House subcommittee reviews federal renewable energy development

The House Subcommittee on Oversight and Investigations held a July 14 hearing on the status of Ivanpah and other federal loan-guaranteed solar energy projects on U.S. Bureau of Land Management (BLM) lands.

“It seems that in spite of improved technologies, billions of dollars-worth of federal tax credits, and government mandates that force utilities into solar power purchase agreements, the cost and efficiency of solar energy is still not competitive with hydro, nuclear, coal and natural gas,” said Subcommittee Chairman Louie Gohmert, R-Texas. “And Americans repeatedly pay the price in a system where the government chooses winners and losers.”

The $2.2 billion Ivanpah Solar Electric Generating System facility on the California-Nevada state line was made possible by a $1.6 billion federal loan guarantee, said a July 14 statement from the panel’s GOP majority. Even though this facility is owned by companies worth hundreds of billions — Google, NRG Energy and Brightsource Energy — the project was almost fully financed by federal subsidies, the GOP said.

“Ivanpah is an example of big-government programs benefitting big and influential economic actors for preferred projects,” said David Kreutzer of the Heritage Foundation.

Some panel members discussed their frustration with the Administration’s apparent double standard between renewable energy facilities and other economic activities on federal lands. For an expensive source of electricity generation, solar projects enjoy preferential treatment in leasing, financing and law enforcement, said the GOP statement.

“[T]he problem with the Administration’s actions with regard to solar leasing is that contrary to claims that the Administration has an ‘all-of-the-above’ policy, the Administration has been antagonistic towards natural gas, oil and coal production on federal lands,” said Daniel Simmons, Vice President for Policy at the Institute for Energy Research.

BLM offers update on renewable energy development progress

BLM representative Mike Nedd reported in his prepared testimony: “Facilitating the responsible development of renewable energy resources on public lands is a cornerstone of the Administration’s energy strategy. Prior to 2009, wind and geothermal energy projects approved on public lands had the capacity to generate approximately 2,500 megawatts (MWs) of power, and there was no solar energy development.

“Since 2009, the BLM has approved 59 utility-scale renewable energy projects, including 35 utility-scale solar facilities, 11 wind farms, and 13 geothermal plants. When fully constructed, these projects will provide more than 15,000 MWs of power, enough electricity to power as many as 5.1 million homes, and will provide over 24,000 construction and operations jobs. These approvals helped the BLM successfully meet the goal of the Energy Policy Act of 2005 to authorize at least 10,000 MWs of renewable energy on public lands by 2015. Indeed, the BLM met that goal a full three years ahead of schedule. Today, the BLM continues to work toward the President’s goal of permitting 20,000 MWs of renewable energy on public lands by 2020.

“Over the next two years, the BLM expects to process five renewable energy projects (four solar and one geothermal), providing an additional 1,002 MWs of generating capacity. These projects further the BLM’s contribution to a diverse energy mix nationally.

“A central component of the BLM’s renewable energy program is the Bureau’s focus on improving the way it sites and reviews renewable energy projects. A key part of this effort is the Western Solar Plan, which was finalized in October 2012. This comprehensive plan provides a blueprint for utility-scale solar energy development on public lands in Arizona, California, Colorado, Nevada, New Mexico and Utah. It established solar energy zones (SEZs), which are areas of high energy generation potential, low resource conflicts, and access to existing or planned transmission. The plan also identified potential incentives for development within those zones (e.g., reduced project-specific review times), and established a process that the BLM could use to identify and establish additional zones in the future.

“To date, the BLM has established 19 SEZs. If fully built out, projects in these SEZs could produce as much as 27,000 MWs of solar energy, or enough to power approximately 8 million homes. The value of these zones was illustrated in 2014 with the first successful competitive solar auction in the Dry Lake SEZ in Nevada. That auction netted $5.8 million in bonus bids, and using the expedited review process established by the Western Solar Plan the review and approval of these projects were completed in 10 months, less than half the amount of time generally needed under the standard application-by-application process applied outside of SEZs.

“In addition to helping guide development to the right places, the Western Solar Plan also provided a foundation for the BLM’s current rulemaking process to update its right-of-way regulations to facilitate solar and wind energy development. These new regulations, which we anticipate finalizing later this year, will provide additional options for the BLM to offer areas competitively for solar and wind energy development and incentives for leasing within designated leasing areas, such as SEZs.

“The BLM is also continuing to utilize early coordination with its partners, including state, county and local agencies, tribal governments, the Bureau of Indian Affairs, the U.S. Fish and Wildlife Service (FWS), the National Park Service, and the Department of Defense to facilitate the review of these projects.

“The DOE Loan Guarantee Program The Energy Policy Act of 2005 authorized the U.S. Department of Energy (DOE) to implement the Title XVII Loan Guarantee Program. That program provided for the issuance of loan guarantees to qualified innovative clean energy projects, including eligible solar projects. According to the DOE, the Loan Guarantee Program was designed to encourage commercial use in the United States of new or significantly improved clean energy technologies that reduce, avoid, or sequester greenhouse gas emissions.

“These loan guarantees, issued by the DOE, were important to the successful construction and development of four solar projects on public lands — the Ivanpah Solar Energy Generating Facility ($1.6 billion in loan guarantees), the Desert Sunlight Solar Project ($1.5 billion in a partial loan guarantee), the Genesis Solar Project ($852 million in a partial loan guarantee), and the Crescent Dunes Projects (a $737 million loan guarantee).”

