A North Carolina company canceled a wind farm project in January that would have placed as a many as 112 towering turbines across two counties in northwest Michigan.
Energy Conversion Devices, one of the state’s pioneer manufacturers of advanced batteries and solar panels, filed for bankruptcy protection in February.
Several ethanol refining plants planned for the state never materialized.
And in early March, General Motors halted production of its much-ballyhooed Chevrolet Volt gas-electric vehicle for five weeks and temporarily laid off 1,300 workers due to slow sales. (Though, the automaker quickly altered its plan.)
“It’s a difficult environment across the landscape for virtually all types of renewable energy,” said Arn Boezaart, director of Grand Valley State University’s Michigan Alternative and Renewable Energy Center in Muskegon.
The reasons, experts say, include politics, economics and, as former President George Bush once put it, America’s addiction to oil.
Federal legislation that sought to end tax breaks for major oil companies failed in late March. The bill, co-sponsored by Michigan Sen. Debbie Stabenow, a Democrat seeking re-election, was seen as having little chance of passing both houses of Congress.
In Michigan, state government’s attitude toward promoting alternative energies has shifted radically, from unbridled enthusiasm under former Gov. Jennifer Granholm to cool ambivalence under her successor, Gov. Rick Snyder.
Granholm staked her legacy on the creation of green jobs to offset the nearly 850,000 jobs lost on her watch as the auto industry imploded.
But the federal Bureau of Labor Statistics, in its first effort to quantify jobs that benefit the environment or reduce energy consumption, found they comprise a small proportion of the total.
Michigan had 79,771 green jobs in 2010, or 2.1 percent of all jobs, according to federal data. Of those, 64,615 were in the private sector. The state ranked 12th in the nation in green jobs. California led all states with 338,445 such jobs.
A study by the Granholm administration in 2009 said there were 96,767 direct green jobs and an addtional 12,300 supporting jobs in Michigan in the private sector alone -- or 50 percent more than what was found by the BLS for 2010. The study was based on a survey of about 6,400 businesses, analytical work by state labor market economists and focus group research.
The BLS said its study was based on a nationwide survey of 130,000 businesses polled in the quarterly census of employment and wages program.
“The state of Michigan is silent on what the state’s energy future might look like,” Boezaart said. “It’s left people to figure it out on their own.”
Under Granholm, the state approved $3.4 billion in tax incentives, loans and grants to clean energy companies, according to figures provided by the Michigan Economic Development Corp.
The federal government promised another $2.4 billion, including $1 billion awarded to battery and component manufacturers in Michigan.
Granholm also signed into a law a requirement that the state’s utilities produce 10 percent of their electric power from renewal sources of energy by 2015. The Michigan Public Service Commission says utilities are on track to meet that goal.
But Snyder has dismantled Michigan’s network of tax credits and incentives, including those that supported battery production and other alternative energies.
His approach is to lower taxes for businesses across the board, rather than single out certain industries for special treatment in an attempt to attract jobs and investment.
“We said, ‘Let’s look at how we are doing business in the state and level the playing field for everyone,’” said Steve Bakkal, director of the Michigan Energy Office.
The small office, located at MEDC, has an annual budget of about $1 million, money which comes mostly from the U.S. Department of Energy. It promotes energy efficiency and renewable energy, mostly through consumer education, consulting services and federal lending programs.
Some say the deluge of state and federal spending between 2008 and to 2010 to develop batteries for electric vehicles, wind turbines, solar panels and biofuels created a glut of capacity that will take years for demand to absorb. Financial support from the federal government also is underpinning the development of lithium-ion batteries, used in electric and hybrid vehicles, including the Chevy Volt.
Vocal critics, including conservative radio host Rush Limbaugh, say the government is trying to make automakers produce vehicles that consumers don’t want.
Arguing over electric vehicles
GM CEO Dan Akerson recently lamented that the Volt has become “a political punching bag.”
The debate over batteries and electric vehicles is magnifying every setback in those industries, said Alan Baum, a West Bloomfield auto industry analyst who studies the electric and hybrid vehicle segments.
“Electric vehicles and batteries are under a microscope,” he said. “Everything gets blown out of proportion.”
Consider the troubles at Massachusetts-based A123 Systems, a lithium-ion battery maker with manufacturing plants in Livonia and Romulus. A123 has received more than $400 million in state and federal assistance.
Its recent layoffs, financial losses and an embarrassing recall of defective batteries have generated unwanted national publicity for the company.
On March 26, A123 said it would replace $55 million worth of defective batteries used by Fisker Automotive, its largest customer.
Four days later, conservative columnist Michelle Malkin, writing in the National Review Online, called the company an “eco-boondoggle” and a “green dud.”
A123 spokesman Dan Borgasano disputed Malkin’s claim that A123 is “teetering on the edge of bankruptcy.”
While admitting the company is facing challenges, Borgasano said the A123 has sufficient liquidity to handle the recall.
With gas prices above $4 a gallon, one might think consumers would be lining up to buy electric and hybrid vehicles.
