Will A Hurricane Blow Your Business Down?

By Patricia Eggleston

For U.S. clean tech companies with global operations, events such as tornadoes, hurricanes, port

strikes and civil unrest, can shut down suppliers for months and threaten the financial resiliency of a company that does not have a business continuity and recovery plan. According to the Chubb 2012 Clean Tech Industry Survey, three out of four clean tech companies operate internationally, leaving them exposed to these very risks which may quickly threaten the financial stability of their business.  In addition, 40 percent of clean tech companies surveyed depend on foreign businesses for their supply chain, yet 59 percent do not have an up-to-date business recovery plan and at least 50 percent are not proactively planning for or protecting against disruptions caused by weather-related events.

Why is there a disconnect?  As innovators, clean tech executives are accustomed to the risks and constant changes that are a part of their industry. While clean tech executives are busy developing technology, securing funding and increasing sales, some may miss the global risks, such as supply chain resiliency, that could threaten their business.  For instance, earlier this year China reportedly shut down numerous factories due to heavy smog—a move that could quickly create costly production delays for clean tech firms awaiting the delivery of components in the U.S.

Developing a business continuity plan can mean the difference between long term survival and succumbing to a catastrophe, especially for small to mid-size businesses. According to the Federal Emergency Management Agency (FEMA), 40 percent of small businesses do not reopen after a weather-related disaster. Begin by assessing all parts of the supply chain—including your supplier’s supply chain—to expose any weaknesses.  If your company obtains a key component from a single location, that’s a red flag and could indicate potential trouble. A global property and business income insurance policy can help bolster strong supply chain management by providing a firm with a financial cushion for loss of income and extra expenses if operations are halted due to property damage caused by natural disasters or other causes.

Not sure where to start? Talk to your insurance agent or broker to learn how you can develop or update your business continuity plan. Some insurance companies may also offer online or print resources to help clean tech companies develop a plan.  Clean tech companies that prepare now may be able to avoid a costly loss in the future.

Patricia Eggleston, a vice president and commercial underwriting manager for the Chubb Group of Insurance Companies, is based in Englewood, Colorado, and can be reached at peggleston@chubb.com.

MLP Parity Act Would Include Clean Energy Companies

On April 24, 2013, a bipartisan group of senators and representatives reintroduced a revised version of the Master Limited Partnership Parity Act (the MLP Parity Act) to the Senate and House. Currently, a company can qualify as a master limited partnership (MLP) only if at least 90 percent of its gross income consists of "qualifying income," including income form the production and sale of oil and natural gas, coal extraction, and pipeline projects.

The MLP Parity Act would enable clean energy companies to qualify for MLP status by expanding the definition of "qualifying income" to include income from clean energy resources, including wind, solar, biomass, municipal solid waste, hydropower, and hydrokinetic energy. The expanded definition would also include waste-heat-to-power, carbon capture and storage, energy efficient building properties, and biochemicals, and would allow for income from certain transportation fuels to qualify, such as cellulosic, biodiesel, and algae‐based fuels. A company could qualify as an MLP under the MLP Parity Act only if at least 90 percent of its gross income is included in one or more categories of qualifying income, as modified by the MLP Parity Act.

Renewable Energy Standard Increase - SB 13-252 - Needs Your Help

Chris Shapard, CCIA

We need your help to push back on the attempts to get Governor Hickenlooper to veto SB 252.  Outside groups have waged a campaign of misinformation about this bill.  An anti-climate change think tank called the Heartland Institute, the Americans for Prosperity, and others have bought radio, television, print and internet ads against the bill.

Not mentioned in the ads is the historic rise of fossil fuel costs that always get passed onto the consumer, the recent increase in electricity costs from wholesale electricity cooperative associations due to fossil fuel costs that exceed 2% and Colorado’s success thus far with our current Renewable Energy Standard (30% by 2020 for Investor Owned Utilities and 10% for rural cooperatives).  Also, not being heard in the noise are the off ramp provisions that if a utility can’t meet its requirement under the 2% rate cap increase (an increase from the current 1%) then their requirement percentage decreases.

The 2010 Colorado Cleantech Action Plan, sponsored by CCIA, state, federal and economic development partners found that a leading driver for cleantech growth was our strong public policy accomplishments – specifically our Renewable Energy Standard.  No bill is perfect and SB 252 is no exception but it is a reasonable and important bill for the continued success of cleantech in Colorado. 

CCIA actively lobbied and testified in support of this bill to increase the Renewable Energy Standard (RES) from 10% to 20% by 2020 for cooperative electric utilities providing wholesale electricity and large cooperative electric associations with at least 100,000 meters. Consumer costs are capped at a maximum 2% annual increase (up from the current 1%) for compliance with the standard. Compliance off ramps were put in place to decrease the standard for cooperatives who can't meet the goals under the consumer cost cap.

