This week’s Green Scene column in Crain’s Chicago Business: Clean-tech entrepreneurs gather to explore Illinois growth options

Leaders of Illinois’ “clean energy” movement gathered in Chicago yesterday and called more coherent state legislation and better financing opportunities as essential ingredients to attract growth in the renewable energy sector here.

More than 100 clean-tech entrepreneurs, finance executives, policy experts and a sprinkling of government officials met at the University of Chicago’s Booth School of Business at the Gleacher Center to learn about trends, financing options and state and federal policies affecting the sector’s ability to prosper in Illinois.

Several speakers pointed to the state’s mandate that 25% of all energy provided by electric utilities and alternative regional electric suppliers must come from renewable energy sources by 2025. Conference participants, including Susan Hedman, administrator of the U.S. Environmental Protection Agency’s Region 5 (which includes Illinois), agreed such Renewable Portfolio Standards (RPS) encourage new investment in clean-energy projects.

Ms. Hedman, who oversees Superfund sites and other contaminated areas in her region, encouraged entrepreneurs to check out those locations as potential locations for new clean-energy power plants. “The EPA has developed methods to help entities acquiring properties that are contaminated to be insulated from prior liability,” she says. “Renewable energy facilities are particularly good choices for these sites, and easier to develop than if you wanted to build an elementary school or residential area there.”

Many speakers and attendees worried about the logistics of achieving the 25% RPS goal because of piecemeal state legislation that isn’t clear-cut. Furthermore, market forces and a burdensome regulatory process make it difficult for alternative energy companies to attract affordable financing for them to build locally, says Barry Matchett, co-legislative director of the Environmental Law & Policy Center, a Chicago-based environmental advocacy group and a co-sponsor of the clean-tech gathering.

Some clean-tech business leaders say they’re going to set up shop or expand in states that attract them with the best incentives and most secure long-term state policies. Declan Flanagan, CEO of Lincoln Renewable Energy, maintains the solar and wind energy firm’s headquarters in Chicago, but its recent growth is occurring elsewhere. Mr. Flanagan says he’s been opening new offices and growing operations in New Jersey, Denver and Austin, Texas, because those states have set clear objectives in their renewable energy policies.

“The RFP (request for proposals) process is way too complicated in Illinois and businesses have to jump through too many hoops to make things happen here,” he says. “I’m glad Illinois has an RPS, but we need debt to buy the equipment we need and Illinois has the most complicated, risky contracts that aren’t financeable because of the way the Illinois Power Agency is set up. It’s too hard to build anything here.”

Mr. Matchett urged everyone in the room to call their state representatives in Springfield and demand they create a more hospitable environment that encourages more investment in clean tech. The industry has not been good at letting legislators know the ripple effect of investing in wind and solar, he argued.

“When you bring money to rural communities in a new wind development project, it creates jobs locally,” said Mr. Matchett. “It pays for librarians and school teachers and a new swing set for the local park. You need to tell this to your politicians.”

Indeed, the clean-energy industry is still in its infancy when it comes to lobbying at the state and national levels. Peter Duprey, CEO of Broadwind Energy, a wind-power company based in Chicago, noted the coal and petroleum lobbies are on the same page and have great influence among legislators. “The renewable group isn’t as well focused and many have different agendas. That makes it difficult to get a clear message across.”

While the pool of venture capital financing in Illinois has grown for alternative energy start-ups and later-stage companies looking to scale up, companies should seek out financing options that sometimes wed public and private funding sources, advised Amy Francetic, executive director of the Clean Energy Trust, a non-profit that offers technical assistance and other services to emerging clean-tech companies in the region. She encourages entrepreneurs to explore alternatives that include grants or other pools of money from the U.S. Department of Energy, the National Science Foundation and the Department of Defense.

On the public financing side, the Illinois Finance Authority has the ability to provide credit enhancement for renewable energy and energy efficiency projects, but hasn’t yet closed any such deals, said Christopher Meister, IFA’s executive director. The closest the agency has come to financing green energy projects was in connection with issuance of municipal bonds for a hospital and a college in the state that borrowed money for energy efficiency and capital improvement projects.

He asserted that Illinois Gov. Pat Quinn supports the clean-energy sector and is  working with the General Assembly to enact a comprehensive energy plan that will improve financing mechanisms for renewable and energy efficiency projects. He conceded that, until recently, it’s been difficult coming up with state-backed financing tools that help wind and solar power firms and protect taxpayers at the same time.

“The best intentioned public policy sometimes comes up a little short for entrepreneurs, like the ones in this room,” Mr. Meister observed.

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