TODAY’S STUDY: BUILDING ON LOCAL STRENGTHS (NEW ENERGY IN OREGON)

Oregon’s Clean Energy Economy; A Clean Edge State Clean Energy Leadership Index Report
November 2012 (Clean Edge, Portland Development Commission and Business Oregon)

Introduction

As the global clean-energy economy continues on a path of increasingly lower costs and accelerated growth, the U.S. remains an integral industry player – a technology developer, a product manufacturer, and a market for clean-energy technology deployment. But after decades without consistent federal support, America’s clean-energy sector has become geographically fragmented, with states and cities acting as the primary drivers of growth. While some regions made early proactive efforts to attract clean-energy companies, jobs, deployment, and investment, others opted to ignore the sector altogether and are only now beginning to realize the economic benefits of clean-energy pursuits.

This report, sponsored by the Portland Development Commission and Business Oregon, two key economic development agencies within the state, evaluates Oregon’s standing in the U.S. clean-energy economy. The report leverages data from Clean Edge’s 2011 State Clean Energy Leadership Index, a subscription based research service that provides a unique perspective of U.S. clean-energy activity by aggregating and analyzing industry datasets from a variety of public, private, and Clean Edge sources. The index produces annual comprehensive performance scores and rankings for all 50 U.S. states based on activity in three key clean-energy categories: technology, policy, and capital.

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The following pages highlight Oregon’s strongest areas of activity and compare the state’s performance against national averages and performances of five other top performing states chosen for their similar characteristics and high frequency of interstate competition: Arizona, California, Colorado, Massachusetts, and Texas. Topics covered include clean electricity, clean transportation, energy intelligence (green building, smart grid, etc.), financial capital, workforce and innovation, and policy structure.

Oregon’s robust industry presence earned it a second-place ranking in the 2011 State Clean Energy Leadership Index. Trailing only California’s overall score of 95.3 (out of 100), Oregon’s score of 79.4 was enough to beat out the next three top performers Massachusetts, New York, and Colorado. Of the states compared against Oregon in this report, California scored highest, followed by Massachusetts at 71.8 (third place), Colorado with 60.2 (fifth), Texas at 47.6 (18th), and finally Arizona at 40.7 (24th). With only six states earning scores higher than 60 and a median U.S. score of 40.4, results of the State Clean Energy Leadership Index indicate that while examples of clean-energy activity can be found in every corner of the nation, a clear top tier of states exhibits leadership across a wide variety of clean-energy sectors and activities.

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Oregon’s significant technology deployment, supportive government policies, and successful track record of capital attraction and job creation have given the state a prominent standing in the U.S. clean-energy industry. But with increased domestic and foreign industry competition, and an overall economic climate that has left most states constrained for capital, business as usual will not guarantee Oregon a lasting competitive edge. This report aims to examine Oregon’s successes, compare its performance against other leading states, and uncover lessons which will enable Oregon to continue its leadership into the next era of clean energy.

Clean Electricity

Utility -Scale Clean Electricity Generation In the United States, the electric power sector accounts for roughly two fifths of total energy consumption, two fifths of total carbon dioxide emissions, and one third of all greenhouse gas emissions. These facts make electricity generation the frontline in America’s battle to break free of fossil fuels, limit carbon emissions, and develop a clean-energy future.

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Oregon’s abundance of low-carbon energy sources – wind, hydroelectric, biomass, solar, and geothermal – gives the state a unique opportunity to establish an electricity supply practically free of fossil fuels. The state’s clean electricity activity is already among the best in the nation, with wind, hydro, biomass, solar, and geothermal making up more than 63 percent of all utility-scale electricity generation in the state. At 55 percent of total generation, hydro is the largest source of Oregon’s low-carbon electricity, although we do not consider large-scale hydroelectric dams to be environmentally neutral. Wind power also plays a substantial role in Oregon, making up more than seven percent of electricity generation in 2010, up from 1.5 percent in 2005.

Elsewhere in the nation, electricity remains largely tied to fossil fuels, with coal, oil, and gas providing 70 percent of U.S. electricity in 2010. But with leading clean-energy states implementing increasingly aggressive renewable portfolio standard (RPS) targets – 25 percent by 2025 in Oregon, 30 percent by 2020 in Colorado, and 33 percent by 2020 in California – clean energy is transforming much of the U.S. electric grid.

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Installed Wind Energy Capacity

With 2,104 MW of wind energy installed by the end of 2010, Oregon ranked sixth in the U.S. in total wind capacity, trailing only Texas, Iowa, California, Minnesota, and Washington. Oregon also placed sixth for wind as a percent of total peak capacity (14.7 percent) and sixth for wind’s share of total generation (7.1 percent), best of the six states compared in this report. Iowa, with 25.2 percent of its peak capacity from wind, leads the nation for wind as a share of total capacity, and also leads for wind as a percent of total generation (15.4 percent). Texas may dominate in cumulative wind capacity with 10,085 MW installed through 2010 – more than the next three states combined – but the Lone Star state barely cracks the top 10 overall when measuring wind as a percent of peak capacity; it ranks eighth at 9.41 percent.

