Nevada lagging in the race to a green future

By David McGrath Schwartz

Sunday, Feb. 8, 2009 | 2 a.m.

As state leaders tell it, companies like Mariah Power should be the future of Nevada’s “green jobs” economy.

The Reno-based wind turbine maker will this year ship $9 million worth of its innovative wind turbines, which quietly power homes and businesses.

The company has 15 employees, eight in Reno. But when it came time to expand and mass-produce the company’s technology, Mariah Power went elsewhere.

After evaluating eight states, the company selected Michigan as the home of its manufacturing facility and 140 green jobs.

Nevada is locked in what participants say is a cutthroat competition for renewable energy jobs. Debate over how to best attract an industry many see as the forefront of an economic shift will occupy lawmakers and other state leaders this legislative session.

“Everybody’s in a race to do it now,” said Ian Rogoff, chairman of Nevada Institute for Renewable Energy Commercialization, a nonprofit company that brings technology to market.

And by some measures, it’s a race that Nevada, with its climate, geology and proximity to California’s massive energy demand, could win.

But right now, experts say, Nevada is trailing. Although geothermal power has a respectable presence in Northern Nevada, there are only a few solar plants in Southern Nevada, no wind farms and one manufacturing plant for a solar thermal technology that employs 20 people.

Gov. Jim Gibbons, a Republican, and Assembly Speaker Barbara Buckley and Senate Majority Leader Steven Horsford, both Democrats, agree a renewable energy economy is integral to the state’s future. And legislators have vowed to take up policies this session that will help the state grow the industry.

“This is akin to the other big things in this state,” said Mike Skaggs, executive director of the Nevada Economic Development Commission. “Think mining, and then in the 1950s gambling. This is of the same magnitude.”

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When most people think of green jobs, they imagine fields of solar panels and workers weatherizing homes. But once the solar panels are erected and the turbines are built, those jobs are gone. As one lobbyist put it, it doesn’t take many people to wash solar panels.

So the real prize that Nevada and states such as New Mexico, Arizona and Utah are pursuing are jobs building the wind turbines and photovoltaic systems, Skaggs said.

“Manufacturing equipment that these projects need to use, that’s where the high-wage jobs are,” he said. “With unemployment approaching 10 percent, our emphasis should be on how do we get the most high-wage jobs the quickest.”

Nevada has, so far, attracted only one manufacturer of solar equipment.

One reason Nevada trails other states, particularly Arizona and New Mexico, is because it doesn’t offer competitive incentives, Skaggs said.

New Mexico has a long list of tax incentives, some specifically tailored to the renewable energy industry. It recently announced an agreement to bring in a Signet Solar manufacturing plant that will create 600 jobs. In return, the state economic development agency agreed to provide $6 million in infrastructure improvements and credits against corporate income tax and sales tax.

“Even though you have a decent incentive program here in Nevada, most states we compete with have giveaways,” said Somer Hollingsworth, president of the Nevada Development Authority, a private entity that works with the Economic Development Commission to attract companies to Nevada. “They give land. They give buildings. They write checks for training dollars. All of this is worth millions and millions of dollars.”

Nevada was working with another solar panel manufacturer to bring hundreds of jobs to the state, when New Mexico swept in with a suite of incentives, Hollingsworth said.

That’s not to say Nevada has no incentives. Manufacturers that pay above-average wages and export a majority of their goods out of state can get a large break on the sales tax they pay on equipment.

Ausra opened a Las Vegas manufacturing facility for solar thermal equipment in July. It guaranteed 20 jobs that will pay an average of $24.50 an hour and in return the state offered incentives worth $650,000, according to the Economic Development Commission.

The state also offers property and sales tax rebates for renewable energy projects that generate 10 kilowatts of power or more.

All those tax rebates and incentives are set to expire in June.

There will be a broad push to renew the tax credits during the legislative session. Some in the renewable energy industry will also push for more incentives to compete with other states.

But lawmakers are still seething over a tax incentive they approved in 2005 to encourage companies to build “green.” Casino companies and connected developers got tax credits worth hundreds of millions of dollars before lawmakers could rewrite the law.

“We will look at incentives, and find what works and what doesn’t,” said Assemblywoman Marilyn Kirkpatrick, D-North Las Vegas. Kirkpatrick said she would consider making it a requirement that all panels used in Nevada solar fields be built here.

“Any incentive has to be good for Nevadans,” she said.

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Signet Solar, which chose New Mexico over other Western states, downplays the importance of incentives.

“It’s not the only way companies make decisions,” said Keshav Prasad, the company’s vice president of business development.

More important is good existing infrastructure and a high-tech manufacturing base, he said.

Indeed, if you ask experts in the field what prevents Nevada from becoming a leader in green jobs, the reasons go well beyond incentives. They include:

• The Bureau of Land Management controls most of the land in Nevada and has yet to approve a single solar project.

• The state lacks transmission lines to transport energy from the rural areas, where much of the energy would be produced.

• Capital markets are frozen, meaning companies lack cash to buy equipment.

There is also a broad consensus that funding education is key.

UNLV and UNR both have renewable energy programs. The Desert Research Institute also wins praise for its work.

Gibbons, however, has proposed a 36 percent cut in higher education in his budget.

“We haven’t spent the money on higher education that we’ve needed to,” said Hess, the chief executive of Mariah Power. “When you cut the UNR budget, when you cut the UNLV budget, that’s my talent. That hurts me.”

Hess said he decided to move his company’s manufacturing jobs to Michigan because of its infrastructure and workers’ experience working with steel.

In Nevada, he said, he hasn’t seen great leadership in the public or private sector for renewable energy or developing a “knowledge economy.”

“I don’t see cities taking a leadership role. I don’t see counties taking a leadership role,” he said. “Gambling has been in the lead so long, we’ve let casinos dominate where we go and what we do. That’s not a knowledge economy.”

But some say the will and factors to broaden the economy are in place.

When Nevada was the fastest-growing state in the nation, with home prices skyrocketing and casinos posting record profits, there was little incentive to try something else. But growth has slowed, and state officials say unemployment could rise as high as 11.4 percent.

When asked why the state would now get serious about diversifying the economy when efforts have failed in the past, state Sen. Mike Schneider, D-Las Vegas, who heads the newly created Senate Energy, Infrastructure and Transportation Committee, said: “We’re dead. We’ve been exposed.”