But they’re not, mostly because the vehicles are still too costly. Many consumers see electric plug-in technology, like that used in the Volt, as inconvenient or unproven.
Automakers also are building smaller cars with more efficient internal combustion engines that buyers see as a better alternative to electrics.
“The economics, especially for plug-ins, are not there right now,” said Brett Smith, co-director of the manufacturing, engineering and technology group at the Center for Automotive Research in Ann Arbor.
“It will be a long time before energy storage is viable,” he said, regarding advanced batteries. The business model still doesn’t work.”
Either the price of electric vehicles will have to fall substantially or gasoline prices will have to rise to $7 or $8 a gallon before electric vehicles will become competitive with gas-powered models, Smith said.
Solar hasn't sizzled
The solar manufacturing industry is also facing tough times.
When Swedish appliance maker Electrolux closed its Greenville plant in 2006, throwing more than 2,000 employees out of work, solar-panel manufacturing was seen as the city’s salvation.
Uni-Solar, a division of Energy Conversion Devices, built two factories in Greenville that together employed about 400 workers. The company was awarded state and federal incentives valued at $37 million over 20 years.
But plunging solar prices and the elimination of subsidies in Europe, where Uni-Solar sold many of its panels, drove the company and its parent into bankruptcy in February.
Production in Greenville has been mostly halted and Energy Conversion Devices said it plans to sell off Uni-Solar.
Wind power generation is faring better in Michigan, although it has faced opposition from those living in areas where wind farms with giant turbines have been proposed.
North Carolina-based Duke Energy cancelled its planned Gail Windpower Project in Benzie and Manistee counties in January.
The project faced strong opposition from local residents who said the turbines would scar the northern Michigan landscape near Lake Michigan.
Milt Howard, vice president at Duke Energy Renewables, said the project was “the catalyst for a tremendous amount of discussion about wind energy in the region.
“Much of it was respectful and fact-based, some of it less so,” he said.
State officials said they are optimistic about the future of wind power generation in breezy Michigan, in part because costs have been falling rapidly.
Wind power comprised 94 percent of all renewable energy contracts approved by the state Public Service Commission to help meet the 10 percent renewable energy standard.
“Wind is a great industry in Michigan,” Bakkal said.
Chicago-based Invenergy is nearing completion of the first phase of a 213-megawatt wind farm in Gratiot County. When fully built out, the project will be the largest wind farm in Michigan and produce enough electricity to power 50,000 households.
And last month, Michigan, Illinois, Minnesota, New York and Pennsylvania signed an agreement with the U.S. Department of Energy that supporters say could lead to offshore wind farms on the Great Lakes.
The agreement seeks to harmonize regulations among the states and speed reviews of project proposals.
Capitol Hill decisions loom large
But some say wind turbine installations could stall if Congress fails to renew a wind energy production tax credit, due to expire at the end of the year.
The credit, worth 2.2 cents per kilowatt hour generated, has been hotly debated in Congress, which is seeking ways to trim the federal budget.
Last year, Congress ended a 45-cents-a-gallon subsidy to ethanol. That was a blow to ethanol producers and growers of corn, which is used to make ethanol.
“We feel that,” said Jeff Sandborn, president of the Michigan Corn Growers Association. “It’s a bad rap.”
Sandborn said he thinks it’s unfair for the federal government to end subsidies for renewable energy sources, including ethanol, while maintaining billions of dollars in subsidies for the oil and coal industries.
Critics say ethanol raises global food prices because it diverts corn used for animal feed to motor fuel.
There are five ethanol plants operating in the state. But 10 plants were proposed as recently as four years ago, according to the Michigan Department of Agriculture and Rural Development.
Mascoma Corp., a New Hampshire-based renewal fuels company, is planning to build an ethanol plant near Kinross. Instead of corn, the plant will use hardwood pulp drawn from Upper Peninsula forests to make 20 million gallons of ethanol a year.
The company received $80 million last December from the Department of Energy for the design, construction and operation of the cellulosic ethanol plant, which is expected to be completed by the end of 2013.
“For a place like Michigan that is adding to forest land, I think we could really grow the cellulosic ethanol industry,” said Bruce Dale, director of Michigan State University’s Office of Biobased Technologies.
Dale also is a member of Mascoma’s science advisory board. Cellulosic ethanol is a new technology and there are no large-scale plants operating the United States.
Although the ethanol-blending subsidy has ended, federal regulations require that 15 billion gallons of corn ethanol be blended into fuel annually by 2015.
Sandborn defended corn ethanol as being good for the state and national economies.
“Farmers don’t take the money and invest it in Dubai,” he said. “They reinvest it here on equipment, fertilizers and other products they need to operate their businesses.”
But Boezaart of Grand Valley State University said Michigan and the federal government need to create energy policies for alternative energy businesses to grow.
“That would begin to give some market certainty to renewable energy producers,” he said.
Rick Haglund has had a distinguished career covering Michigan business, economics and government at newspapers throughout the state. Most recently, at Booth Newspapers he wrote a statewide business column and was one of only three such columnists in Michigan. He also covered the auto industry and Michigan’s economy extensively.