DiMasi Proposes $50 Million Program to Jumpstart Clean Energy Startups in Massachusetts; Renewable Energy Fund Would Be Slashed

3/17/08Follow @wroush

On Tuesday, Massachusetts House Speaker Salvatore DiMasi will announce a proposal for a five-year, $50 million spending program designed to boost the state’s clean energy sector, mainly by providing seed grants for early-stage technologies, retraining experienced entrepreneurs from other industries to navigate the energy business, and overhauling vocational-ed programs.

Investors and executives are greeting the proposal as a breakthrough for the clean energy business in Massachusetts. But to raise money for the program, DiMasi proposes taking money away from an existing renewable energy program, funded by a surcharge on residential ratepayers’ electric bills, that supports construction of solar, wind, and hydropower facilities through grants and rebates.

The new program’s overall goal, according to several advocates of the initiative interviewed today by Xconomy, is to close gaps in the local support system for early-stage clean energy companies—gaps that currently allow too many of the state’s talented workers, and too much of its investment capital, to flow to cleantech enterprises outside Massachusetts. “To keep the growth in green jobs, we have to fight,” DiMasi said in an announcement today previewing his proposal. “Other states are rolling out the red carpet trying to steal our brain power and our venture capital. We have a natural clean energy cluster here and I intend to keep and grow it here.”

DiMasi’s plan was crafted largely by the New England Clean Energy Council (NECEC), a non-profit group formed in 2007 by a coalition of local venture capital firms, clean-energy entrepreneurs, university researchers, and service providers such as intellectual-property law firms. It would set up a Massachusetts Clean Energy Center with responsibility for three main projects: a seed grant program providing awards of $100,000 to $250,000 for proof-of-concept projects by energy researchers or small startups; a fellowship program designed to give established entrepreneurs a three-month crash course in energy technology and markets; and a “green jobs initiative” intended to help the state’s educational institutions train new clean energy workers.

The Clean Energy Center would complement and in some ways resemble the Massachusetts Life Sciences Center, which the legislature created in 2006 to foster economic development in the biotech sector and which would be the primary agency administering Governor Deval Patrick’s proposed 10-year, $1 billion life sciences investment package. NECEC members say the plan for the Clean Energy Center was also modeled, to some extent, on MIT’s Deshpande Center for Technological Innovation, which disburses technology-development grants of up to $50,000 to MIT faculty and students.

Under DiMasi’s proposal, half of the funding for the Clean Energy Center, or about $5 million per year, would come from the Bay State Competitiveness Fund—a $43 million fund that the Massachusetts legislature, under DiMasi’s leadership, set aside in 2007 using money from the state’s budget surplus. The other $5 million per year would be siphoned away from an existing program, the Massachusetts Technology Collaborative’s Renewable Energy Trust Fund. The trust fund accumulates from surcharges—about $6 per ratepayer per year—levied on Massachusetts residents’ electric bills. It’s used to support a range of projects, from consumer rebates for small rooftop solar-photovoltaic installations to seed funding for hydropower facilities and other alternative-energy projects.

The fund collected $24 million in surcharges in 2007 and spent $44 million on awards. The proposed redirection would represent a 21 percent revenue cutback for the trust fund, based on its 2007 budget. Officials at the Massachusetts Technology Collaborative did not return calls requesting comment on DiMasi’s proposal before this story went to press. [Update 3/18/08 12:45 pm: I reached Chris Kealey, chief of staff at the Massachusetts Collaborative, who said that the agency "doesn't typically comment on draft or pending legislation."]

But despite the fact that half of the Clean Energy Center’s budget would come from rejiggering … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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