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Sunblock for SunShare 

It took a short time to cast a long shadow over one of the Springs' brightest new companies

As people trickled into a west-side bar in late April to hear about community solar gardens, the entrepreneur behind the meeting sat in a booth, wearing a scowl.

It was David Amster-Olszewski's darkest hour, just days after Colorado Springs City Council's April 23 vote to rescind the city's solar-garden program. Its first incarnation, a pilot program, had caught on locally and led the way nationally, with other entities in Colorado, Minnesota, Massachusetts and California soon employing key provisions from it.

But the pilot carried subsidies that a new Council opposed.

Their decision dashed the Colorado College grad's hopes of expanding his solar business here. It was particularly crushing not only because the previous Council had approved it two weeks before, but because Amster-Olszewski had already proven that his company is capable: SunShare had built two 500-kilowatt, fully subscribed solar gardens as part of the city's pilot.

A scaled-back version was still a possibility in Colorado Springs, which was one of the reasons why he was in the bar that night. But mostly, he was looking to regroup.

Well, mission accomplished.

Three months later, the 26-year-old again carries his usual sunny demeanor, and says Council's decision pushed him to spend more time looking beyond Colorado Springs. Since then, SunShare has landed 60 percent of Xcel Energy's latest solar garden allocation. He'll soon open an office in the Denver metro area, and another in the San Francisco Bay Area, where he'll work on securing a portion of California's 600-megawatt community solar program.

On Monday, Amster-Olszewski also learned his company has been short-listed to build 6 megawatts of solar gardens for the Sacramento Municipal Utility District, his biggest undertaking so far.

"That's one helluva comeback in a few months," he says. "For us, it's a huge milestone." Contract negotiations are to begin immediately.

For now, SunShare's headquarters remains here. But whether the company stays here — along with its jobs, capital and creative energy — hinges largely on a smaller-scale Colorado Springs Utilities program to be considered by Council next week.

"Right now, I'm waiting to see what happens August 13," Amster-Olszewski says. "Had Council not taken this up so quickly, we would not still be here, I guarantee that."

That it's come to this frustrates Councilor Jan Martin, one of Amster-Olszewski's biggest advocates. Saying that solar gardening "looks to be a wave of the future," she notes the Springs just four months ago was poised at the fore.

"And yet what we're doing is retracting our program," she says. "We are slowing down, rather than leading the field."

A new idea

Amster-Olszewski grew up in Miami and always admired his grandfather, Harvey Amster, who started a chain called Robin's Uniforms. At a time when nurses, pilots and others bought uniforms off the rack in Bloomingdale's or Macy's, his granddad started marketing directly to airlines and other businesses. "It wasn't a new product," Amster-Olszewski says. "It was just a new business model."

He attended Colorado College because under its block plan, he'd have the freedom to do special projects and study across disciplines. He earned a degree in international business and politics in 2009.

After graduation, he signed on as a management trainee at SunPower, a $3 billion solar company based in California. It's the firm that, with money from the American Recovery and Reinvestment Act of 2009, built the Air Force Academy's 6-megawatt solar array.

"Every quarter I'd be in a different business unit working for an executive," he says. One assignment landed him in Germany, where the idea of community solar had taken hold. Customers would purchase solar panels that would be installed in a nearby garden, and receive credits on their electric bills for the energy created by those panels.

"The simple premise was, a lot of people don't have good roof space, can't afford the upfront cost, or had shading, and so they couldn't benefit from renewable energy," he says. "So community solar was brought about in Germany as a way to allow anyone in the community to have the choice of using solar energy instead of fossil fuels by building these large solar farms dispersed throughout the community."

After nearly two years in the trainee program, Amster-Olszewski was ready to start his own company.

In early 2011, Amster-Olszewski was scoping out sites for solar gardens on the West Coast when he took a break to visit friends in the Springs. Colorado was on his radar, because the state General Assembly had passed legislation the year before to allow community solar, though the Public Utilities Commission hadn't yet implemented it.

While having lunch at Poor Richard's that March, he ran into Martin and former Councilman Richard Skorman, both of whom he'd met while at CC.

After hearing Amster-Olszewski talk about his plan, Martin asked, "Why don't you do this in Colorado Springs?" he recalls. "I said, 'Really?'" Martin pointed out the city's April election could bring a new panel of Council members who might support the idea. She was right.

