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Spurning Coal, Manistee Rides the Windspire

Governor says revived factory just part of state’s green jobs future

May 13, 2009 | By Glenn Puit
Great Lakes Bulletin News Service

  Workers erect a Windspire near the Manistee factory that’s building them. The firm says its Michigan market and local jobs will grow as the state expands clean-energy policies.
MANISTEE—Five years ago, this Lake Michigan manufacturing and port town was just a few steps away from getting a new coal plant.

Today, however, Manistee is headed in a very different direction.

The town first shifted gears in 2004, after intense citizen resistance stopped a proposed 425 MW power station in its tracks. Coal opponents urged Manistee’s leaders, who wanted the plant, to find other ways to rebuild their economically depressed city, and local officials shifted their recruitment efforts to, among other things, attracting clean-energy manufacturers.

Last month, those efforts paid off for this community of 6,500 people when Mariah Power began manufacturing its new Windspire, a unique, home-scale wind turbine, in a local factory. The factory, operated by Sterling Heights-based MasTech, had been building auto parts, but was down to just five employees. Now it has 40 making Windspires.

Mariah, which designed the Windspire and markets the 30-foot-tall device with vertical blades, intends to sell its product worldwide. The company claims a backorder of 2,500 units and says it will bring 140 new jobs to Manistee in the next three years, about 50 more than the proposed coal plant’s developer once promised.

The irony of the town’s switch from a coal-powered to a clean-powered future is not lost on Manistee’s formerly coal-friendly leaders, nor on Michigan Governor Jennifer Granholm. She, along with 500 other people, showed up here for Mariah’s April 20th grand opening, held under a tent that sheltered the audience from a bone-chilling rain.

Governor Granholm clearly relished the moment. She has long pushed state lawmakers and, more recently, state regulators for new laws and rules that aim to rebuild the state’s economy by boosting energy efficiency and large- and small-scale renewable energy production. The governor says such policies can attract more companies like Mariah to Michigan by building a local market for their products and demonstrating that the state is serious about leading the nation’s emerging clean-energy economy. That economy, according to the American Wind Energy Association, now employs more people building wind turbines than the fossil fuel economy does mining coal.

At the grand opening, Manistee’s elected leaders were reluctant to say that rejecting a coal plant brought Mariah to their town, but Mariah CEO Mike Ness was happy to say so. Mr. Ness argued that, by saying no to coal, Manistee forced itself to explore the booming clean-energy manufacturing sector.

“I think they are being rewarded for their stance,” he said. “I am happy to be in a place that made that kind of choice. It was a hard one, for sure, and I have a ton of respect for the community and their leadership.”

When Governor Granholm addressed the happy crowd, she pointed to the big picture.

“The whole system is all coming to be, right here in Michigan,” Ms. Granholm said of the new approach to making electricity that is emerging around the world, which is called distributed generation. “It’s happening right here in Manistee County. We are all about the jobs to be created, and this economic sector is the ripest.”

But whether or not state lawmakers will enact more policies to boost the governor’s relentless drive to exploit the nation’s fastest-growing manufacturing sector is unknown. Many legislators have attacked Ms. Granholm’s recent decision to look closely at the economic and environmental wisdom of building new coal plants. Many also appear indifferent to a growing push to improve on last year’s legislation requiring utilities to provide clean energy and energy efficiency. Meanwhile,  a bill introduced in the Legislature's last session to set profitable rates for entrepreneurs who would use devices like the Windspire to generate and sell clean electricity to the grid has yet to receive even an initial hearing.

It Almost Didn’t Happen
Michigan and Manistee almost missed out on Mariah’s clean-energy investment.

In 2006, less than two years after Manistee rejected coal power, Mariah was a start-up company with just five people that was looking for capital to launch its product. Mr. Ness’s dream was to place his cage-like, wind-spun spires in the backyards of homes and businesses, where they would churn out about 2,500 kWh of electricity every year—about one-third of the average U.S. household’s electrical consumption, according to a 2007 U.S. Department of Energy estimate.

Currently, the company’s Web site does not list a price for Windspire, but claims it is “well below other renewable alternatives” and that the average payback “without rebates or incentives, is under 10 years.” Although current and future federal and state tax incentives and rebates can significantly lower that price, the initial domestic market for the device would appear to be in regions or states with the highest electric rates, such as New England, the Middle Atlantic, California, Hawaii, and Alaska. The company currently seems most interested in overseas markets, however, where electricity is quite expensive.

“What we are trying to do is provide a low-cost, easy to install wind appliance that people can afford to buy and put it on their home or put it on their business,” Mr. Ness said.

But even though he saw distant markets as his best initial sales strategy, Mr. Ness said he felt the Midwest was the best place for a manufacturing facility, and was on the verge of setting up shop in Columbus, Ohio. The city was ready to loan Mariah $1.8 million, but the deal fell through when the town asked the firm to provide a backup letter of credit in case it failed.

