Culver: Energy program ‘right thing to do’
Culver said the Iowa Power Fund has inspired investors and energy startup companies to do business in Iowa. He said the program is helping create jobs in some communities, and he said the program’s impact will grow as more projects advance.
Culver was reacting to an investigation by the Associated Press that found that five years after the fund’s creation, much of the money hasn’t been spent, some projects have been scrapped, others were slow in getting started because of fundraising difficulties and the state can’t say how many jobs the program created. Lawmakers also diverted millions from the fund, originally set to be $100 million, for other purposes.
Culver, a Democrat, pointed to a plant in Shenandoah that is seeking to commercialize algae production as an example of a success story. BioProcess Algae, which received $4 million from the fund, is using carbon dioxide left over from ethanol fermentation to grow substitutes for fish oil and proteins for feedstock. CEO Tim Burns said the company had invested millions in southwest Iowa and hoped to make its first royalty payment to the state within the next year.
Culver noted that construction was under way on a cellulosic ethanol plant in Emmetsburg, which has been promised $14 million from the fund along with federal assistance of more than $200 million. He said a second cellulosic ethanol plant planned for central Iowa, promised $9 million from the fund toward its otherwise privately funded $235 million price tag, is also moving forward.
Culver said those three projects alone, if they come to fruition, would justify the state’s $71 million investment in the fund by helping bring hundreds of millions of dollars in outside investment to the state. He noted that dozens of other projects were still in the works and predicted a number of them would also be successful.
“They would not have been built in Iowa without the Power Fund, they’d be doing it somewhere else or they wouldn’t be doing it at all. It was the magnet that attracted that concept, that idea, and that capital,” he said. “We’re actually in the ground and moving forward and developing energy solutions of the future right now. To me, that’s proof that this has been the right thing to do.”
Culver conceded that the economic downturn that started after the fund was created in 2007 did have an impact in making fundraising harder for some of the projects. And he said the slow rate of spending showed that the fund’s board carefully vetted projects.
“We’re not just blindly throwing money at ideas. They have to prove the concept. They have to show us progress. And I think that’s actually a good thing that we have been conservative in terms of that money actually going out the door,” he said.
“The Power Fund members can tell you, they have a very high standard. Some companies have met it and others have not.”
The AP review also found some hitches by companies.
One company accidentally wasted most of its $1 million grant ordering equipment from an out-of-state supplier that went bankrupt. It has pledged to pay back the money. Two other companies canceled contracts for different reasons, and $2.8 million was spent studying a proposal to store wind energy that was later determined not to be feasible.
Culver said bumps along the way were to be expected with new technologies.
“No one suggested that we would be batting a thousand overnight,” he said. “Any startup, any new research and development project, takes time and it takes money.”