'Bootstrapping'

That summer, Martin and newly elected Councilor Brandy Williams, a 30-something engineer, met with Springs Utilities CEO Jerry Forte, who answers to the Council when it acts as the Utilities Board. Amster-Olszewski flew in from California for the meeting.

"Jan said she wanted to have a solar garden up and running in Colorado Springs before the end of the year, before the state program went into effect and the projects were allowed to be built elsewhere in the state," he says. "We wanted to be first. That was really the message.

"By the end of the meeting, Jerry said, 'We can get this program up and running in three months.' So we shook on it. I went back to California, and flew straight back here and borrowed a car."

Though familiar with the Springs' conservative nature, Amster-Olszewski also saw "a great small market to get SunShare started. It's a beautiful place to live. There's a lot of supportive people here."

He persuaded a friend to join him, and they set up shop in an apartment near Uintah Gardens, on the west side. They borrowed a portable table and chairs, slept in sleeping bags on the floor, made customer contacts on their laptops and cell phones, and launched a business.

Amster-Olszewski hired several people — friends, college interns, and other adventurous business types — who agreed to work without pay until the project paid off. He also worked out similar deals to pay vendors.

(Disclosure: One such deal was for advertising in the Independent, with the bill not due until the following March. The next year, SunShare assisted with the Independent's Give! campaign, gifting solar panels to a randomly selected donor who gave to four or more participating nonprofits.)

On Sept. 27, 2011, City Council approved the pilot program. It called for qualified developers, chosen on a first-come, first-served basis, to build 2 megawatts of solar gardens in increments of 500 kilowatts each. The developer would profit from sale or lease of panels and an upfront payment (topping out at $2 per watt) from Utilities. Meanwhile, customers would receive a 9-cent-per-kilowatt-hour credit from Utilities and see their electric bills reduced by up to $10 per month, on average. They could expect to recover their investment in less than 10 years, then enjoy the bill credit for as long as the solar garden produced power and was connected to Utilities' grid.

With that, SunShare kicked it into gear. Skorman helped the company reach hundreds of people through e-mail. He also hosted informational meetings, such as one at the Thirsty Parrot that October. It drew at least 100 people and gave the young entrepreneur the stage to hawk panels at a minimum investment of $1,100.

Other companies were also making pitches, but Amster-Olszewski was selling panels like hotcakes. SunShare appeared determined to by itself defy a 2011 Brookings Institution study that ranked the Springs next-to-last out of 100 cities for clean energy jobs, and at the bottom in other clean-energy measures. Much like in a political campaign, SunShare supporters held rallies, gave endorsements, sent e-mail blasts, even put up yard signs.

"We're one of the worst places for clean technology in the country," he said that fall. "And now we're going to be first [with this program]. It's cool."

On Nov. 29, 2011, Gov. John Hickenlooper showed up at Venetucci Farm, along with local dignitaries, to help install the first of 2,500 panels on Amster-Olszewski's initial project. Within a month, the sold-out project was finished; a month later it was connected to Utilities' grid.

"We actually sold out that project to 300 customers in 10 weeks," he says. "That was more customers participating in solar than had signed up for Springs Utilities' rooftop [solar] program in the last 10 years combined."

And finally, his employees — three full-timers and five working part-time — got their first paychecks.

While Amster-Olszewski was building that project and another two miles east (energized in late 2012), several of his friends in California were trying to break into the solar business, too. "They've been very successful raising venture capital," he says. "They have fancy offices in downtown San Francisco, with waiting rooms and a receptionist at the front desk."

And then with a slight grin, he adds, "And no sales, and no business opportunity."

He continues, "What we did was bootstrapping. You sleep on the floor. Everybody works in your house. You don't go out and raise a bunch of money from wealthy people. Everybody on the team gets paid if the project happens, if it succeeds. This community as a whole got behind us and allowed us to succeed."

Of course, the scope of their success was still relatively modest, overall: Colorado Springs Utilities has a total generating capacity of about 1,100 megawatts, meaning its 2-megawatt pilot comprised less than two-tenths of 1 percent of total capacity. (Each megawatt can power 750 homes, according to the Lawrence Berkeley National Laboratory.)

So in late 2012, Amster-Olszewski turned attention to convincing Council to expand the program.

Here today ...

Solar gardens today don't make financial sense for customers and developers without a subsidy, because the technology is so expensive. Developers receive federal and local money designed to encourage solar development; they make money from panel sales if they can build gardens for less than their customers pay. Customers, too, can only recoup enough of their up-front expenses by getting credits on their bills.

