State's 'new energy' edge

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Minnesota’s renewable energy boosters point to iconic images like Buffalo Ridge in the southwest part of the state, where rows of giant wind turbines spin; or to ethanol plants rising above green fields of corn; or maybe to onyx-colored solar panels tilti

Rod Larkins would add the Port of Duluth.

That’s where the massive wind turbine parts come off ships from Europe, said Larkins, the new associate director of the University of Minnesota’s Initiative for Renewable Energy and the Environment. When Barack Obama’s presidential campaign staff asked Larkins about Minnesota’s strengths in renewable energy, he told them about the port, which he calls an unappreciated part of the state’s umbilical cord to the wind turbine industry overseas.

President-elect Obama soon may ask for a closer look. A key tenet of his campaign was that investments in renewable energy could loosen U.S. dependence upon foreign sources of energy, ease climate change and boost the economy by creating jobs.

Kick-starting the economy just moved to the top of the list.

“Finding the new driver of our economy is going to be critical. There’s no better driver that pervades all aspects of our economy than a new energy economy … That’s going to be my No. 1 priority when I get into office,” he told Time magazine a few days before the election.

His initial plan was to spend $150 billion of federal money over 10 years to create 5 million energy-related jobs.

If he follows through on those campaign promises, Minnesota could benefit more than some other states, energy experts say.

“Minnesota has an opportunity to succeed in the new green economy by using its existing strengths to get there before others,” said Lois Quam, head of Piper Jaffray’s alternative energy investments arm.

A federal push would send a signal to investment markets, and the Twin Cities, as a major financial center, could be in the thick of making bets on green energy, she said.

In the scramble for new manufacturing jobs, Minnesota would be fighting an uphill battle with Rust Belt states such as Michigan, but it has an edge in construction of the new energy infrastructure, said Michael Noble, executive director of Fresh Energy, an advocacy nonprofit in St. Paul.

He pointed out that three of the nation’s largest builders of wind farms are located in Minnesota and each did about $1 billion in business last year.

The state has technological expertise it can put to work, said Larkins, who worked at 3M for two decades before taking his present job in October. 3M developed reflective solar tubes that concentrate sunlight, and ceramic-based high-voltage transmission lines that extend the distance electricity can be sent, but more innovations are needed, he said.

Minnesota’s biggest renewable energy industry is ethanol, with 19 plants operating and three more under construction, but investor appetite has been chastened lately by the bankruptcy of VeraSun, a major player.

The state already requires gasoline sold here to include 10 percent ethanol, but Obama’s position paper calls for a fleet of new ethanol-ready cars and trucks that could increase demand for biofuels.

Meanwhile, the University of Minnesota is working on developing “next generation” cellulosic ethanol that will move away from corn and use nonfood products such as prairie grasses, waste wood or corn stover. Obama’s campaign plan uses tax incentives and government contracts to accelerate development, but most people agree commercial sale of this kind of ethanol is several years away, at best.

Wind energy is Minnesota’s second major renewable resource, with much of its growth propelled by the state’s requirement that utilities produce 25 percent of their electricity using renewable resources by 2020.

Obama’s hopes for a national renewable energy standard dovetail with those of Minnesota and 27 other states. Minneapolis-based Xcel Energy, the state’s largest utility, projects that it will exceed Obama’s call for 10 percent of power production from renewables by 2012 — Xcel ought to have 18 percent by then, said Dave Sparby, the Xcel executive in charge of Minnesota and the Dakotas.

A national mandate could prompt Minnesota utilities to build even more capacity and export electricity, particularly if the state joins forces with other wind-rich states such as the Dakotas and Iowa, said Jim Bertrand, head of the energy practice at Leonard, Street & Deinard in Minneapolis.

Transmission presents the biggest barrier, but renewable-energy advocates want the Obama administration to streamline the process in order to build “energy superhighways.”

Even solar power isn’t off the table, advocates say, although Minnesota isn’t known as a sunshine state.

The state is too cold and too far north to create utility-size solar energy plants that serve thousands of homes as in places like Nevada, but individual homes and commercial buildings can be good places for rooftop installations that can reduce their electricity bills, advocates say.

They point to places such as Germany, which isn’t brimming with sunshine either but is the No. 3 producer of solar panels, behind China and Japan, thanks in part to big government rebates. Germany now is home to Q-Cells, the world’s biggest maker of photovoltaic cells used in solar panels.

Even the Ford Motor plant in St. Paul could get new life from an Obama plan calling for 1 million plug-in hybrids on the road by 2015, said David Morris, vice president of the Institute for Local Self Reliance in Minneapolis.

The plant is slated to close in 2011, but if the carmaker wrangles a buyout from the administration, Morris wants Obama to require Ford to develop an electric-hybrid pickup truck to be made at the plant, which now makes the Ranger light pickup.

All of the above would require breathtaking injections of money in the forms of tax incentives, loans or grants.

Critics say investing billions of taxpayer dollars into energy could lead to a boom-bust cycle like the one ethanol is working through, and it won’t create more energy than otherwise would have been created.

Supporters such as Morris say it’s just the spark the economy needs.

“What aren’t we throwing money at?” he asked.

Trade groups say there’s no time to waste. On Thursday, representatives of renewable-energy groups called on Obama to pour $30 billion into such investments right away next year and to extend the production tax — credit critical to the wind industry — from one year to five years. Investments in wind have ebbed and flowed because of the on-again-off-again nature of the tax credits.

“All we need to do is give the right signal … and the investments will flow,” said Randall Swisher, executive director of the American Wind Energy Association.

But advocates acknowledge that the very act of trying to create jobs in one part of the economy may mean destroying them in another. They want to tread lightly.

“The idea is not to put anyone out of business,” said William Glahn, director of the Minnesota Office of Energy Security. “The idea is to put financial incentives in energy that is more environmentally sound.”

He believes the state’s demand for wind power can attract overseas turbine manufacturers to build factories closer to their markets, the way Toyota, Honda and Mercedes Benz did for their cars.

Minnesota is seeing some of this already. Suzlon, an India-based maker of wind turbines, put a blade manufacturing plant in Pipestone, and Moventas, a Finnish company, is breaking ground on a turbine components factory in Faribault.

But until more of that happens, parts will continue to be offloaded in Duluth.

Larkins said that’s good for now.

“Eventually,” he added, “I’d rather have us exporting.”

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