It's a warm summer day in 2053, and Jane Q. Oregon sits behind the wheel of her zero-emission hydrogen fuel cell car as it drives itself from Klamath Falls to Portland.

She passes the Oregon Institute of Technology Reforestation Center -- a sprawling complex of geothermally heated greenhouses turning out millions of saplings to mitigate global warming. Continuing north, she passes the Deschutes River, now free of hydroelectric dams and teeming with salmon. On either side of the road, photovoltaic panels march across the high desert, providing power to greater Bend. The solar arrays also churn out clean-burning hydrogen gas that's piped out to distribution stations across the region, powering everything from cars and refrigerators to computers and mobile phones.

Along the banks of the Columbia, Jane Q. passes huge windmill farms feeding into new Bonneville Power Administration transmission lines that snake through the Gorge, bringing green power to the ultra-energy-efficient homes, offices and factories of the Silicon Corridor. This booming metro area now stretches from Eugene to Southern B.C. -- but burns only a fraction of the fossil fuel that Portland did just 50 years ago...

This green energy paradise in the Pacific Northwest might seem like a pipedream. But it could just happen. In fact, in some particulars the future is already here, at least on a small scale -- geothermal nurseries in Klamath Falls, wind farms along the Columbia, energy-efficient solar-equipped green buildings in Portland and Eugene, cutting-edge fuel cell R&D in Bend.

And there's a growing chorus of utility planners, sustainability advocates and venture capitalists who say that in time Oregon could become a key hub for R&D, test marketing, early implementation and volume manufacturing of new energy technologies.

"If you look down the road 10 to 15 years, we're going to have significant wind and solar resources," says Christopher Dymond, an energy analyst at the state's Office of Energy. He says Oregon could meet 20% of its power load from these renewable, "non-dispatchable" resources -- so-called because they're dispatched by the hand of Mother Nature, producing power only when the wind blows or the sun shines.

Because sun and wind can't produce electricity on demand, the region's future energy portfolio would need to be rounded out by a combination of dispatchable renewables -- such as biomass, hydroelectric and geothermal, plus combined-cycle natural gas turbines. Eventually, hydrogen fuel cells -- installed in cars, home appliances, even power plants -- could play a huge role in the regional energy picture as well.

The jury's still out on whether Oregon will be a developer of this technology, or merely an end-user, says Dymond. And make no mistake, billions, perhaps trillions of dollars of future economic activity are at stake. Whoever gets in on the ground floor could become a source of expertise, equipment and new inventions for decades to come.

U.S. missteps haven't helped the local effort. Denmark-based Vestas, the world leader in wind turbine manufacturing, has indefinitely delayed plans to build a major manufacturing facility in Portland. That's in part because Congress hasn't passed a long-term extension of the Production Tax Credit, which helps wind energy producers offer their product at a competitve price compared to conventional electricity. On the solar front, Japan and Germany have far outpaced the U.S., increasing solar capacity tenfold since the mid-1990s through various government incentives.

On the other hand, Oregon largely has its act together compared to many other states, with several effective state programs to subsidize green energy, significant tax breaks for businesses that invest in energy-saving technology, along with enthusiastic support from utilities and environmentally conscious consumers. Under Oregon's net metering law, utilities buy electricity from customers who are generating a surplus, encouraging renewable technology in commercial and residential buildings.

"This will be the dominant resource of the 22nd century," says Dymond. "The next five years will determine where this cluster of industries takes root. At this point, most of the companies are owned overseas. The question is, will we be builders or buyers?"

In the U.S., no one region dominates new energy research and development. "The hot spot is still up for grabs," says Nancy Floyd, co-founder of Nth Power, an energy-focused venture-capital fund based in San Francisco and Portland. "And there's momentum here. It fits with the cultural roots of Oregon -- our resource economy and our environmental awareness."

It also fits with Oregon's knowledge base. Our 800-pound gorilla is the Bonneville Power Administration (BPA), with its expertise in electricity production and transmission. A new collaboration between Oregon State University and the Pacific Northwest National Laboratory will push the envelope of energy-efficient microtechnology products, such as tiny combustion engines and portable cooling devices.

Meanwhile, researchers at the University of Oregon are developing more efficient photovoltaic materials and mapping solar radiation, and the Oregon Institute of Technology is working on next-generation homes powered by solar and geothermal energy.

Oregon also has natural advantages over other places -- sunny skies in the east; strong, steady winds along the coast and east of the Gorge; geothermal activity in the south; mountains of cow dung and wood chips that can be used for biomass generation. Plus, of course, the incredible hydroelectric potential of the Columbia River system, which has made coal, oil, nukes and even natural gas relatively minor ingredients in the region's energy mix.