On April 9, City Council considered a 10-megawatt community solar program wherein Utilities would pay solar customers 16 cents per kilowatt hour generated this year, 12 cents next year and 10 cents in 2015. (Utilities would be selling that solar power to residential customers for about 5.44 cents per kilowatt hour.) Utilities estimated the program's subsidy at $22 million over 20 years, which equates to about $3 per residential ratepayer annually.

The program had been discussed at numerous public meetings and was drafted with the help of an industry group that included representatives from several solar companies. In this meeting, six outgoing Councilors would make a vote one of their last official acts. Most of their successors sat in the audience.

Several community members spoke, among them Dan Malinaric with Atmel. He reminded Council that the chip manufacturer is the city's largest water and power consumer and employs 1,100 people here with a $150 million annual payroll. The solar subsidies, he said, would hit his company for about $75,000 a year, or $1.5 million over 20 years. And that kind of money is worrisome, he said, because the company is "in a battle ... to reduce costs to be competitive with Southeast Asian contract manufacturing companies."

Malinaric also said that large manufacturers locally aren't willing to pay extra to foster solar development. "Those who want it should pay for it," he said. "Does this make us more competitive in our business climate, or less? I say less."

Malinaric didn't mention that under a separate city program, Atmel had already received its own subsidy at taxpayer expense: Last year, it received a $339,000 tax break when Council approved rebating half Atmel's personal property tax on equipment from 2011 to 2015, according to a Gazette report.

Another speaker was Jim Hartman with Clean Energy Collective of Carbondale, a SunShare competitor that had built a solar garden, but subscribed less than one-fifth of it, under the pilot program. He argued that his company elsewhere "has been successful with less than 16 cents [as a per-kilowatt-hour payment]. We feel a more appropriate rate in 2013 would be 13 cents," which would save ratepayers $2.7 million over 20 years.

City Auditor Denny Nester also took up the mantle of protecting the ratepayer, showing that subsidies could go up to $33 million — about another $1.70 per year, per ratepayer — if electric rates increased sharply over the next 20 years.

Confident in their previous research, six Councilors voted for the program. The three who voted against — Tim Leigh, Angela Dougan and Lisa Czelatdko — were all on their way out the door.

... gone tomorrow

But over the next two weeks, the new Councilors asserted their authority. First, they killed a previously approved study to examine selling Utilities' power division. Then they placed the solar-gardens program on the agenda for their April 23 formal meeting.

Concerned, Amster-Olszewski sent an April 20 letter to Council President Keith King. He argued, among other things, that Utilities' $22 million figure was inaccurate, because it failed to acknowledge that some of the credit the city pays to solar customers covers the actual cost of the power. Given that, the true subsidy was about $11.3 million. (At that level, a residential customer's subsidy would be about $1.45 per year, while large industrial customers would pay roughly $5,300, based on an extrapolation from city auditor figures.)

On April 23, King opened discussion, and Utilities official John Romero quickly proceeded to outline "options to reduce the cost of solar while supporting solar in the community," as King had requested. Romero introduced the idea of killing the up-front per-watt incentive payment, and lowering the per kilowatt hour payment from 16 cents to 13 cents, as suggested by Hartman on April 9.

This confused newly elected Councilor Jill Gaebler, who said, "I was at the last meeting and I was under the understanding they had discussed those options for over a year. They worked through all those options and now you come with other options that are supposed to be better. I just don't understand why suddenly there are new options."

Martin made clear the approved program had been recommended by industry representatives. But Romero countered, "We agree 16 cents would be viable. We didn't know someone would come forward with 13 cents."

After some back and forth about specific provisions of the program, Utilities CEO Jerry Forte weighed in.

"It needs to be said that we support renewable energy," he said. "We support solar and wind. We support some subsidy until renewable energy can stand on its own two feet. How much and at what cost is a policy question.

"I personally support the efforts of the last board. It was a public process. So I have to say I support that process for arriving at where we are at today."

But then he told his new bosses, "Do I like the results? No, I think we can do better."

After that, 23 people spoke in favor of the program that had been approved April 9, and 11 spoke against. When Amster-Olszewski asked to give a presentation, it took a special vote to allow him more than the normal three minutes allotted during the public comment period.

It wasn't enough. Council killed the April 9 program 5-4, on the votes of King, Helen Collins, Joel Miller, Andy Pico and incumbent Merv Bennett, who switched his vote from two weeks earlier.