SB 13-252 also:

• Requires 1% of cooperatives' retail sales to come from distributed generation (DG) and .75% for a cooperative with less than 10,000 meters;
  

• Expands the definition of eligible energy resources to include coal mine and landfill methane if the PUC qualifies the projects to be greenhouse gas neutral;
  

• Removes the additional RES credit for new generation built in Colorado after Jan. 1, 2015.
  

Please contact Governor Hickenlooper via phone, email or letter to express your support for SB 13-252.

Email: http://www.colorado.gov/govhdir/requests/opinion-leg.html
Phone: (303) 866-2471
Mail: John W Hickenlooper, Governor
         136 State Capitol
         Denver, CO 80203-1792

CCIA Dispatches from DC

Last week I fled the snowstorms of Colorado for the spring cherry blossoms in Washington DC to lobby Congress on energy tax reform as part of the Advanced Energy Economy’s (AEE) first regional chapter fly-in.  Companies and clean energy organizations from all over the country converged in DC to talk to House Ways and Means and Senate Finance Committee Members of Congress and senior staff.  We had companies and associations from North Carolina, Arkansas, Boston, Michigan, California, Maryland, Minnesota and more.  Ed Williams, the CEO of Novinda, was the industry advocate rounding out CCIA’s team.

Despite the historic gridlock in Congress there is a real bipartisan push to reform the tax code.  One message nobody disagreed with is that our current tax policy is broken and because we don’t have a national energy policy, energy tax policy is the driving force for cleantech.  

The overall theme of our message was promoting a smarter tax policy - one that is technology neutral, outcomes based and sunsets when a particular goal is met.  Unfortunately, the various tax policies benefitting cleantech are composed of one, two and five year sunsets and reauthorizations that combine to create artificial cliffs prohibiting planning and investment.  We need to look no further than the recent brinksmanship and damage done by the recent one-year extension of the wind PTC.  Instead of a one-year extension of the wind PTC, Congress needs to set a goal - like 5% of our baseload electrical energy from wind or X amount of gigawatts deployed, then the tax benefit sunsets.  

Another example I used was in the transportation sector.  Congress should set a goal to reduce foreign imported oil for transportation and any domestic technology (electric vehicles, natural gas vehicles, advanced engine efficiencies, biofuels, more transit etc.) that helps to accomplish the goal gets a tax incentive.   When the goal is achieved then the tax break goes away. This is especially important in the current context of many traditional energy industries getting tax breaks baked into our tax code with no sunset provisions.  The current tax system picks winners and losers and distorts markets thereby decreasing and sometimes flat-out discouraging investment in new innovative technologies.

Democratic and Republican members were impressed that a group came to DC not asking for a handout and volunteering for a sunset to a potential tax provision benefitting their industry.  This message especially resonated with Senate Majority Leader Harry Reid’s staff and Energy Committee Ranking Member Senator Lisa Murkowski’s staff.

While this was more of a 30,000-foot discussion on energy tax policy, if tax reform bogs down again in the DC swamp then cleantech needs to be prepared to fight for specific provisions in another temporary tax extenders package.  This is of course if we can walk and chew gum at the same time.  I’m confident CCIA, AEE and its members can do just that.

Chris Votoupal

Deputy Director

CCIA

Energy Conversations from Utah's Energize 2013

As a conversation starter at the Energy Commercialization Center's Energize 2013 conference, I had the pleasure of visiting Snowbird, Utah (my first time in the Utah mountains) and participating in the first effort to connect and build the Rocky Mountain regional cleantech ecosystem.  The Energy Commercialization Center at the University of Utah was one of five 2010 DOE EERE-funded Innovation Ecosystem Development Initiatives that will accomplish such activities as pursuing intellectual property protection for technological innovations; nurturing and mentoring entrepreneurs; engaging the surrounding business and venture capital community; and integrating sustainable entrepreneurship and innovation across university schools and departments. 

During the course of the two-day event, research organizations, companies and industry trade groups from Utah, Colorado and Idaho met to share best practices and ideas for policy, access to capital, and tech transfer among other topics.  My colleagues from Colorado included Dick Franklin, Executive Director of the Rocky Mountain Cleantech Open, and Steve Berens, Executive Director of the Cleantech Fellows Institute, who spoke about Rocky Mountain resources for clean technology innovation and entrepreneurship. 

My session concerned best practices in cleantech policy and how policy can successfully drive job creation.  While the surrounding states are not yet as organized as Colorado, there's a lot we can do together to facilitate the cooperation to grow our clean technology industries.  One of the best parts of the program was meeting new partners like RenewableTech Ventures and Navillum Nanotechnologies that I can plug into Colorado's clean tech universe.  I look forward to future collaboration with Utah's Energy Commercialization Center and the ongoing energy conversation.

