Weekly Clean Energy Roundup:March 1, 2006

News and Events

Energy Connections

Alaska and Oil Producers Reach Natural Gas Pipeline Agreement


News and Events

DOE Offers $160 Million for Biorefinery Construction

DOE announced last week its offer of $160 million in funds over the next three years to construct up to three biorefineries in the United States. Biorefineries are a concept similar to today’s refineries, except that instead of using petroleum as their raw material, they draw on woody biomass resources such as agricultural waste, trees, forest residues, and perennial grasses. Like today’s refineries, biorefineries will produce both fuels and chemicals. See the description of biorefineries on the DOE Biomass Program Web site.

The goal of the new solicitation is to demonstrate that commercial biorefineries can be profitable once initial construction costs are paid. DOE will provide up to $100 million for any single demonstration project, and industry is required to provide at least 60 percent of the total cost of the project. The solicitation is part of President Bush’s Biofuels Initiative, which includes a goal to make cellulosic ethanol?ethanol derived from woody biomass?cost-competitive by 2012, potentially displacing up to 30 percent of the current U.S. fuel use by 2030. See the DOE press release.

Energy Officials Promote Solar, Biofuels, and Hydrogen Initiatives

DOE officials traveled around the country last week to promote various aspects of President Bush’s Advanced Energy Initiative. Secretary of Energy Samuel Bodman highlighted President Bush’s Solar America Initiative during a visit to GT Equipment Technologies, Inc., which designs, manufactures, and assembles equipment for the solar power and semiconductor industries. The Solar America Initiative seeks to accelerate the widespread acceptance of clean solar energy technologies throughout the United States by 2015. The goal of the initiative is to generate enough solar energy by 2015 to provide 5 to 10 gigawatts of electricity, enough to power 1 to 2 million homes. See the DOE press release and the Solar America Initiative page on the DOE Solar Energy Technologies Program Web site.

Secretary Bodman also visited General Motors Fuel Cell Activities to highlight the President’s Hydrogen Fuel Initiative. The President’s budget for fiscal year (FY) 2007 includes $289.5 million for the initiative, a 22 percent increase. In addition, Douglas Faulkner, the Acting Assistant Secretary for Energy Efficiency and Renewable Energy, spoke about the President’s Biofuels Initiative at the Biomass and Switchgrass Conference at Alabama’s Auburn University. The initiative aims to replace more than 75 percent of U.S. oil imports with biofuels by 2025. The President has requested $150 million for the Biofuels Initiative in his FY 2007 budget, a 60 percent increase. Finally, Karen Harbert, Assistant Secretary for Policy and International Affairs, toured the Steelcase Wood Plant in Grand Rapids, Michigan, and the Michigan Alternative and Renewable Energy Center. Steelcase Wood Plant is the world’s first manufacturing plant to receive a LEED (Leadership in Energy and Environmental Design) certification from the U.S. Green Building Council. The Michigan Alternative and Renewable Energy Center is a LEED-certified demonstration facility for distributed power generation, featuring solar roof tiles, a fuel cell, and a nickel metal hydride battery. See the DOE press releases on the visits by Secretary Bodman, Acting Assistant Secretary Faulkner, and Assistant Secretary Harbert.

USDA Awards $8.6 Million to Clean Energy Projects

The U.S. Department of Agriculture (USDA) announced last week its award of more than $21 million to 15 energy projects, including $8.6 million for four renewable power projects, one energy efficiency project, and one biodiesel production plant. USDA High Energy Cost Grants totaling more than $5.4 million will support a wind power project in Hooper Bay, Alaska; a wind and diesel hybrid system in Nikolski, Alaska; the repair of a 1.5-megawatt hydropower system near Cordova, Alaska; the installation of hybrid solar power systems on Navajo tribal lands near Cameron, Arizona; and energy saving retrofits to homes in Greenville, Alabama. In addition, a Renewable Energy loan guarantee of more than $3.2 million will be awarded to Clinton County Bio Energy LLC of Iowa, which is building a biodiesel plant capable of producing 10 million gallons per year. The plant will consume more than 7 million bushels of soybeans each year and will produce much of its energy supply from the by-products of the biodiesel production process. The plant already received a $500,000 Renewable Energy Grant from the USDA in December. See the USDA press releases on the new awards and the previous award, and see the full list of recipients on the USDA Rural Development Web site.

As part of its energy strategy, the USDA also released a Web-based tool to help farmers and ranchers identify potential nitrogen cost savings associated with nitrogen fertilizer applications. For each major crop and application method, the USDA’s Energy Estimator for Nitrogen presents potential alternative practices and estimates their cost savings. According to the USDA, fertilizer accounts for 29 percent of agriculture’s energy use. See the USDA press release and the Energy Estimator for Nitrogen.

