This fall, students in Nevada and Sigourney will board hybrid diesel-electric school buses that could use up to 50 percent less fossil fuels than conventional buses.

The pilot project, a collaborative effort of the Iowa Energy Center with several other agencies, is an example of the type of renewable energy and conservation initiatives that could receive funding through the proposed $100 million Iowa Power Fund. At the same time, the Power Fund is viewed as a new resource to help Iowa’s universities and the private sector commercialize new technologies   to develop Iowa’s emerging bio-energy industries.

With just two weeks remaining in the regular session, legislators are still wrestling with the scope of the measure that would create the Power Fund and a new Office of Energy Independence. The initiative, originally proposed by Gov. Chet Culver during the gubernatorial campaign, seeks to make Iowa an energy-independent state as well as furthering the development of bio-energy   companies.

“We really want to create a bill where everyone is involved on a bipartisan basis, because everyone in the Legislature has a stake in this issue,” said Sen. Bill Dotzler, a Waterloo Democrat who chairs the Economic Development Subcommittee of the Senate Appropriations Committee. The subcommittee last week took up Senate Study Bill 1348; that bill and House Study Bill 305 appear to be the versions of Power Fund legislation that will move forward.

Some legislators fear the broad measure will overwhelm the 18-member board that would be appointed to administer it.

“My overriding concern is just how much we are asking of this Power Fund and the people involved in it,” Sen. Jeff Angelo, a Republican from Creston, told other subcommittee members. “For instance, how much should the Power Fund board be involved in educating the public [about energy conservation]? That just seems like a massive task in addition to everything else they’re doing.”

Angelo said the legislation should require the appointed board to spend the next year formulating its duties and that no funding decisions should be made until the Legislature reconvenes next year.

Dotzler said legislators face a balancing act in determining how broad or prescriptive the legislation should be, but that it’s important to launch the fund now.

In contrast with the existing Grow Iowa Values Fund, the Iowa Power Fund would provide funding for research and early-stage technology concepts, such as new methods of fermentation for making ethanol, he said. Such a start-up could later qualify for Values Fund loans or grants, said Dotzler, who served on the Values Fund board when it was first formed in 2003.

Robert C. Brown, director of the Office of Biorenewables Programs at Iowa State University, said he believes the Power Fund’s overarching goal “should be to ensure Iowa’s leadership in both biofuels production and as a technology provider in the world.”

“The fund should be treated as a war chest to respond rapidly to opportunities that will help us meet this goal,” he said. “Providing leverage for access to federal and industrial funds should be a priority, whether it’s research or commercialization efforts.”

Brown said his biggest concern is that the legislation will be made too prescriptive, “leaving the (board) with nothing to do but dole (money) out according to a formula established by the Legislature and with no incentive for the beneficiaries to leverage it to greater purpose.”

Earlier versions of the bill had earmarked a total of $5 million annually to either specific organizations, such as $1 million to the Iowa Energy Center’s revolving loan program and $500,000 for additional research grants, or for specific types of projects, such as $1 million that had been allocated for grants to nonprofit organizations and local governments for energy-savings innovation grants.

Floyd Barwig, director of the Iowa Energy Center, said such earmarks would be valuable for furthering the research its loan and grants program enables. On a broader scale, however, awards made by the Power Fund board to any energy efficiency projects will help those projects leverage other available federal or state funding, he said.

“I see it as an opportunity for dealing with renewable research, particularly with commercialization of research, in a more robust fashion,” Barwig said. “I see it as complementary. We as an energy center aren’t authorized to give grants to any private company, whereas the Power Fund could. So it could be a tool to move research out of the laboratory and into the real world.”

Among its current projects, the Energy Center is working with a national consortium in which two Iowa school districts are each purchasing a hybrid school bus. The buses run on diesel fuel, but also use a rechargeable electric motor that can be plugged in each night.

“The expectation is that they’ll be able to go about 50 miles in the morning before the engine even turns over,” Barwig said. “And at current prices in Iowa, electricity is a cheaper fuel source than diesel. And they’ll be able to sit at a school and idle on the batteries, so you won’t have all the emissions when they’re sitting at a school. So we’re very excited to see this get on the road.”

A number of other states are also considering programs to jumpstart private investments in energy technology companies, said Marty Murphy, manager of enterprise development programs with the National Renewable Energy Laboratory in Golden, Colo. California, for instance, has established a $30 million fund targeting earlier stage investments, he said.

Management talent will be critical to those start-up companies’ success, even more so than the technology they possess, he said.

Final versions of the Power Fund bills are expected to be hammered out by House and Senate subcommittees this week and reach the floor for debate by early next week.

Meanwhile, a supplemental appropriation for $250,000 to fund the Office of Energy Independence has already passed both the Senate and the House, according to Doug O’Brien, an adviser on renewable energy with the governor’s office. Once that bill is signed by the governor, those funds will be immediately available, O’Brien said.

The governor’s office is also in the process of sorting through potential nominees for appointments by Culver to the Power Fund board, “but there’s no short list,” O’Brien said.