Today in New West news: 480-acre solar farm planned for outside Billings, Montana; Denver’s SendGrid, and new report outlines Utah’s big tax and revenue yields thanks to tourism.
According to the Billings Gazette, a new solar farm, to be built by MT Sun, proposed for northwest Billings, is set to go online by the end of 2018. When finished, it will be the largest solar project in the state of Montana, providing 80 megawatts of electricity—enough for 14,400 homes. Further, it would employ 190 people during construction, cost $90 to $110 million to build and generate $1.2 to $1.6 million in property taxes in its first year alone. Further, since the project is on public land (near a substation that used to service the Corrette coal plant in Billings), money from the lease would go toward Montana’s public school system.
In spite of these developments, however, Montana solar faces a rocky road ahead, if the current signals from the Legislature are any indication. From the Gazette:
In Montana, regulated utilities are required to buy power from QFs in order to promote renewable energy development. The Montana Public Service Commission approves the price for which the power is bought, the length of the contract, and a project size under which utilities like NorthWestern Energy must offer a contract with terms set by the state.
The state is compelled to promote renewable energy by a 48-year-old federal law, the Public Utilities Regulatory Policies Act, or PURPA.
PURPA hasn’t fared well in Montana in the last year. In June 2016, the PSC illegally suspended PURPA at the request of NorthWestern Energy after the utility asserted that it was being inundated with small solar energy projects, roughly 100 of them, attracted to Montana by excessively favorable QF prices and contracts, which were 25 years long.
The Federal government in December ruled that Montana was wrong to abandon PURPA. The PSC is now trying to set a less favorable price for renewables, one that won’t attract so many projects.
The Legislature is now changing the rules for QF contracts, limiting the length to no more than 20 years and setting no minimum contract lengths. Renewable energy companies in general and particularly solar energy companies say that the Legislature, by not setting a minimum contract length, is opening the door for contracts that are too short. The banking lobby has testified that it might not finance small renewable energy projects in the future if the Legislature’s changes meant contracts were so short that renewable energy companies couldn’t pay off loans.
Republican Sen. Tom Richmond of Billings is sponsoring Senate Bill 102, which proposes changes to QF contracts. He initially asked that the contract lengths be limited to five years but changed the bill after the banking lobby objected.
The Gazette notes that NorthWestern Energy supports SB 102.
Down in Colorado, according to the Denver Post, SendGrid, a Denver-based e-mail company is making waves as one of the cities hottest tech companies. Indeed, the company is reportedly mulling an IPO—according to CEO Sameer Dholakia, who saw his company go from a three-person startup to a giant that employs nearly 350 and fields some 35 billion e-mails a month. From the Post:
“My wife had a great line, ‘You seem to be struggling with this decision. Tell me when you want me to tell you the answer.’ She’s much smarter than I am,” said Dholakia, in an interview earlier this month with The Denver Post. “She said, ‘You’ve fallen in love with this company. You’re going to do this and we’re going to make it work.’”
He joined. A few months later, SendGrid opened a Silicon Valley office.
If you’re not familiar with SendGrid, you’ve almost certainly received an e-mail from them, especially if you use eBay, Uber or Yelp. Most are mundane — an Uber receipt, a reset eBay password, an Airbnb welcome note. But when the company started, pretty much no one focused on these simple software-driven transaction messages. SendGrid quickly dominated.
Ryan McIntyre, a partner at Boulder venture capital firm Foundry Group, mentored the co-founders as they tweaked the company during the Techstars accelerator in 2009. He became an investor because, he said, “while in hindsight the idea seems obvious, there really were no other companies doing exactly what SendGrid was doing. They pioneered the transactional e-mail market.”
The company figured out how to make money early on by charging a transaction fee; as clients grew and sent out more messages, SendGrid grew. SendGrid became profitable in the second half of 2016 and is on track to hit $100 million in revenues this year. In November, existing investors handed the company another $33 million to fund further growth. Business could not be better.
But a big reason Dholakia is happy is that he fits right in with SendGrid’s culture. After co-founders Isaac Saldana, Tim Jenkins and Jose Lopez graduated from Techstars, the team created the company’s four H’s: honest, hungry, humble and happy.
“We screen against them, we recruit against them, we promote against them, we fire against them,” Dholakia said. “You’ll hear us refer to them and use them in meetings. ‘David, honest H, I’ve got to give you feedback on blank.’ Or David will say, ‘Sameer, we’re behind on this, we need to see some hungry H.’ You’ll hear it in the common vocabulary of the company.”
He joins every new orientation class and spends a good deal of time talking about culture. It’s not for everyone, he admits, including some of the best engineers out there. Some have called it cult-like. He’s OK with that.
Finally, over in Utah, according to Utah Business, a new report from the Utah Office of Tourism has cemented tourism’s key role in the Beehive State’s economy. Indeed, per the report, travelers spent $8.17 billion in 2015, which contributed $1.15 billion in state and local taxes. From Utah Business:
“State sales tax revenue generated by travelers helps fund a variety of Utah priorities, including education, public safety, health and human services, road construction and maintenance,” said Governor Gary R. Herbert. “Tourism significantly bolsters the economy and strengthens our tax base.”
Income taxes from tourism related jobs contributed more than $100 million to Utah schools in 2015, according to the Kem C. Gardner Policy Institute. Motor fuel tax revenue (gas taxes), from travelers contributed more than $100 million to Utah’s transportation and infrastructure. An additional $200 million in state sales tax revenue went to Utah’s General Fund where it was used to pay for essential services in Utah including health and human services, corrections, courts and the justice system, public safety and economic development. 2015 tax contributions from tourists amount to the equivalent of each Utah household paying an additional $1,235 into the state.
“Utah is establishing our reputation as a recreation destination for tourists from all over the world,” said Vicki Varela, managing director of Tourism, Film and Global Branding. “A decade ago, people credited our red-rock wonders to Arizona and the Greatest Snow on Earth to Colorado. Today, telling people you’re from Utah stirs stories of amazing vacation memories.”