IRS Releases Guidance on Energy Efficiency Tax Credits

The U.S. Internal Revenue Service (IRS) issued guidance last week on the tax credits for new energy efficient homes and for energy efficiency improvements to existing homes, as established by the Energy Policy Act of 2005. A credit of up to $2,000 is available for eligible contractors who build a qualified new energy efficient home and sell it either this year or next. The credit is available for all new homes, including manufactured homes constructed in accordance with the Federal Manufactured Homes Construction and Safety Standards. See the IRS press release and the guidance for traditional homes (PDF 25 KB) and manufactured homes (PDF 36 KB).

For existing homes, the law provides a 10 percent credit for buying qualified energy efficiency improvements, including insulation, reflective metal roofs, insulated exterior doors, and energy efficient exterior windows and skylights. The law also provides residential tax credits of $50 for each advanced main air circulation fan and $150 for qualified furnaces or hot water heaters fueled with natural gas, propane, or oil. That credit increases to $300 for qualified heat pump water heaters; high-efficiency water heaters, boilers, furnaces, and central air conditioners; and geothermal heat pumps. To earn the credit, the improvements must be made this year or next year. The maximum credit for both years is $500, of which expenses for windows can provide no more than $200. Manufacturers of these products may certify them as eligible for the tax credits, in which case the homeowner can rely on the certification to claim the credit. See the IRS press release and the full IRS guidance (PDF 37 KB).

To help homeowners take advantage of the energy efficiency tax credits, the Alliance to Save Energy (ASE) has created a special tax credits Web site. ASE has also issued state-by-state energy saving tips for 37 states and the District of Columbia, and has published a free consumer booklet of energy saving tips called “Power$mart: The Power Is In Your Hands.” See the ASE Energy Efficiency Tax Credits Web site, the ASE press release and Web site for the state-by-state energy tips, and the ASE press release and Web site for the Power$mart booklet.

California Builders Include Solar Power on Hundreds of Homes

Two California homebuilders?The Grupe Company and Victoria Homes?are building hundreds of new homes that will feature solar power systems and advanced, energy-efficient designs. The new homes will meet about half of their electricity needs using SunTile solar power systems from PowerLight Corporation. The Grupe Company is currently building 144 homes near Sacramento, creating the second largest “Zero Energy Home” Community in the United States. The Victoria Homes developments in Southern California will be designed and built under ConSol’s ComfortWise energy efficiency program, which works with builders to combine energy saving technologies with energy efficient design and testing. The ComfortWise program yields homes that are 30 percent more efficient than the national Model Energy Code standard and 15 percent more efficient than the California Residential Energy Efficiency Standards. Since all the new homes will combine energy efficiency with solar power, homeowners are expected to achieve annual savings of up to 70 percent on their utility bills. See the PowerLight press releases about The Grupe Company and Victoria Homes, as well as the Victoria Homes and ConSol Web sites.

Solar power installations on homes and small businesses may get less publicity than large projects at corporations and universities, but they also add a significant contribution to U.S. solar power production. On February 1st, California’s Pacific Gas and Electric Company (PG&E) connected its 10,000th solar customer to the grid. The 10,000 customers provide the utility with more than 70 megawatts of solar power. Of course, California provides substantial rebates for solar power systems, and federal tax credits are also available now. How much do state rebates help? A new study from DOE’s Lawrence Berkeley National Laboratory (LBNL) suggests that California’s solar rebates do not directly affect solar module costs, but do drive down the costs of the remaining electrical components. Unfortunately, the rebates can also result in some price inflation for solar power systems. See the PG&E press release and download either the executive summary of the new LBNL report (PDF 141 KB) or the full report (PDF 2.1 MB).

Energy Connections

Alaska and Oil Producers Reach Natural Gas Pipeline Agreement

The prospects for delivering natural gas from Alaska’s Prudhoe Bay to the lower 48 states improved significantly last week, as the State of Alaska and the state’s major oil producers reached an agreement on major fiscal provisions for a natural gas pipeline contract. However, Alaska Governor Frank Murkowski noted that technical issues connected to the gas contract must still be addressed, along with terms on oil contracts. In return for their commitment to move forward on a natural gas pipeline, the oil producers are seeking greater financial stability. According to ExxonMobil, oil contract terms consistent with an oil tax bill proposed by the governor would allow the gas project to move ahead.

For the State of Alaska, a key part of any agreement on a natural gas pipeline is a reworking of oil production taxes. Alaska’s Kuparuk field, the second-largest oil field in the nation, will no longer pay a production tax this year, and Prudhoe Bay will pay near zero taxes in about 12 to 14 years. To keep tax revenues flowing, the governor is proposing a new tax system based on the percentage of the net profit. Tax revenues would be lower when initial large capital investments are made and higher as oil production increases. At current oil prices, Alaska would receive an additional $1 billion in production tax revenue under the proposed new tax system. See the governor’s press release and the state’s Alaska Gas Pipeline Web page.

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