When Mr. Ness wasn’t willing to do that, Ohio’s loss eventually became Michigan’s gain.

Then the Alliance for Economic Success, an economic development agency serving Manistee County and several other surrounding counties, learned that Mariah was looking for a place to make wind turbines. Its officials pounced, and with the help of Governor Granholm, local city and county leaders assembled an economic incentive package that Mr. Ness said he couldn’t refuse.

“They called me,” he said. “I was out looking for a place, and they came to me.”

Manistee Mayor Cyndy Fuller said that the town made its intentions very clear to the company.

“We made sure Mariah power really knew we wanted them to be here,” Mayor Fuller said. “And, we really listened to our citizens for what was important to them.”

Mr. Ness said he already had $2 million in financing in place, but that he needed about $2 million more to get the manufacturing rolling. Manistee and the state came up with about $1.4 million in seed money, equipment, and facilities. Critically important to the project, he said, was an alliance forged with MasTech, which converted its nearly idle Manistee facility into a Windspire factory.

“If you are talking about the politics of it, the State of Michigan was up front and out there, ahead of the curve,” Mr. Ness said. “The things they are doing with renewable energy, I think it’s a reflection of the governor and the Legislature. You have a very dynamic governor who called me and said, ‘We think you are doing the right thing, and we want you to come to Michigan.’ Well, when the governor calls you, that is kind of cool.

“I have felt nothing but welcome from the people of Michigan and Manistee,” the CEO added. “The people are warm and helpful, and our product is now 98 percent made in Michigan.”

Is Michigan Truly Ready?
But while Mr. Ness praised the governor’s leadership on alternative energy, clean energy experts say Michigan still has a long way to go if it wants to create the tens of thousands of new, green energy jobs that Governor Granholm envisions.

Last year, after almost two years of trying, the state Legislator made Michigan the 26th state to enact clean energy and energy efficiency mandates for electric utilities. The new laws require Michigan utilities to get at least 10 percent of their electricity from renewable sources by 2015, and take steps to reduce customers’ energy consumption by 1 percent a year starting in 2011. Several states in the Great Lakes region, including Illinois and Minnesota, currently have significantly more aggressive renewable energy mandates.

Michigan’s modest progress toward a clean energy economy also has been complicated by a push for new coal plants in other communities around the state over the past three years. The state’s coal rush started in 2006, the year after Manistee turned its back on that polluting energy technology that is a major contributor to global warming. By mid-2008, eight companies had proposed new coal plants in Michigan.

That presented the governor with a tough problem: how to encourage the growth of a new, clean-energy manufacturing sector in a state that could be flooded with a fresh supply of coal power.

The controversy has simmered for more than two years, as utilities and many pro-coal state lawmakers pushed hard to include coal in the state’s energy future. Clean-energy advocates, led by the Clean Energy Coalition, which includes the Michigan Land Use Institute, have pushed hard for moving the state away from coal power and toward the emerging, much less centralized, 21st-century models for generating, distributing, and saving electricity.

In February, in what observers on all sides agreed was a bold move, Ms. Granholm announced new policies meant to create a clean-energy jobs bonanza, look more critically at Michigan’s coal rush, and reduce the state’s dependence on fossil fuels for generating electricity by 45 percent by 2020.

Her orders, which do not require legislative assent, directed the Michigan Public Service Commission to write new rules establishing self-financing, “pay as you save” programs that cut home and business energy use. According to the governor, the rules also would create tens of thousands of new jobs weatherizing homes and businesses, allow utilities to profit from helping customers reduce electricity use, and make it more economically sensible for homes and businesses to install small-scale solar panels and wind turbines, such as Windspires.

Then, she ordered the state to determine whether Michigan actually needs additional electricity and whether building new coal plants would be the best way to supply it.

Clean-energy advocates have praised both policy moves, saying they are among the most comprehensive in the nation. They add that, if the MPSC successfully translates the governor’s orders into user-friendly rules, the need for additional coal plants—already facing serious questions in the face of the state’s population and manufacturing decline—would vanish and utilties could eventually start retiring their oldest, dirtiest facilities.

Meanwhile, several state legislators are pushing the governor’s already aggressive clean-energy envelope. They have re-introduced so-called “feed-in tariff” legislation that would transform home- and business-scale solar and wind generators from money-saving to moneymaking opportunities.

Mr. Ness is convinced that implementing feed-in tariffs would be a boon to both his business and to other companies that manufacture renewable energy devices.

He said that, right now, about 70 percent of Mariah’s sales market will be overseas, largely in Europe, where power is much more expensive, and where governments already have feed-in tariffs and, because of them, truly huge markets for home-scale green generation. The program has reportedly created several hundred thousand jobs in Germany alone.

“They are much better at using less power than we are,” Mr. Ness said of Europe. “If we could stop the building of one coal plant with a number of (Windspire) units, everyone would be happy.”

Glenn Puit covers coal and clean energy issues for the Michigan Land Use Institute. Reach him at glenn@mlui.org.

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