Culver signs $100 million power fund

Supporters of a $100 million Iowa Power Fund see vast opportunities for developing renewable energy, but tough decisions remain to ensure the state investments result in tangible long-term results.

Gov. Chet Culver signed elements of the power fund measure into law Wednesday at stops in Ames and Cedar Falls. The measure allows companies and other groups to apply for grants to research and develop alternative energy sources.

"By signing the Power Fund into law, we can create the jobs of the future in Iowa that will keep our kids at home where they belong," Culver said.

The state will contribute $25 million to the fund in each of the next four years.

Culver spokesman Brad Anderson said the plan is aimed at investing in projects that have commercial potential, from biofuels to wind power to co-generation plants that produce electricity from burning cardboard or scrap wood. The hope is that investing in such projects will help Iowa become more self-sufficient and will attract businesses who will employ state residents.

"The state gets revenue from workers," Anderson said. "The state benefits when companies come to Iowa and build these products that eventually will help the state wean itself off foreign oil."

The bill outlines broad terms of which energy sectors the state will seek to develop and who may apply for money. For instance, companies or community colleges can research fuel sources beyond corn and switchgrass and look into using animal waste or fat. Community groups could also get cash to set up solar panels or a wind farm.

But officials who review grant applications face a difficult task in choosing viable projects that will result in economic benefits for the state.

Floyd Barwig, director of the Iowa Energy Center in Ames, said because so many of the proposals will likely be experimental, the power fund board must make sure it gambles on promising projects.

"The challenge in the power fund will be finding the right balance," Barwig said. "The object isn't to just do studies. You want real businesses to employ real people. But research is the basis."

He said officials have to decide whether to fund proven technologies such as biodiesel plants or risk money on more experimental efforts that could take years to perfect.

Precise funding guidelines haven't been written yet, but Anderson said the bill has "clear paths to follow with regards to results" via a rigorous application process.

A seven-member committee will first review funding applications, then make recommendations to an 18-member Power Fund Board that will ultimately decide which projects to approve.

The 18-person board includes representatives of state agencies including the utilities board, economic development, natural resources and secretary of agriculture. The governor will appoint seven board members from private companies or research groups, and the remaining seven board members will be non-voting. They include state lawmakers from both parties as well as people appointed by the Board of Regents, the Iowa Association of Community College Presidents and the Iowa Association of Independent Colleges and Universities.

A new Office of Energy Independence will oversee the board and all the state's energy initiatives. The director will hold public meetings around the state before creating a plan to move the state toward energy independence by 2025. The proposal is due in December.

In addition, the Iowa Utilities Board is to submit a study by January 2008 on how energy efficient gas and electric companies are and how consumers can cut energy use.

Anderson said Culver will likely name the office director along with board appointees by early July.

Barwig said signing the bill is the first step, but coming months will be the real test in following through with lofty plans.

"I think it's an extremely positive development," he said. "It will also be a very, very challenging development."