Mid-Michigan a valley of giant alternative energy potential...

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Alternative energy could power an economic renaissance in a state that desperately needs jobs, and mid-Michigan could play a key role in that future.

"We have a significant opportunity to create new jobs throughout the alternative-energy production chain," said Steve Pueppke, director of the Office of Biobased Technologies at Michigan State University.

Last month, the U.S. Department of Energy announced Troy-based Delphi Corp. will lead an $8 million project to develop advanced propulsion inverters for hybrid vehicles. The inverters regulate the flow of electricity to hybrid components.

Dow Corning Corp. -- it has offices in Midland and a majority share in Thomas Township's Hemlock Semiconductor, a global leader in solar energy technology -- is part of the inverter development project.

"Michigan is playing a huge role" in the development of alternative energies for the auto industry, said Don Walkowicz, executive director of USCAR, an automotive technology consortium involving Detroit automakers and federal government.

Dow Corning's Compound Semiconductor Solutions is a key member of the Delphi-led team that will work to create a next generation propulsion inverter for hybrid vehicles.

It will contribute unique semiconductor technology for a high-temperature inverter for advanced hybrid vehicles.

The company received a three-year, $2.4 million contract for the work. The new technology will lower the cost of inverter components and improve the performance of inverters, which control power generation and output in hybrid vehicles during acceleration and deceleration.

The successful development and supply of silicon carbide wafers will position Dow Corning as a leader in the industry.

The goal is to reduce the cost and size of inverters for electric propulsion systems by 50 percent or more.

Along with Dow Corning, mid-Michigan is in the alternative energy fray with wind turbines in the Thumb and ethanol plants in Caro and Ithaca.

"It will be extremely difficult because we're competing with 49 other states," said Brett Smith from the Center for Automotive Research in Ann Arbor. "Differentiating ourselves from the competition will be very important."

That work has accelerated in the wake of gasoline now selling for more than $4 a gallon, federal regulations that will boost fuel economy for cars and trucks to 35 miles per gallon by 2020 and worries about climate change caused, in part, by vehicle exhaust.

Deriving energy from wind, sun and biofuels such as ethanol -- and the vehicles it powers -- could become an industry rivaling the Internet-driven tech boom of the 1990s, some say.

"I think there's something to this," said Don Grimes, a University of Michigan economist. "This may be the technology that will have an impact similar to the computer industry over the next 10 years."

As an example, Grimes points to Rochester Hills-based Energy Conversion Devices Inc., which for decades lost money developing solar roof panels, nickel metal hydride batteries and other alternative-energy technologies.

Today ECD has a stock market value of $2.6 billion, almost half of General Motors Corp.'s $5.7 billion valuation.

The company, through its participation in a joint venture called Cobasys, is working on development of lithium-ion batteries to power plug-in hybrid vehicles that GM is developing.

There are about 300 companies in Michigan employing 50,000 workers involved in some aspect of alternative energy, according to an estimate by the Michigan Economic Development Corp., the state's business-attraction and marketing arm.

And there are almost daily announcements about alternative-energy companies or research efforts starting in Michigan.

Massachusetts-based Mascoma Corp. said June 27 that it will build a $250 million plant to turn wood chips into ethanol, the first operation of its kind in the nation.

The plant, which received a $15 million grant from the state's new Centers of Energy Excellence Fund, is expected to start production in 2012 and could create as many as 700 direct and spin-off jobs.

Mascoma's partners in the project are GM, Marathon Oil Corp. and Marquette-based JM Longyear.

"Michigan has a terrific forestry resource," said Mascoma Chief Executive Officer Bruce Jamerson. "For me, a big plus is that we have outstanding partners here."

Troy-based Compact Power Inc., and Milwaukee-based Johnson Controls Inc., which has an automotive unit based in Michigan, also have won contracts from GM to develop lithium-ion batteries.

Auto parts makers and the federal government last month formed a Michigan-based consortium, USAutoPARTs, which will research technologies, such as lightweight materials and hybrid components. The consortium plans to train workers for the alternative-energy industry.

A May study by East Lansing-based Anderson Economic Group found the state's University Research Consortium received $79.5 million in alternative energy research grants last year, only California received more.

U-M, MSU and Wayne State University are members of the consortium.

Smith says one of Michigan's biggest challenges will be overcoming a perception, forged by the domestic auto industry's historic hostility toward federal fuel economy and emissions standards, that it is unfriendly toward "green" technology.

"There is a perception that Michigan is not a clean state," Smith said. "People don't look to Michigan as a leader in these technologies."

Competing states aren't standing still. California, considered a leader in the promotion of alternative energy, announced Monday it landed a $300 million Tesla Motors electric-car assembly plant.

California waives the state sales tax on equipment purchases to build zero-emission vehicles, an incentive that will save Tesla a reported $9 million.

Hours after Mascoma's announcement, the Michigan Legislature approved the $18.75 million Choose Michigan fund that would offer loans and grants to alternative energy companies and other businesses that locate here.

Gary Krause, director of special projects at the Michigan Economic Development Corp., says developing an alternative-energy industry gives Michigan a chance to boost its badly bruised economic self-image.

"Despite all the doom and gloom, there is some hope here," he said. "But it's going to take bold action by everyone involved."

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