Finance Help For Fuel Cell Plant

July 12, 2002
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MUSKEGON — Backers of efforts to develop a high-tech business park along Muskegon Lake hope to land $6 million from the state to help pay for a fuel cell-powered electric generating plant that will power the project.

The energy-efficiency grant from the Michigan Public Service Commission would help finance construction of a $20 million to $25 million fuel-cell power plant, as well as solar power and battery power storage portions of an alternative-energy research center, said David Mielke, dean of Grand Valley State University’s Seidman School of Business, which is a partner in the Muskegon SmartZone.

The grant request is a major part of a financing package that Mielke is working to arrange for the project.

“It would go a long way in building the power center,” Mielke said. “I’d say it’s a key component to the success of the full plan. If it comes through, we’ll pretty well be set.”

Siemens Corp., the U.S. arm of German-based conglomerate Siemens AG, has agreed to partner with Grand Valley State to develop an “Energy Center of Excellence” in Muskegon that will include an alternative-energy research center, a business incubator for alternative energy ventures, and a fuel-cell power station.

The MPSC is preparing to award up to $12 million in grants for the development, improvement or application of energy-efficient technologies such as fuel cells and wind and solar energy, as well as expand commercial markets for their use.

Decisions on the grant awards could come next month, according to MPSC Project Manager Margaret VanHaften. The Muskegon SmartZone application is among 12 finalists now under review that are seeking a collective $20 million in energy-efficiency grants, she said.

If the Muskegon SmartZone does not win one of the MPSC grants, GVSU will have to solicit support for the project elsewhere, or consider scaling it back, an option Mielke calls a “last resort.”

“If this doesn’t come through, we’ll aggressively pursue other financing,” he said.

GVSU hopes to break ground on the fuel cell plant in September and have the first phase operating in 2003.

Successfully securing the MPSC funding could make up for unsuccessful efforts to extend to Muskegon the same tax benefits written into the state’s proposed NextEnergy initiative.

NextEnergy is Gov. John Engler’s proposal to promote automotive fuel cell and alternative energy research and development in Michigan. Engler proposes to base NextEnergy out of a 700-acre, tax-free business park on state-owned land in York Township, near Ann Arbor, for alternative energy companies.

Many of the tax benefits written into the legislation are site-specific for companies locating in the NextEnergy Zone proposed near Ann Arbor, although some are statewide.

On a statewide basis, the NextEnergy proposal would exempt from the state sales and use taxes through 2012 the sale of stationary and vehicle devices using alternative energy technology. Businesses whose primary function is the research, development and production of alternative energy technologies and products also would receive an exemption from the state Single Business Tax.

Exclusive to the NextEnergy Zone is an additional refundable Single Business Tax credit on the personal income taxes generated by the payroll of companies located in the business park, as well as a 12-year exemption from the personal property tax.

Local lawmakers had hoped to amend legislation for NextEnergy to extend the same tax benefits for NextEnergy Zone to cover the 34-acre Muskegon Lakefront SmartZone, which will focus on accommodating companies involved in the research, development and commercialization of stationary fuel cells that are used in buildings.

The inability to include the Muskegon SmartZone in either the state House or Senate versions of the NextEnergy legislation is disappointing, although Mielke does not consider it a setback.

“It’s always nice to see some added value,” Mielke said of the NextEnergy tax benefits. “My feeling right along is, in a sense, that we can do without it. We don’t need it to be successful in our development.”

Backers of the Muskegon Lakefront SmartZone say they have a strong case for additional financial support from the state.

The Muskegon SmartZone already has a major corporate partner in Siemens Corp. and other companies that have been formed in the alternative-energy field. The Muskegon initiative can also help further Engler’s vision of making Michigan the global center of fuel cell research, development and commercialization.

“We’re already hitting home runs here,” said Nick Pietrangelo of Harding Energy Inc. in Norton Shores, a maker of nickel hydride batteries that can store the electricity generated by fuel cells, solar panels and other energy sources.

The vision of the SmartZone’s backers is to generate a new economic sector in West Michigan that can produce and supply components needed by the emerging alternative-energy industry.

“What we have here is a workable model,” said Jim Wolter, director of energy research for GVSU on the Muskegon Lakeshore SmartZone. “Hopes and dreams are what you’re looking at in NextEnergy. There’s a reality here in West Michigan.”      

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