Bennett writes in an email that he'd become concerned it was too costly. He also wanted to see a competitive developer selection process, rather than a first-come, first-serve approach.

"I changed my mind to allow for a better, more financially viable process with the full engagement of the new council," he writes.

Pico sums up the subsidy argument as follows: "The concept that one person can purchase, lease or subscribe to a solar panel and force their neighbors to pay for it is not a good, fair, equitable or just business practice."

Taking a broader view, Amster-Olszewski says if someone wants to talk about subsidies, they should observe how China is cornering the world market by providing land and technology while guaranteeing markets for solar developers. "Now they're building the cheapest solar panels in the world and putting all the American and European companies out of business, because American and European governments are getting shy on subsidies just as solar is exploding."

Amster-Olszewski also notes that some on Council didn't take into account the program's intangible benefits, such as jobs and job training. Based on a study of the local impact of renewable energy by University of Colorado at Colorado Springs economist Fred Crowley, the 10-megawatt solar garden program would have added $7.9 million to the economy through wages, taxes and capital in a single year.

Bright future

The Department of Energy's Annual Energy Outlook for 2013 forecasts that solar generation capacity will increase by 1,000 percent from 2011 to 2040, leading all renewables.

GTM Research and the Solar Energy Industries Association reported in June that solar had its best first quarter ever this year by adding 723 megawatts across the country, including utility-sized systems, which accounted for 48 percent of new electric capacity. According to SEIA's president, there's enough solar to power more than 1.3 million American households.

Colorado has moved from 12th in 2012 to eighth in 2013 in the amount of solar generation. And helping lead the way is Xcel Energy. The Minneapolis-based utility has 245 megawatts of solar power in Colorado and proposes to add 30.5 megawatts in 2014.

It's in the midst of an 18-megawatt community solar garden program started last year, and plans to add 6.5 megawatts of community solar gardens in 2014, according to a July 24 filing with the Public Utilities Commission.

Xcel spokesman Mark Stutz won't release terms of the solar garden program, citing proprietary information, but says all Xcel customers are assessed 2 percent on their bills to fund renewable energy. Under state law enacted in 2010, investor-owned utilities must produce 30 percent of their power from renewables by 2020. Stutz says the company already has reached 20 percent.

(Municipally owned utilities must produce 10 percent of their power from renewables by 2020. According to Colorado Springs Utilities, the city is aiming for 20 percent, but currently stands at 10 percent, most from hydro plants. Forecasts show Utilities aiming to bolster its holdings largely through the purchase of Renewable Energy Certificates from other producers, rather than production of its own renewable energy.)

Competing among 30 developers, SunShare in June captured 2.5 megawatts of Xcel's 4.5-megawatt small gardens program, Amster-Olszewski says. He adds that SunShare already has identified 20 acres of land in Arapahoe and Adams counties for its gardens.

"Now, when I go to California and speak to investors," he says, "it's one thing to say you're working with a medium-sized municipal utility in a small town in Colorado. It's another to say you're working with one of the biggest utilities in the country [Xcel]....

"Having a delay in the program in Colorado Springs forced us into a much bigger market with a stronger story to tell."

SunShare now is focused on subscribing and building the projects for Xcel, which he values at $14 million. The company also is laying the groundwork to participate in California's 600-megawatt solar program, currently under consideration by the legislature. While California's higher electric costs make it hard to compare apples-to-apples, this program shares similarities with the Springs' 2-megawatt pilot: for instance, its 18-month timeframe for allocation to developers, and its giving customers a credit equal to the full value of the energy delivered to the grid. And California's is also labeled a "pilot," which suggests a larger program would follow.

Despite the growth, no one knows what will happen to the industry when the federal Investment Tax Credit declines from 30 percent to 10 percent in 2017 for commercial and third-party-owned systems, like SunShare's, and drops to zero for directly owned residential systems, such as rooftop systems.

When the wind production tax credits came due to expire at the end of 2012, the American Wind Energy Association predicted layoffs of up to 37,000 people, and Vestas, a Danish company with several factories in Colorado, did lay off workers. Within two weeks of the tax credits being restored in January, Vestas began rehiring.

The problem, according to Danny Kennedy, is that renewables, including solar, are being forced to figure out how to survive without any subsidies, unlike fossil fuels that have had tax credits and other benefits for 100 years.

