorned with solar panels that rises up alongside a 95-year-old barn.

Near the ground the wind barely stirs, and the turbine’s blades are still. But once atop the tower, the long black blades slowly begin to spin.

Given the tower’s scale — which at 13 kilowatts lands it somewhere between the small wind and solar systems made for residential use and the massive wind farms sprouting up in rural America — the project is believed to be one of the first of its kind in North America.

If all goes to plan, the company that built and financed the tower, Burlington-based Highland Communications, hopes to generate enough power to operate its office off the grid during peak power production, and the company may eventually install the system at other businesses.

The tower is just one of several pioneering projects that are part of the state’s emerging clean-energy sector. State leaders believe that the businesses behind these projects could make Washington a major player in the nation’s emerging green energy industry that may find opportunity in climate change.

“The Pacific Northwest certainly has a leg up,” said John Gardner, the vice president for economic development and extension at Washington State University. “From a cultural perspective, a political will standpoint and a historical perspective, we have a great advantage.”

In terms of investor dollars and research funding, Gardner estimates that the state’s clean-energy industry ranks among the top three in the country, which is why he and others would like to begin mobilizing it into a more prominent business cluster.

On March Point near Anacortes, the smokestacks from a pair of decades-old oil refineries owned by Shell and Tesoro provide the backdrop for a series of next-generation energy projects being built by small businesses.

In the next few years, Skagit County could be home to a series of anaerobic manure digesters and a 5-million-gallon-a-year biodiesel refinery.

Many of these projects are moving ahead thanks to innovative, risk-taking entrepreneurs such as Highland owners Frank and Teresa Campbell, and their associate Gary Smith, who engineered the Burlington wind and solar tower.

Smith is a self-described “backyard inventor type” with a mile-a-minute brain that he jokes “doesn’t come with an off switch.”

Such an overactive mind makes him a perfect match for pioneering new ways to build a business around green technology.

As it turns out, Smith is just getting started.

At Highland, which specializes in building communication sites for cell phone companies, Smith is also considering planting beets and corn on a 2.5-acre site near its headquarters. Those crops could then be used to produce ethanol to fuel the company’s truck fleet.

“We’re really focused on running the entire company on its own generated power, from the building to our truck fleet,” said Smith, who’s also studying hydrogen fuel cell technology and other energy sources that could be installed on cell phone towers to keep the systems operating during outages.

Risks of green ventures

When it comes to green energy, ingenuity only goes so far. Many of these ventures are risky, expensive and still untested in the marketplace.

Highland’s wind tower is on the low end, costing about $250,000. A good portion of that went toward research and design, thus the company believes it may be able to build future systems for closer to $125,000.

Other local projects are considerably more expensive.

Farm Power Northwest, which is owned by two brothers, Daryl and Kevin Maas of Mount Vernon, plans on building five anaerobic manure digesters that will convert cow manure into usable energy.

Their first site in south Mount Vernon, which could power the entire town of La Conner, will cost about $4 million.

Thankfully for them, the one thing the green energy sector has going for it right now is a burgeoning interest among investors.

Among clean-energy ventures, biofuels have generated the most investor interest in recent years, thanks to favorable government support. But more recently, attention has shifted to other clean-energy sources.

Kevin Kuper, the marketing director with Bellingham-based Whole Energy, which plans on building a biodiesel refinery in Anacortes next year, said that in some cases feed stock prices have turned the cost-benefit ratio for the biodiesel industry on its head.

Now, investors are most interested in tidal, wind, solar and methane projects, he said.

According to a study by the National Venture Capital Association, in the first nine months of 2007, nearly $1.7 billion, or 7.4 percent, of U.S. venture capital investments were in American companies that develop technologies for conserving energy and resources, protecting the environment, or eliminating waste. Several years back, clean tech investments represented less than 1 percent of all venture capital dollars.

The scale of the Maas brothers’ digester project puts it well out of reach of venture capital funding, but they’ve still found plenty of interest among Angel-certified investors.

The clean tech economy
Other green energy pioneers have been wanting to bring their ideas to the marketplace for years, but their visions have only begun to pencil out thanks to a more favorable regulatory climate.

“We’re finally coming to a point where all this stuff is making sense economically,” Smith said.

Highland will receive 15 cents for every kilowatt-hour of solar power it produces and 12 cents for wind through state incentives. The company is also eligible for a state sales tax rebate and a federal tax credit on the system’s installation cost.

Meanwhile, a state mandate requiring increased green energy production has made even the smallest projects enticing for large utilities.

Kevin Maas said that the price Puget Sound Energy set for digester-produced power is among the highest in the country.
The brothers had also hoped to receive roughly 10 percent of their income from carbon credits, though the carbon credit marketplace hasn’t been all that it’s cracked up to be.

So far, their best opportunity to sell carbon credits is on the Chicago Climate Exchange, but the exchange treats credits like commodities. Thus all credits are priced about the same, no matter the source.

The situation is less than desirable for small-power producers whose projects may have more positive ecological impacts, which they feel should net a premium in the carbon credit marketplace.

Kevin Maas believes that the carbon credit exchange underscores the larger problem the green industry faces right now, which is that the marketplace is made to accommodate large energy producers, but it doesn’t fit next generation energy producers who are smaller and draw from a much wider range of energy sources.

“The biggest problem we’re facing is an industrial age mind-set,” he said. “The mind-set that everyone is in is so different today than where we have to be. I can dream of a world where we produce power on a local level, but that world is a ways away. The focus remains on big projects.”

Kuper agrees, adding that wind, tidal, biomass and other energy sources may be the future, but none will solve the problem alone, and each will be come with a higher price tag than what society expects.

“We can’t replace cheap energy with renewable energy,” he said. “All of these things are going to form our future, but none can replace the cheap easy sources of energy. The whole thing has to get reworked.”

While a lot may still need to change for clean tech to become more viable, at Highland, Smith said they’re not waiting around for regulations and other market forces to change.

“There’s no excuse for this not happening yet,” he said. “Our mind-set is screw it all, we’ll do it ourselves.”

Skagit Warming Series:
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Nature's Laboratory
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Warming's impact on Skagit water
Climate change poses threat to regional icons
Warming shifts odds away from salmon survival
Climate change could have dramatic impact on local agricultural scene
Warming: A rising tide
Tribe, La Conner on front lines
Green Power
Nuclear power unlikely alternative
Skagit Warming: Government action
Climate and You
What You Can Do
Why turn off the lights?
Skagit Warming: Tell us what you think

* Josh Lintereur can be reached at 360-416-2141 or at .