Revised priority: Springs might not be a clean-tech hub, but industry won’t be ignored

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focus-environmentWhile clean technology was the fastest-growing industry in Colorado over the past five years, it’s not likely to be the linchpin of economic growth in Colorado Springs.

And economic leaders say that might be OK.

The Colorado Springs Regional Business Alliance has declared clean tech, which includes renewable energy manufacturing, installation and maintenance, a focus area. But the alliance is just starting to reassemble a clean technology team of industry leaders to direct recruitment efforts, said Tammy Fields, senior vice president of business development for the alliance.

“The main focus of the group will be to attract businesses that are truly part of the clean-tech industry,” Fields said.

The group is smaller and more concentrated than when a collection of sustainability professionals worked on the 6035 plan several years ago.

Recruiting clean technology companies to Colorado Springs isn’t likely to be an easy or particularly fruitful task, Fields said. There are a lot of barriers.

Wind turbine manufacturers such as Vestas, which opened a plant in Pueblo, aren’t good matches for Colorado Springs, Fields said.

“Wind needs rail service to transport those heavy parts,” she said. “We were never really looked at for Vestas.”

A lot of other renewable energy companies are young and just getting started. They’re risky investments. Larger, more-established renewable energy companies looking for new locations would be welcome, but there’s a lot of competition for them and they can have their pick of new locations, most of which will offer better incentives.

“Clean tech or renewable energy companies are challenging,” Fields said. “It’s newer technology and it’s more reliant on tax credits and subsidies. And we know our community is not going to write them a check.”

While Colorado’s renewable energy industry has seen more than 40 percent growth over the past five years, according to figures from the Denver Economic Development Corp., it only grew 0.5 percent in 2012. Renewable energy has struggled with uncertain tax subsidies for wind and a glut of solar panels that drove market prices below production cost over the past year.

That has forced some local employers who do work in the clean-tech industry to reorganize or downsize.

Local clean-tech businesses

For a few years, renewable energy was a growing part of business for Springs Fabrication.

“We work with a few solar companies and some biofuels,” said Tom Neppl, CEO of Springs Fabrication. “So many things are connected to the renewable energy world, even things you wouldn’t expect.”

So, he figures he has some contracts related to renewables that he doesn’t even know are clean-tech contracts. “Right now, I would say it’s less than 10 percent of our business,” Neppl said. “Renewables have really taken a hit.”

Because Springs Fabrication works with such a wide variety of industries, the abrupt downturn in the industry didn’t impact Neppl’s company.

“We just replaced the business with other opportunities,” he said.

Most of those are mining and fossil fuel contracts.

Olson Motor & Control had to cut back on staff. The New Jersey-based company that opened a manufacturing location in Colorado Springs in 2011 builds inverters for utility-scale solar projects. CEO Bill Olson said the Colorado Springs location cut back from 11 to five staff.

Worth the trouble

Though clean technology probably won’t be a major industry here, it can’t be neglected, because it’s a valuable piece of the economic puzzle for other reasons, Fields said.

“It’s probably not the driving force behind a company’s decision to come here or not,” she said. “But it’s more important to some companies than it is to others.”

While most decisions about whether to move to Colorado Springs are based on the bottom line, a community interest in and support of sustainable practices and renewable energy investment is important in a lot of corporate cultures these days, Fields said.

It’s definitely part of the equation for some of the companies that would build data centers in the planned T5@Colorado data center park, formerly known as the Vineyard Data Center Park, under construction in south Colorado Springs, said Vince Colarelli, the general contractor who is spearheading the project.

He has partnered with Iron Point and T5, a pair of reputable national data center park developers and managers. Colarelli expects to begin building construction by the end of 2013 and start moving data centers into the park in another year after that.

Energy, energy conservation and renewable energy are all big parts of the discussion with potential tenants, Colarelli said. “It’s not just about having green energy, but it’s also about conserving the energy you are using,” he said.

Because of the cool nights in Colorado Springs, tenants will be able to naturally cool their facilities and avoid a lot of energy use that way, Colarelli said.

“For some organizations where that is part of their value system, conservation and renewables are a really big deal,” Colarelli said.

He and his partners worked with Colorado Springs Utilities to develop a comprehensive sustainability plan for those tenants along with onsite generation using biofuels.

The onsite renewable power will help to offset the increased load on CSU.

Colarelli estimates the 65-acre park will require about 70 megawatts of electricity, which is about 7 percent of the city’s total capacity.

Big deal to big users

While renewables and sustainability are important to a lot of Colarelli’s potential clients and a lot of the big corporate businesses the Business Alliance courts, low electric rates and reliable power are more important, Colarelli and Fields say.

“If you look at where data centers are being developed across the country, there are a couple common themes,” Colarelli said.

