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Colorado's energy future: strong yet vulnerable

Colorado is vulnerable due to its current low prices is in its efforts to implement renewable energy solutions. While other states, including California and Massachusetts, take on large scale efforts for wind, solar and other renewable and clean energy production opportunities, the low cost of energy in Colorado makes these energy investments by utilities, private companies, and Colorado residents, not economically viable when compared to the current low cost of traditional fossil fuel based energy in Colorado. This means that, in spite of our Governor's strong emphasis on making Colorado the renewable energy state, current low prices for traditional energy hinder Coloradans, our venture capital sector, and our companies from jumping on this clean energy bandwagon with significant investment.

The common wisdom regarding the future of energy in Colorado runs something like this:

  • We have ample supplies of natural gas, oil, wind, sun, and other energy sources.
  • We are a net exporter of energy and will become an even stronger exporter of energy in the next decade.
  • Our state government has put renewable and sustainable energy development as one of its highest priorities.
  • The prices we pay for energy are below the national average.
  • Colorado is in a very strong energy position.


Mostly true, but common wisdom overlooks several energy problems that are both unique to Colorado and that put us in a vulnerable position over the next decade.

Colorado is in the unique position of being able to generate a greater supply of energy than it has the ability to transport efficiently to national and even world markets. By having so much supply, and relatively low state-wide demand relative to our supply, prices in Colorado are artificially below the national market prices but are unlikely to stay there. Markets have a way of building pipelines and other means of efficiently transporting Colorado energy to the highest bidders in the country and the world. When this begins to happen, and it is already happening, the prices... more [truncated due to possible copyright]  

The common wisdom regarding the future of energy in Colorado runs something like this:

  • We have ample supplies of natural gas, oil, wind, sun, and other energy sources.
  • We are a net exporter of energy and will become an even stronger exporter of energy in the next decade.
  • Our state government has put renewable and sustainable energy development as one of its highest priorities.
  • The prices we pay for energy are below the national average.
  • Colorado is in a very strong energy position.


Mostly true, but common wisdom overlooks several energy problems that are both unique to Colorado and that put us in a vulnerable position over the next decade.

Colorado is in the unique position of being able to generate a greater supply of energy than it has the ability to transport efficiently to national and even world markets. By having so much supply, and relatively low state-wide demand relative to our supply, prices in Colorado are artificially below the national market prices but are unlikely to stay there. Markets have a way of building pipelines and other means of efficiently transporting Colorado energy to the highest bidders in the country and the world. When this begins to happen, and it is already happening, the prices for energy in Colorado will quickly mirror the national average.

For example, at the 2007 conference on Colorado's New Energy Economy: the Path Forward, Mercator Energy showed that roughly 81% of natural gas exports from the Rockies are going to the Southwest while roughly 19% are exported to the Northwest. Less than 1% is currently going to the large markets in the East with substantially higher rates.

What this means is that the prices for energy over the next decade in Colorado will rise at a substantially higher rate than the national average, effectively removing one of Colorado's selling points to large companies who want stable energy prices when they look to build a new facility.

The recent example of Gambro not building its newest manufacturing/ processing facility in Colorado, even though it has a great presence in Lakewood, Colorado was based, in part, on energy and water issues uniquely relevant to Colorado.

Another area where Colorado is vulnerable due to its current low prices is in its efforts to implement renewable energy solutions. While other states, including California and Massachusetts, take on large scale efforts for wind, solar and other renewable and clean energy production opportunities, the low cost of energy in Colorado makes these energy investments by utilities, private companies, and Colorado residents, not economically viable when compared to the current low cost of traditional fossil fuel based energy in Colorado.

This means that, in spite of our Governor's strong emphasis on making Colorado the renewable energy state, current low prices for traditional energy hinder Coloradans, our venture capital sector, and our companies from jumping on this clean energy bandwagon with significant investment.

Besides the lower return on investment due to lower energy prices, Colorado cannot compete with the likes of California, or even Austin, Texas, on the amount of money spent on installation incentives for clean energy solutions. CA, MA, NM, MI and numerous other states have more government incentives flowing into the clean energy sector, making them the clean energy frontrunners in installed base.

But generation capacity is not necessarily what makes one the leader in the new energy economy. The real economic impetus lies in providing solutions that create steady jobs and sustained economic activity.

Attracting or creating businesses that provide solutions for the clean energy sector could create new high paying jobs and growth prospects for the future. Case in point, the new wind blade manufacturer will create 600 steady jobs while all the wind farms in Colorado collectively do not provide anywhere close to that number of jobs once the construction of the wind farms in completed. Colorado needs to promote more successful research, development and commercialization of renewable energy technologies.

One area where we need to focus to help Colorado with its energy vulnerability is the solution that currently provides the "best bang for the buck", i.e. energy efficiency and demand-side management. These solutions do not require massive investments, subsidies or incentives. If implemented correctly, they can provide the best return on investment and the maximum number of "green collar" workers for the new energy economy.

Colorado could take the lead in developing programs for implementing energy efficiency solutions, training the new energy economy worker and in implementing energy efficiency and demand-side management solutions for utilities, residents and businesses across Colorado and the nation. We need to conduct rigorous energy audits on all houses and buildings, business processes, and utilities and encourage the owners of these facilities to act on the findings to save energy while meeting their needs.

Colorado's vulnerability is related to our nation's energy vulnerability. While the outlook is strong for our energy rich Colorado, the outlook for our consumers who will be paying rapidly rising energy prices over the next decade is what makes us vulnerable.

As with any challenge, we have a duty to rise up to the occasion. Leadership on the energy issue is one part education and one part action. The education needed is that energy costs will continue to rise and that energy efficiency grows in importance every day. The action necessary is real financial support for commercialization programs and training programs for the green collar workers that will make Colorado the "green rush" state in the 21st Century.

Ravi Malhotra is the Executive Director, and Herb Rubenstein the Chief Operating Officer at iCAST (International Center for Appropriate and Sustainable Technology) in Lakewood, CO. iCAST works with communities to develop solutions that use local resources for local benefit.


Source: http://www.denverpost.com/c...

MAR 28 2008
http://www.windaction.org/posts/14092-colorado-s-energy-future-strong-yet-vulnerable
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