The Iowa Power Fund Board took action last week on the first batch of proposals submitted to it. The board is handing out $25 million this year in state funds to various groups or firms applying for the money to be used for research and development of renewable energy and for projects which improve energy efficiency.
The 18-member citizen advisory board looked at six proposals and five were approved to move forward in the process. The sixth, a proposal by ethanol maker Poet LLC was tabled for ongoing discussion. Poet is asking for $20 million to use to help finance a cellulosic ethanol plant Poet wants to build as part of an expansion of its current corn ethanol plant at Emmetsburg in northwest Iowa.
The Power Fund was established by Gov. Chet Culver and the Iowa Legislature last year and is managed by the new Iowa Office of Energy Independence. The board will have a total of $100 million to invest in projects over the next four years at $25 million per year.
Headquartered in Sioux Falls, S.D., Poet wants $20 million of that $100 million for expansion of the northwest Iowa ethanol plant. The expanded part would produce cellulosic ethanol from corncobs purchased from area farmers. This project is named "Project Liberty."
Board says Poet's request is too big
"We must keep in mind this is a sizable portion of our fund," says board chair Fred Hubbell of Des Moines. "The vote doesn't mean Poet's request is dead. It tables the request so we can talk some more." Poet's Jim Sturdevant told the board that lack of the $20 million "will cause us to step back and take another look at the project. We'll have to see what happens."
Some Power Fund board members expressed concern that if too much of the $100 million is given to Poet, not enough would be left for other projects. With $25 million this year and $25 million next year, giving $20 million to a single project would make board members think twice about voting for any other ethanol project, says Hubbell.
The Legislature created the Power Fund in 2007 to provide financial help to entities that will increase Iowa's research, development and use of sources of renewable energy and to improve energy efficiency.
Poet received an $80 million grant from the Federal Department of Energy in February 2007. Poet then began to look around for other sources of funding for the $226 million Emmetsburg plant expansion and became aware of the Power Fund, says Sturdevant. Construction hasn't started yet, but the plant is tentatively set to open in 2011 and would buy and use corncobs from an estimated 400 farms surrounding Emmetsburg to make cellulosic ethanol. In addition to the plant at Emmetsburg, privately-held Poet has majority interest along with local stockholders in plants at Ashton, Hanlontown, Jewell, Gowrie, Corning and Coon Rapids.
Board moves ahead on renewable energy
Last year Iowa Gov. Chet Culver proposed the $100 million Iowa Power Fund. It was debated and then approved by the Legislature and is managed by the new Iowa Office of Energy Independence. The Power Fund board has indicated they want to move forward and help fund five of the first six projects it has studied and that have applied for funds. The board has appointed a negotiating committee for each applicant.
The first five projects the board has voted to move forward on are: $1.5 million for Cellencor of Ames to finance an experimental microwave dryer to be used in ethanol plants; $1.6 million for Iowa State University for research on polymer-based photovoltaic solar panels; $600,000 for a prairie grass research project by the University of Northern Iowa; $600,000 for Renew Energy of Osage for machinery to turn wood chips and other waste into fuel pellets; $2.3 million for Great Plains Renewables at Shenandoah for an experimental research and testing facility to try to make oil from algae.