And Oregon consumers seem to like all this green energy stuff. Since last March, when PGE and PacifiCorp began offering green power options under Oregon's utility restructuring law, more than 34,000 residential and small-business customers (2.5% of the total) have signed up. "If our customers are 20% more likely to want this resource, that willingness to pay a little more for local renewable power is what's going to kick-start this industry," says Dymond.

Floyd points to several Oregon companies that are developing expertise in "smart energy" -- the software and distribution equipment to manage new energy technologies. She says several firms are gaining traction -- Serveron for power plant production, EZConserve for conserving energy across computer networks, Digital Inspections for monitoring transmission problems. Plus there's Intel, inventing new chips to do more while sucking less juice.

All of which makes Oregon an ideal testing ground for the cutting-edge power system of the future. Experts describe this as an integrated "energy web" of homes, schools, offices, factories and farms, all equipped with renewable generating capacity. They'll draw power from the grid when they need it and send some back when they have a surplus. "We're moving toward a more distributed [energy] architecture where power is generated closer to the people," says Floyd.

It's still more expensive, though, to produce electricity from renewable sources than from fossil fuels -- in the case of solar power, several times more expensive.

There are two key reasons. First, much of the cost of renewable technology is in the initial capital investment -- making photovoltaic panels, building windmills and running transmission lines out to them, drilling for geothermal energy -- and those costs are spread out over time (fuel costs, it's worth noting, are nil). Second, fossil fuels get significant subsidies through government tax breaks, and also cause incalculable damage to the environment and human health -- a cost that isn't on your gas bill but is borne by society as a whole into the future.

U of O business professor Mike Russo points out that even if green power costs more up front, it can be a sensible business decision. "If you're a forward thinking company, you might anticipate higher energy prices [for fossil fuels] and a payback [from renewables] down the road," he says. "You also get a reputational benefit right away."

Companies such as Nike and Norm Thompson, for instance, have found that going green adds value to their brands. The U of O's new $40 million showcase Lillis Business Center is installing high-priced photovoltaic architectural glass from Europe and other ultra-green features to become a beacon of sustainability among biz schools nationwide.

But most Oregon businesses are simply looking for the cheapest, most predictably priced power -- wherever it comes from. And so far, renewables aren't a very attractive option, if the only thing you're looking at is the monthly bill. That's true even though prices for electricity from local utilities and the BPA have soared recently, and are expected to keep climbing nationwide over the long haul.

"It is going to be a real challenge for a number of industries to maintain their competitive advantage in the region," warns Ken Canon of Industrial Customers of Northwest Utilities.

"I still have not seen solar get to the point where it's as cost-competitive as it needs to be," Canon says. "There's still an open question on wind. You hear it only costs 4 cents per kilowatt-hour averaged over a 20-year period. No newsprint maker or aluminum smelter is going to be able to afford that. Aluminum's having a hard time at 3 cents and newsprint's having a hard time at 4 to 5 cents.

"For an industrial customer," he says, "the question is, 'What's it going to cost me today?' Utility planners have the luxury of saying, 'This is good in the long term.' But there is no long term if you can't get through the short term."

To level the playing field, Oregon has one of the most aggressive incentive programs in the nation to make renewables more competitive, funneling 3% of the money customers pay PGE and PacifiCorp to the Energy Trust of Oregon. The Trust in turn subsidizes green power, helping to bring its cost closer to the market price for electricity produced with fossil fuels.

When state and federal subsidies are added into the mix, wind, geothermal and biomass are now competitive with fossil fuels in many settings. Hence PacificCorp has teamed with Florida Power and Light to build the 120-MW Stateline project east of the Columbia Gorge, with another 100 MW planned. PGE, BPA and Golden Northwest Aluminum are involved in other big wind installations. A biomass project at the Port of Tillamook Bay will capture methane from rotting cattle manure that's collected from six local dairies and use it to generate electricity.

Meanwhile, world oil production will start declining in coming decades, fossil fuels are warming up the globe and oil politics are heating up international tensions. All of which suggests that renewables have a very bright future. That's especially true where energy is already expensive and government is proactive -- such as Europe and Japan -- and, perhaps, in certain parts of the energy-guzzling U.S., where wind and sun are plentiful, state programs promote investment, and consumers like power that doesn't trash the planet. Like, for instance, Oregon.

Not all the newfangled energy technologies on the drawing board will pan out in coming years. Which ones might be right for Oregon?

Wind power

California and Texas lead the U.S. in wind generation, but Oregon and Washington have been adding capacity at breakneck speed on the wind-swept hills east of the Columbia Gorge. The research group Renewable Northwest estimates that Oregon could meet all of its power needs with wind.

Most R &D and production is done by European companies, not surprising since Europe relies on wind much more than the U.S. does. Lake Oswego-based Windtec is on the cutting edge, though, developing a twin-rotor turbine that rotates 360 degrees and increases power output up to 50%.