Cleantech Fellows Institute Opens Applications for Executives and Entrepreneurs to Bridge Their Talent and Skills into Cleantech

Cleantech Fellows Institute encourages new venture formation, job creation and growth of the cleantech industry

As “Cleantech 2.0” blossoms from the lessons learned over the past decade, smart entrepreneurs and corporate executives are looking to leverage the lessons of the past and launch themselves to success in cleantech. The Cleantech Fellows Instituteaddresses a simple but compelling problem: more seasoned executives are needed everyday to bridge cleantech opportunities to a hungry global market. The objective of the Institute is to help experienced entrepreneurs and executives accelerate their transition into the cleantech sector, stimulating new venture formation, job creation and growth of the cleantech industry.

The Cleantech Fellows Institute is the premiere executive talent bridge and is accepting applicationsnow through July 12, 2013. The program will run from mid-August to mid-December and combines seminars, guest speakers, lab visits, company tours and a capstone project. The rolling admissions process will provide prompt feedback to applicants from the entrepreneurial and corporate community.

“Executives with proven business building experience, a creative drive, and leadship abilities are encouraged to apply," commented Steven Berens, Cleantech Fellows Institute, executive director. “Each candidate must have a strong desire to transition into the cleantech industry through accelerated immersison, networking and technology exposure. Targeted executives include those who have built successful ventures in sectors such as aerospace, biotechnology, information, energy and enterprise technology.”

“I would recommend the Cleantech Fellows Institute to anyone interested in the industry and who wants to make a difference,” said John Tuttle, 2012 Cleantech Fellow. “The Institute team delivered an incredible program that tied together a deep curriculum, an impressive network of cleantech experts and a highly-valuable capstone project. The intensity of the program, combined with the dedicated network of experts, truly created an atmosphere of community. When I finished the program, I really felt that I had built a network that would help me grow my business.”

Colorado Cleantech Industry Association’s Cleantech Fellows Institute

The Cleantech Situation

ICOSA Magazine

by: Eric Drummond

Many of us in the industry have seen the headlines in the print media and have watched the “experts” on the cable news shows discussing the early demise of cleantech—newspaper articles and TV documentaries recently claiming that cleantech is dead, that the cleantech bubble has burst.  But if we look beyond the provocative headlines, we’ll see that the industry is not dead or dying; it’s growing, and in some sectors maturing, but doing so without effective and rational policy support and during a time of financial difficulty.  And because it’s hard, investors, entrepreneurs, regulators and other industry players are still figuring out the most efficient manner in which to bring new technologies to market.

The facts, on the other hand, appear to reflect a far different story:

• U.S. venture capital investment in cleantech companies reached $4.9 billion in 2011, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource.  This is flat in terms of deals compared to 2012 but represents a 29 percent increase from the $3.8 billion raised in 2009.
• Nationally, renewable electricity generation doubled from 2006 to 2011, and prices for wind, solar and other clean energy technologies decreased.
• Employment in cleantech industry sectors expanded by almost 12 percent from 2007 to 2010.
• Locally, the Denver, Colo., nine-county region ranked sixth out of the 50 largest metro areas in the United States in cleantech employment concentration in 2011, with around 1,500 cleantech companies operating in the nine-county region in 2011.
• Colorado had investments of $363.3 million throughout 2011, a 28 percent increase from 2010, making it the state with the third highest level of investments.

Recognized as one of the most innovation-intensive states, Colorado derives this honor from the strength of the research, investor and entrepreneurship communities built around the University of Colorado, Colorado State University, Colorado School of Mines and the National Renewable Energy Lab (NREL).  Another data point, in the past five years, more than 450 provisional, nonprovisional and international clean technology patents have been filed by researchers at these schools.
Others have pointed out that Colorado has enormous local resources, and with NREL in our midst we have an incredibly strong link to the national cleantech ecosystem.  NREL is the leader in research in solar, wind, biomass and other clean technologies.  Indeed, known in the research and development community as “the Oscars of Innovation,” NREL has won 50 R&D 100 Awards in the last 30 years.
In addition to NREL, Colorado is also home to a number of other federal labs, including the National Institute of Standards and Technology (NIST) and the National Oceanic and Atmospheric Administration (NOAA), and the state is also home to the National Center for Atmospheric Research (NCAR).  This feature set of national labs and research centers, as well as universities, and investor and innovator communities, all reflect on the rich diversity of the Colorado cleantech ecosystem.

A Cleantech Solution
What many of us have come to understand is that most venture capital firms are quick to acknowledge that they invest in teams and people, not just products and technologies.  With that in mind, an enterprising and energetic group of people banded together to create a platform, the Cleantech Fellows Institute, to accelerate the development of cleantech in the region and across the nation.