"When we put money into new businesses, technology development, commercialization of new products, the payback timelines are going to exist," says Kennedy, executive vice president and co-founder of Sungevity, Inc., a home solar company based on Oakland, Calif., and author of the 2012 release, Rooftop Revolution, How Solar Power Can Save Our Economy — and Our Planet — From Dirty Energy. "But if they change the goalposts in the middle of that, it's hard to build that momentum."

'An amazing thing'

Amster-Olszewski has seen the posts moving with his own eyes, but Colorado Springs aside, he still feels like he's on the brink of a revolution.

A fundamental change is underway, he says, whereby power providers create and sell energy to utility companies, who then distribute it. He likens the shift to the overhaul of the telecommunications industry that ignited innovation leading to development and proliferation of mobile devices.

And as SunShare enters its third year, with eight full-time employees with three more to be added soon, he says investors want to loan it money: "It's an amazing thing."

Solar gardens, he says, weren't even on the radar two years ago. Now, "It's a hot topic in Silicon Valley. Everybody is talking about it. The market itself is huge. Once the California program is allocated, that's $2 billion in projects. Texas, New York, Florida, Vermont, Massachusetts, Delaware, all those states have either passed or are working on legislation to do the same thing."

So his attention — as well as the potential for dozens of new employees, millions in capital, and tens or hundreds of thousands of dollars in taxes — will be focused elsewhere. Still, it's not easy to cut the apron strings from his incubator.

"We don't plan on closing our office here," he says. "The community has been very supportive of us, and it still looks like there will be a program here."

Indeed, the April 23 vote called for enacting a new tariff for community solar by Aug. 1 or soon thereafter. And Amster-Olszewski credits several Council members for digging into the issue. "Andy [Pico] spent a lot of time. He's very interested in learning about it," he says, noting he's also met with Miller, Knight, Martin and Gaebler in the last three months.

But it remains to be seen exactly what kind of program, if any, Council will approve this year, and whether it will draw interest.

What's on the table right now is a proposal to authorize 2 megawatts; lower the customer payment to about 12.44 cents (with some variability depending upon electric rates); and select developers using an RFP process.

Tim Braun with Clean Energy Collective supports it. "The new program appears viable in many regards," he says via e-mail. "We do anticipate bidding and believe our extensive experience will make us an attractive partner to the City and CSU."

But Dan Weinman, with PPC Solar of Taos, N.M., says he's not sure the scaled-back version works financially for his company. "We go to our financial backers and run it through their analysis and see if it's something they will fund," he says.

Sam Masias of Colorado Springs has worked in the solar industry for years and has pushed Utilities to support solar from the outset of its rooftop rebate program in 2006. So when the reversal came April 23, he was disappointed.

"On the one hand we're still going to have [community solar gardens]; on the other hand CSU is getting more deeply involved in picking a winner rather than the market place," he writes in an email. "I hate to lose a primary employer (SunShare), especially one that is green and entrepreneurial."

That echoes Jan Martin's regret.

"He had an opportunity to start his company in California, and we convinced him to come here," she says of Amster-Olszewski. "Yet, what's the first thing we do? We cut back the program. From a young professional perspective, it was a real slap in the face to the commitment the community will make to young entrepreneurs.

"He's just a great example of why we want to nurture our college graduates coming out of our colleges and universities. He's so bright. He knew Colorado Springs. He loved Colorado Springs. It was just a matter of someone taking him by the hand and saying, 'Let's make this happen.'

"These decisions on renewable energy," she adds, "it's really not for me and my generation. It's for the next generation. It's exciting, and I wish Colorado Springs could get excited with him. But our conservative nature continues to hold us back."

Martin hasn't lost hope, stressing the solar garden program isn't dead yet. She'd support even a one-year extension. But on the other side of the debate, King and others sound inclined to delay the solar program further.

"This is emerging technology," King says, "and it's not advantageous to rush into this. It's something [wherein] they're figuring how to cut the costs all the time."

Amster-Olszewski will be there on Tuesday, hearing both sides make their pleas again. But these days, he often talks about his initial headquarters location as though it's mostly in his rear-view mirror.

"I think there's something unique that we did here," he says. "I was surprised about what happened in Colorado Springs. If you can communicate to people here, you can communicate with people anywhere," he says. "When I talk to people in other places, the argument you have to painstakingly make here [for solar power], they already get it."

zubeck@csindy.com

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