A year ago, nine Flagstaff businesses and government agencies pledged to pay more on their electric bills to buy renewable energy.

If they could demonstrate there was a desire for renewables here, perhaps Arizona Public Service would sign a contract with an entrepreneur to start a solar, wind or biomass energy project in northern Arizona and create new jobs here, they reasoned. That didn't happen -- APS spent that money on renewable power elsewhere. But backers aren't dismayed and say they will continue the project this coming year.

"Whatever the form of renewable energy, we just feel like the region should be self-sufficient and this is an effort to nudge us in that direction," said Carl Taylor, a county supervisor and board president of the Coconino County Sustainable Economic Development Initiative.

In all, seven of the nine organizations made good on their pledges and signed contracts with APS to pay a surcharge on their electric bills totaling $70,000 a year. The idea was that APS would use that money to offset the higher costs of a local renewable energy project to make it competitive with out-of-state projects.

But APS recently passed over seven proposals by wind and solar energy developers in northern Arizona to sell power to the utility, saying the cost above traditional energy came in at two to three times the surcharge for renewable projects elsewhere.

"They were all significantly more in terms of the premium," said Lucinda Andreani, a Coconino County employee who co-leads the group of green power purchasers.

The reasons included stronger and more reliable wind elsewhere and the fact that the combined demand of the local group -- equivalent to about 300 homes -- was smaller than anything most commercial-scale renewable installations would support on a cost-efficient basis.

Bottom line: The $70,000 was simply too small to make a dent in the cost gap between local renewable power projects and those in New Mexico, California and elsewhere.

WHO'S PARTICIPATING

Coconino County, the city of Flagstaff, the Museum of Northern Arizona, Coconino Community College, Flagstaff Medical Center, Nestle Purina PetCare Co. and Xanterra Resorts have all signed contracts to buy renewable power for a year at a time. With the cost of green energy expected to drop by 60 percent in the coming year, their $70,000 contribution is likely to buy much more power than the equivalent of 300 households.

The funds could someday be used to bridge the gap between energy projects here and elsewhere, if a project here were to come in just slightly more expensive than one out of state.

"Everybody agrees that there's a huge demand for renewable energy out there, and people are willing to pay a premium for it," said Ron Hubert, director of a local company that teaches businesses how to save money and be more environmentally sustainable.

Some of these members signed on only recently, meaning their combined demand may now be larger.

Amanda Ormond, a wind-energy consultant, makes an analogy to gasoline in how businesses can use renewables to ultimately save money.

She asks: Would you be willing to pay $2.50 per gallon of gas today, in order to lock in that price for 30 years?

"You put your money on renewables and you might pay a little more up front ... all the cost is up-front because it has no fuel cost," she said.

Flagstaff Unified School District and Northern Arizona University did not buy renewable power, citing possible budget cuts.

"Certainly, a guaranteed rate knowing that (other power costs) will increase over time is attractive, but we're not in a position of being able to afford it now," said FUSD Superintendent Kevin Brown.

CHALLENGES ARE MANY

One associate professor at NAU, Tom Acker, has found that a large wind farm would generate about 70 jobs in northern Arizona, 55 of which would be created during construction.

But the hurdles to a biomass, wind farm or solar project near Flagstaff have been several.

Wind power is stronger in New Mexico, making that a better and less-expensive source, said Barbara Lockwood, an APS employee who analyzes renewable energy projects.

Rapidly rising costs for construction materials derailed a large project Hubert was involved with on the East Coast.

Five different biomass proposals have gone nowhere so far, partly for lack of stable federal subsidies that last a number of years.

And solar-thermal projects that heat water work better in the southern part of the state, while electricity-generating solar panels are a good option here.

But there is also significant pressure for utilities to veer toward renewables.

The possibility that the federal government could pass greenhouse gas-capping legislation is one factor -- it would make coal-fired electricity more expensive and thus make renewables more competitive in price.

Another factor is the mandate by the Arizona Corporation Commission that utilities buy 2 percent of their power from renewable sources this year and 15 percent of it from renewable sources by 2025. The utilities are able to purchase power from anywhere they're linked to in the grid, including New Mexico and California.

REGULATORS WANT MORE RENEWABLES

At least a couple commissioners have talked about requiring more renewable energy investment sooner.

"I know that I would like to see an expansion of the percentages on the renewable energy standard, mostly because Arizona's not where it needs to be," said Corporation Commissioner Paul Newman.

He bemoans the $5 billion to $8 billion residents pay for coal-based power annually, and campaigned on the idea of fighting climate changes and air pollution, and making Arizona a net exporter of solar power.

"We actually have a moral duty, when it comes to climate change, to make those policy switches," Newman said.

The various members of the Northern Arizona Renewable Energy Purchasing Group are exploring other options to save or generate energy in the absence of a commercial-scale facility.

Some have pledged to keep paying an ever-larger surcharge to APS for renewable energy, until something is established here. Others say such decisions are pending the resolution of budget problems.

The $70,000, meanwhile, is being spent by APS to buy power wherever the utility invests in renewable energy, including projects elsewhere in the state.

"The main thing is just to get everybody pushing in the same direction, be persistent, and see what happens," Taylor said.

Cyndy Cole can be reached at 913-8607 or at ccole@azdailysun.com.

Other proposals on the table

-- NAU is writing a proposal for a company to come in, install solar panels on the university's buildings at no capital cost to the university, and then sell the power to the university at a fixed rate for a number of years, said Richard Baron, director of sustainability. It worked at Arizona State University.

-- The city of Flagstaff is exploring a rebate program to reduce costs for homeowners who get energy audits, add insulation to their homes, or replace furnaces. The city is also considering killing sales taxes on solar panels.

-- Homeowners in Doney Park, businesses in Flagstaff, and others are installing their own wind and solar panels, and receiving rebates. The downside is, these typically generate less electricity per dollar invested than a larger commercial project that would supply many households.

-- Coconino County plans to lobby the state legislature this year for the ability to allow homeowners to vote to join special energy districts. Much like a group that wants to pave a road, a group of homeowners could join together and vote to install a renewable energy array, then finance it themselves and recoup the cost in future years. The county would manage the paperwork, bonding and tax collections.

-- The Cameron Chapter of the Navajo Nation has signed a contract for wind exploration off Grey Mountain. If built, the commercial-sized turbines would be positioned to send wind power directly into California. A competing company has also been in discussions with Window Rock, leading to some conflicts between the chapter and the tribe's larger administration, according to the chapter president.

-- The city of Flagstaff might lobby the Legislature to allow cities to build the cost of a home renewable project, such as a solar panel, into the property taxes for the home, said Rebecca Sayers, head of city environmental and sustainability programs. It would require a change of law, however. It would be advantageous for homeowners who don't keep their homes for as long as it takes to pay off the investment.

-- APS is going to make it easier for those proposing to build small renewable power installations to bid, by making the process simpler.