After a lackluster 2010, the U.S. wind industry regained some momentum in 2011. The American Wind Energy Association reports that 2,151 MW of new capacity was brought online in the first half of the year, a 72 percent increase from the first half of 2010. Oregon, although not adding any wind capacity in the first three months of 2011, added 201 MW in the second quarter of the year – second most in the country behind only California’s 420 MW of new capacity. Near term prospects for wind energy in Oregon remain promising. The state has rich wind resources, enjoys close proximity to a California market hungry for clean electrons, and is home to many major wind companies including the North American headquarters for both Vestas Wind Systems and Iberdrola Renewables.

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Installed Solar PV Capacity

In the U.S., solar remains a minor source of electric generating capacity – the 2,600 MW of installed solar capacity at the end of 2010 accounted for roughly just 0.25 percent of the nation’s peak capacity. But with rapidly declining costs for solar photovoltaic (PV) technology and a shift of focus from small rooftop installations to utility-scale projects (larger than one MW capacity), the stage is set for major U.S. solar growth. By mid-2011, more than 1,500 MW of utility-scale project capacity was under construction in the U.S., with another 26,000 MW of utility-scale capacity in earlier stages of development, according to the Solar Energy Industries Association.

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To date, PV deployment in the U.S. has been concentrated in only a few states, with the top five states accounting for roughly three-fourths of all installed capacity. California, with its favorable climate, supportive government incentives, and large size, is home to nearly half of the nation’s PV capacity. Although trailing well behind California, Arizona and Colorado are also top-tier U.S. solar markets. Colorado ranks third in cumulative PV capacity and fifth for PV as a percent of total capacity, while Arizona ranks fourth and seventh, respectively, for these measures. Although some distance behind the top few states, Oregon also performs fairly strong in installed solar capacity, ranking 12th in terms of solar as a percent of total capacity.

Massachusetts and Oregon are both highly involved in the U.S. solar sector – Oregon as a leading manufacturer and Massachusetts as a technology developer – but neither has yet been able to leverage industry presence to grow the local solar market for deployment. Admittedly, neither state enjoys the near perpetual sun seen in the American Southwest, but the solar resource of both states exceeds that of Germany, the world’s leading market for PV deployment.

Clean Transportation… Energy Intelligence… Financial Capital… Workforce & Innovation… Clean Energy Policy…


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Conclusion

While California is the frontrunner in Clean Edge’s State Clean Energy Leadership Index, Oregon is among a handful of states showing clear and definitive leadership. Ranking second overall, Oregon has reaped benefits from its strategy, with an increasingly clean and efficient energy supply and a growing number of clean-tech manufacturers and service providers making the state their home base.

What makes Oregon stand apart in the clean-tech sector? The state enjoys a number of key assets, including:

1. A rich culture of early sustainability adopters

2. Proximity to large, ready markets in both California and Asia

3. World-class high-tech manufacturing and workforce expertise

4. Committed support from local and state government

5. Plentiful low-cost energy enabling strong business attraction

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From these competitive advantages, Oregon has established itself as a premier player in the U.S. clean-energy economy. The state has become a leader in clean electricity, where it ranks as a top producer of wind power. Through vast deployment of smart grid technology (ranking second in smart meter penetration) and sustainable buildings (first in LEED projects per capita), Oregon has also demonstrated leadership in the efficient delivery and consumption of electricity. On the transportation front, the Beaver State is working to leverage its HEV friendly consumer base into a top market for EV deployment, making the region a hub for transportation electrification.

Not merely a market for technology deployment, Oregon is also home to a growing cadre of clean-tech manufacturers and developers. Top employing clean-tech activities in the state include solar manufacturing, wind energy development/operations, environmental and efficiency consulting, and energy storage technology development. Pew and Brookings put the state in first and second place, respectively, for its percentage of overall clean-economy jobs. It goes without saying that challenges exist as well. Like most states, Oregon faces extreme budget constraints and has had to refocus and restructure its programs. And while clean energy has clear and strong national-level commitments in countries such as China, Japan, and Germany, the U.S. federal government has no real long-term commitments in place. Among the national programs that do exist, many come up for expiration every year or two, making long-term planning nearly impossible.

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But the clean-energy market continues to offer great promise and its growth and expansion far exceeds national boundaries or the latest political brouhaha. That’s why companies like Toyota, GE, and Siemens are reinventing themselves to take advantage of this economic shift and many governments are leading as well. Oregon, with its deep technology roots, strong ties to Asia, and innovative and sustainably minded populace, offers a great proving ground for a host of clean energy-focused technology, policy, and capital breakthroughs. If the state’s policies and leadership are properly channeled and structured, we believe Oregon can continue to play a top-tier role in enabling faster and cleaner transportation, low-cost net zero-energy buildings, and fossil fuel-competitive renewable power…