Details of these projects are:

  • The Crescent Dunes Solar Project is located northwest of Tonopah, in Nye County, Nevada. It is a 110 MW power tower Concentrating Solar Power (CSP) plant. It uses concentrated solar energy to heat molten salt, which is used as the heat transfer and the storage medium for generating power. The project is the first CSP power tower with thermal energy storage in the United States, and is expected to generate 482,000 megawatt-hours of clean energy annually. The project is located on 2,250 acres of public lands and has generated 1,050 construction jobs with a permanent workforce of 38. To date, the project has paid $1.4 million in rent and MW capacity fees.
  • The Desert Sunlight Solar Project, located near Desert Center in Riverside County, California, is a 550 MW photovoltaic (PV) project. It has been fully operational since January 2015 and will generate 1,060,000 megawatt-hours of clean energy annually. It occupies a total of 4,080 acres of public land, incorporating the solar facility and generation-tie line. The project generated 440 jobs at the peak of construction and has 15 permanent employees. Since becoming operational, the project has paid $10.4 million in rent and MW capacity fees.
  • The Genesis Solar Project is a parabolic trough CSP plant located near Blythe, in Riverside County, California. The project has been operational since April 2014 and consists of two separate 125 MW solar generating facilities, which, combined, will generate 605,000 megawatthours of energy annually. The project is located on nearly 1,950 acres of BLM-managed lands, generated nearly 1,100 construction jobs, and has 47 permanent jobs. To date, the project has paid $5.8 million in rent and MW capacity fees.
  • The Ivanpah Project, located in San Bernardino County, California, is a 370 MW power tower CSP project that was approved by BLM in collaboration with the California Energy Commission in 2010. It will generate 940,000 megawatt-hours of clean energy annually. The project covers approximately 3,471 acres of BLM-managed public land and incorporates three 459-foot tall power towers and 173,500 heliostat mirrors. The project, originally developed by BrightSource Energy, generated approximately 2,650 construction jobs at its peak and involves 86 permanent jobs. It is now owned primarily by NRG Energy. To date, the project has paid over $7.6 million in rent and MW capacity fees.

Nedd provided additional information on Ivanpah. He said the BLM has been carefully monitoring operations at the Ivanpah Project to ensure they are consistent with the project’s right-of-way grant. Under the Federal Land Policy and Management Act, the BLM is obligated to verify, prior to approving a project, that a proponent has the financial and technical capability to operate its right-of-way grant. The BLM is also required to ensure that projects are bonded sufficiently to cover potential operational liabilities, as well as the costs of decommissioning and reclamation of the project site should the proponent be unable or unwilling to conduct those activities. After a project is approved, the BLM is obligated to collect fair market value for those authorized uses. The BLM does not regulate the specific amount of power produced or require a project to achieve a specific level of performance as part of its approvals. The Ivanpah Project is current meeting all of its financial obligations under the right-of-way grant.

Renewable energy group says federal help a key to technology development

Also testifying at the July 14 hearing was Gregory Wetstone, President and CEO of the American Council On Renewable Energy (ACORE). ACORE is a national non-profit organization dedicated to advancing the renewable energy sector through market development, policy changes, and financial innovation.

He said right away in his prepared statement: “This hearing focuses on Federal Loan Guarantee projects on BLM lands. It is important to note at the outset that all such projects are on track to fully repay their loans with interest.

“With the support of the loan guarantee program, the leap to full commercialization in the renewable sector has taken place at a rapid pace, as evidenced by the dramatic increase in private sector investment in utility-scale solar, which went from $5.7 billion in 2008 to nearly $24 billion last year. Additionally, in 2009, the U.S. did not have a single solar PV facility larger than 100 megawatts (MW) in operation. In the several years since DOE issued loan guarantees to support construction of the first five utility-scale PV facilities over 100 MW, another 28 such solar projects have been privately financed in the U.S. without loan guarantees.

“While two loan guarantee manufacturing investments in the renewable sector have failed, accounting for less than 2.5 percent of committed funds, it is important to note that not a single renewable energy generation project in the LGP’s portfolio has failed to meet its repayment obligations under the program. Given the critical role that DOE-guaranteed loans played in the growth of America’s world-class renewable energy sector, especially for utility-scale solar energy projects, there is every reason to conclude that the taxpayer funds associated with this program were well spent.

“DOE has conducted due diligence that is comparable to, if not more stringent than, that in the private sector. Program losses have fallen far below the ten percent budgeted in program risk planning. Ultimately, the program is fostering tens of billions of dollars in economic opportunity across the nation, creating more jobs and setting up long-term, market-driven success for the future.

“With regards to today’s hearing, is it unfair to characterize utility-scale solar or other renewable investments as ‘risky.’ Such thinking is well out of step with the realities of the commercial marketplace. Last year more than $44 billion in private capital was invested in renewable energy, primarily in wind and solar energy, far exceeding investment levels in any other electric generation technologies. These are mainstream technologies, not boutique projects. In fact, since 2005 more than 50% of all new U.S. electric generation capacity has come from wind and solar power, exceeding all other sources of generation. With more than $380 billion in private sector investment since 2004, renewable energy has not only become commercially viable, it has become a vitally important source of American economic growth and job creation.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.