Wind power is very close to being cost-competitive with nonrenewables and would get a big boost from long-term extension of the federal Production Tax Credit, currently set to expire at the end of 2003. Sen. Gordon Smith recently introduced a bill to extend it for 10 years. "In my corner of the state there's tremendous development of wind already, and this will give investors something they can count on," he says, pointing to Vestas' on-again, off-again plan to open a factory in Portland.

Smith says he's open to the idea of expanding the credit to include other renewables, such as solar, but warns that "after all the incentives put in by past Congresses, renewables still amount to less than 1% of our supply. The difficulty with wind and solar is the sun doesn't always shine and the wind doesn't always blow."

Solar power

Oregon is too cloudy and rainy to be a solar powerhouse, right? Wrong, says Chester Farris, president of Shell Solar Industries. "Portland has better productivity than Stuttgart and Hamburg, Osaka and Tokyo." And east of the Cascades, Oregon looks a lot more like Southern California than it does like Northern Europe, says Frank Vignola of the U of O's Solar Energy Center.

Plus, he points out, Oregon --Êeven west of the Cascades -- gets a lot of sun in the summer. "In Portland, the biggest load for commercial buildings is mid-summer, so the load matches the resource."

Still, the U.S. is quickly losing ground in the race to develop solar technology. "Right now Germany and Japan are moving into it big time," Vignola says. "By the end of this century there won't be any oil left and very little natural gas -- the market for solar is worldwide; it's a multi-trillion dollar industry."

Solar technology has come a long way in the past 20 years, but it's still very expensive to make solar panels (they require silicon and a lot of electricity), meaning it can take years to get a financial benefit from the zero-cost fuel: the sun.

Oregon and the Pacific Northwest have a head start, though, if scientists can manage to bring the cost down and the productivity up.

Major silicon and solar panel manufacturers are based in the Seattle and Vancouver areas, and the production technology has a lot in common with semiconductors. As photovoltaic panels become incorporated into standard building materials -- windows and roofing -- the industry could find synergy with others related to homebuilding in Oregon, such as wood products and green architecture. In Southern Oregon, companies such as Energy Outfitters of Grants Pass, which distributes solar and small renewable systems, are booming. The off-the-grid trend that was once limited to remote ranches and homesteads is now going mainstream.

One crucial ingredient for building a local industry will be a new Oregon Energy Trust incentive program for installing solar electric systems in homes and commercial buildings. "That would put us somewhere in the top 10 most cost-effective places for solar, even given our rainier climate," Dymond says.

He envisions that someday silicon will be grown in the Portland/Vancouver area and shipped to Central and Eastern Oregon, where manufacturing plants would simply roll out photovoltaic panels right into the fields to create huge solar arrays. "In Harney County, 6,500 acres could power the city of Eugene," he says.

Geothermal power

Here's how it works: Molten rock heats up underground water, which is brought to the surface to heat homes and offices and to spin turbines, which generate electricity. The hot water is recirculated into the ground. It flows all the time, making geothermal one of the most reliable electricity sources on earth, ideal for providing baseload energy and system reliability.

Geothermal energy is already being used in the Klamath Falls region to heat greenhouses for growing saplings year-round at IFA Nurseries.

The Northwest Power Planning Council has identified 11 volcanically active sites in Southeastern Oregon, and along the Cascades in Washington, Oregon and California that could power more than 1.3 million homes. Geothermal plants are expensive to build, but require no fuel and produce almost no pollution, making their electricity cost-competitive with some fossil fuels.

Plus, the economic benefits are entirely local. A study by the Oregon Office of Energy found that a 100-MW geothermal plant in Eastern Oregon would generate more than $100 million a year in local income and pay $4 million to $6 million in taxes and fees. A state-of-the-art natural gas power plant of the same size would send $11 million to $24 million out of the region every year to pay for fuel.

Fuel cells

There's a growing consensus among scientists and energy planners that hydrogen -- used to run fuel cells -- will be the primary fuel of the future. The industry's in its infancy, though, with major questions remaining about how hydrogen will be isolated, stored and distributed. Fuel cells are expected to become commercially viable over the next several decades in portable devices (such as cellphones), then stationary generators (power plants) and transportation (cars). President Bush has promised a major federal research push into fuel cell technology as well.

David Dusseau of the Oregon Technology Alliance says semiconductor and fuel cell manufacturing are similar -- giving Oregon a step up. Research is moving ahead at Idatech in Bend to develop residential and small commercial fuel cell systems. Still, major university powerhouses are elsewhere.

But Dusseau remains optimistic. "This industry is where semiconductors were in the 1970s, and it's a good fit for us. We could make this the hub for stationary fuel cell development. It fits into the power industry we already have. And the area is small enough to build the basis for a hydrogen distribution system, the pilot for a national model. People will look to us to see how to do it."

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Copyright 2003 Oregon Business magazine