A broad coalition in Northeast Ohio has been working for more than three years to put offshore wind projects in Lake Erie near Cleveland. This group is so far from "the usual suspects" you would expect to find pushing renewable energy that it has actually been led by Cuyahoga County Prosecutor Bill Mason.
But here is the critical point: The coalition is not doing this just to put turbines in the water; it is doing it primarily to enable Ohio industries and workers to supply the billions of dollars in component parts that will make up those offshore turbines. Coalition members are also doing it because they recognize that offshore wind will require substantial innovations if it is to be competitive. Innovations can be developed and introduced by Ohio industries.
The intention is to make offshore turbines in Ohio that are world class in cost and performance. The coalition recognizes that at this moment, offshore wind is expensive. But it is working with turbine manufacturers and the firms that would undertake the foundation and installation work to develop a roadmap of innovation that takes offshore-wind energy production from expensive to competitive. Ohio has made considerable progress -- now we need federal partners. Here is how the feds can help.
What is needed
• Roadmap of innovation for renewable manufacturing: The competitive advantage for a domestic renewable industry lies in accelerating technology innovation. Innovation can and should range from new nano-solar breakthroughs to solving offshore-wind turbine problems. Manufacturers of components are intimately aware of critical problems -- make blades lighter, make transmissions more durable or eliminate them altogether, make solar energy inverters last longer. The list of problems is endless, and the flip side of that is that the potential for improvement is endless. The critical task becomes linking the identification of the problems with the intellectual resources to solve the problems. This link will very likely require creating new synapses between the national research community, in particular the national energy labs, and the manufacturing community.
This linked research and development through commercialization will not only ensure that the domestic renewable industry is world class, it will also help drive down the cost of renewable energy.
• Commercializing the roadmap: An R&D project can be successfully completed from the point of view of the researchers, but ultimately be a failure if it never makes it into commercial usage. Commercialization policy supports moving R&D programs to commercial practice under marketlike conditions. There are many ways to do this, but they all have elements in common. The R&D effort to be commercialized must be "important" from the public's point of view. The private owners of the R&D must have "skin in the game," usually accomplished through a requirement that they provide at least 50 percent of the investment for the initial venture. Finally, in recognition of the public importance of the R&D and the likelihood that the high costs of an initial commercial venture could raise costs so high as to prevent the venture from going forward, the public side will share costs of the commercialization program.
• Incentives with a good story: Support Ohio industries' retooling with low-cost financing by expanding the use of Clean Renewable Energy Bonds. Created in the 2005 Energy Policy Act, Clean Renewable Energy Bonds offer the bond buyers a tax credit in lieu of an interest payment. To this point, these bonds have only been available for public bodies that sell bonds and use the proceeds to finance renewable energy projects. To support domestic renewable manufacturing, federal policy should allow Clean Renewable Energy Bonds to be sold for renewable manufacturing. In essence, renewable manufacturing will get an interest-free loan.
A major program to use renewable-energy bonds to jump-start a domestic renewable energy industry has a very good story line right now. Bonds could be marketed as Green Victory Bonds, giving individuals an opportunity to invest in climate stabilization efforts and the rebuilding of the domestic manufacturing sector. High-income households can purchase the bonds, thereby investing in the new "green economy," and earn tax credits. The bonds and tax credits will be used only if domestic manufacturing expands. Every dollar of tax credits will result in roughly $2 invested in new, domestic manufacturing.
• Create a job-training and career ladder: A serious expansion of Ohio manufacturing will create a demand for trained, skilled workers. Training should be offered from entry level to highly skilled in a way that provides access to a ladder that allows workers to enter at the bottom and move upward. There are examples for Ohio to use, such as the Culinary Institute in Las Vegas where employees have moved from entry-level housekeeping to more skilled and better-paying jobs.
The future unfolds
If the feds step up, here is how the future can unfold. After meeting with every serious offshore-wind turbine provider, the Ohio offshore-wind effort is now partnering with a major turbine provider to develop a pilot offshore project and map the series of broad technology innovations to make offshore-wind energy production competitive. There are literally hundreds of Ohio industries eager to manufacture components. Selected Ohio industries will retool, innovations will be channeled through them, offshore turbines will improve, the cost of electricity from these "new and improved" turbines will drop, demand will increase, Ohio manufacturing will expand, and on and on. Can this cycle of success be guaranteed? Of course not. Ohio has invested heavily, is confident and looks forward to having federal partners.
We need to make offshore turbines, but even more importantly, we need once again to make the future.
Printed in the Cleveland Plain Dealer, Tuesday, July 06, 2010.
By George Sterzinger