Omaha, Nebraska’s industrial electric rate is about 3.5 cents per kilowatt hour. Eastern Washington’s rate is even lower. The industrial electric rate in Colorado Springs is 4.5 cents, which is well below the rate in most places.

“It’s not just the cost of power, but the quality,” Colarelli said. “These things can never go down.”

The reliability of Colorado Springs Utilities combined with natural cooling and a healthy incentive package from the city make the project viable, Colarelli said.

Those enticingly low electric rates are one of the reasons the new Colorado Springs City Council reversed the previous Council’s approval of an expanded solar garden tariff, Fields said.

While the reversal, scheduled for discussion by Council (as the Utilities Board) this week, could jeopardize growing local business SunShare and its 15 employees, major manufacturer Atmel spoke against the tariff saying any increase in rates would have a major impact on its bottom line.

“For the average citizen, it might be OK,” Fields said. “But look at larger users that are paying thousands of dollars a month and what that would mean for them. Do you risk those large employers for (investment in renewable energy companies)?”

Compared to Boulder

At the same time the Utilities Board is reconsidering a decision about expanding its solar garden program, Boulder is working to develop a municipal utility so it can invest more aggressively in renewable energy than its current utility provider Xcel, which is required to get 30 percent of its electricity from renewable sources by 2020. CSU is aiming to reach 20 percent by 2020, but is only required to get 10 percent of its power from renewable sources by then.

“I imagine if that increases rates in Boulder, it will make Boulder less attractive to large manufacturers and data centers,” Fields said.

Probably not, said Clif Harald, executive director of the Boulder Economic Council.

Businesses are not drawn to Boulder for its lower power rates or strong incentive packages.

“First and foremost, what they’re looking for is talent,” Harald said. “They want the kinds of employees that have the minds and the skills and experience to help them grow. Many companies are drawn to Boulder because it’s the kind of community that attracts the kind of people they want working for them.”

That’s what brought IBM, Google and Microsoft to Boulder, Harald said.

“In some ways we look at clean tech as part of a sort of super-cluster of other industries that are all kind of related in some way to our economic value system and that are very prominent here,” Harald said.

Boulder’s core industries are a diverse mix of information technology, aerospace, biosciences, research, clean technology, natural products and outdoor gear. Boulder never actively cultivated its clean tech industry, Harald said. It cultivated a sense of place that attracted people who built up clean tech as an industry. For now, the approach is working.

The city’s unemployment rate is 5.1 percent. The rate in Colorado Springs is still above 8 percent. Industrial and commercial vacancy rates in Boulder are in the single digits — sometimes the low single digits. And there are about 100,000 jobs in the city of about 100,000 residents, which means there are more jobs than there are people to do them and workers have to commute to Boulder.

“I’d say it’s fairly healthy right now,” Harald said.

Boulder’s economic development strategy isn’t about recruiting business, it’s about building a culture that invites business, he said.

“What we’re really talking about is creating these kinds of values and clusters that attract people,” Harald said. “Of course, different communities have different things to attract different people.”

Springs’ recent successes

Colorado Springs has had recent success recruiting data centers to the city. Wal-Mart’s data center came online earlier this year and Colarelli is certain his national partners will have no trouble attracting tenants for the T5@Colorado center.

While clean-tech companies might not be clamoring to move to Colorado Springs, the city is not uninviting to them either.

Fields worked with Olson to bring his company to Colorado Springs before the Economic Development Corp. and Chamber of Commerce merged.

Olson said he chose Colorado Springs for his expanded solar inverter manufacturing over locations he looked at in Arizona, New Mexico and Nevada. It wasn’t because of the city’s greenness, its low power rates or low taxes.

“The taxes and energy costs were actually just pleasantly surprising,” he said. “Colorado Springs is a pretty easy place to fall in love with.”

It has good transportation access, beautiful scenery and great weather, he said.

Fields said that attracting clean technology companies to Colorado Springs is a focus and there will be active efforts to do it once the new team is up and running.

“It may not be what we’re going to be known for,” she said. “But it’s still important.”

One Response to Revised priority: Springs might not be a clean-tech hub, but industry won’t be ignored

  1. Nothing has changed they are still looking to bring companies into town instead of looking how to improve the business climate in town.

    An easy fix would be to advocate energy efficiency more to businesses and households. This would create jobs with local contractors, decrease cost for businesses and households and lending opportunities for local banks.
    Average rate of return for energy effciency upgrades:
    Lighting upgrades between 6 month and 24 months
    HVAC upgrades less then 7 years
    Insulation for buildings 1-2 years

    and there are many more examples.. what is needed:
    PUBLIC AWARENESS AND EDUCATION (the scrapped sustainability office could have provided as such)

    and this would have been funded by more sales tax revenues from the sale of these upgrade projects.. but then we are missing ideas in this town and we are plowing the same old fields over and over again

    peter smith
    May 29, 2013 at 5:37 pm