Las Vegas Review-Journal (Sunday)
Rule could take wind out of renewable power
Rule to encourage bidding on select public lands stirs doubts
WASHINGTON — It was supposed to be the largest wind farm in North America, with 1,000 turbines spinning above 320,000 acres of southern Wyoming.
But after investing more than $50 million and nearly a decade seeking approval to build a wind farm on public lands, the Power Company of Wyoming’s landmark project is still tied up in required scrutiny of its environmental impact.
“We understood that this is a complex process,” the company’s vice president, Roxane Perruso, said. “We did understand that it was going to be several years. We did not anticipate nine.”
The Wyoming project is hardly an outlier. Although the Obama administration has given initial approvals to 46 wind and solar projects on 216,356 acres of public lands since 2009, just 15 are in operation. Others have been abandoned, are still being built or are undergoing years of required environmental analysis.
The administration has said it has a plan to cut through that red tape: a new rule, set to be imposed within weeks, that would encourage developers to bid on government-selected tracts with gusty winds and intense sunlight that are pre-cleared of major environmental conflicts. The rule could be a boon to Berkshire Hathaway Energy Co., First Solar Inc., Iberdrola SA and other companies that have their sights on public land, but developers are wary it will stifle development, putting them at odds with environmentalists who champion the plan.
The proposal would mirror the competitive bidding process the U.S. government already uses to sell oil and gas rights on public land. Under that practice, the Interior Department identifies territory available for oil and gas development, energy companies weigh in with their own nominations, and leases are auctioned off. Tracts that don’t get bids can later be offered for non-competitive leasing.
Under the proposed wind and solar rule, companies would be encouraged to vie for territory in U.S.-designated renewable energy zones, with the result being formal leases that could lock in some terms for at least 10 years and provide more developer protections.
Currently, the Bureau of Land Management only offers renewable energy developers right-ofway authorizations laying out rental payments and fees tied to electric generating capacity. But the agency can change those terms. Under the standard right-of-way grant, the BLM explicitly reserves the right to change per-acre rents annually and the capacity-factor fee at any time to ensure a fair return to the U.S. taxpayers who own the land.
The new measure will dictate how much freedom the next president has to harness public lands to support wind farms and solar arrays that are critical to meeting both U.S. and North American climate goals.
Democratic nominee Hillary Clinton has vowed a tenfold increase in renewable power produced on public lands and waters within a decade, building on progress made during President Barack Obama’s tenure. When Obama took office, no solar and only 566 megawatts of wind capacity had been approved on public land; now, the government has signed off on 15,096 megawatts worth of those projects.
But the proposed rule has fractured the usual coalition of renewable energy advocates, putting wary developers on the opposite side of environmentalists who argue the measure will unleash the zero-carbon promise of wind and solar power on public lands.
Right-of-way permits aren’t a good fit for “4,000-acre, utility-scale solar” projects, said Bobby McEnaney, senior director of the Natural Resources Defense Council’s Western Renewable Energy Project. “A right-of-way can be taken away, modified with very little justification,” he said. “A traditional lease affords far more permanence; it is a much better vehicle for these kinds of projects.”
Developers aren’t convinced. They have been lobbying the government with talking points borrowed from the oil and gas industry’s playbook, warning that the Bureau of Land Management proposal will stifle new projects by hiking costs and creating uncertainty that scares off investors.
“If BLM is making it even more expensive, complex and time-consuming to develop, that’s going to make it that much less attractive to pursue public lands projects,” said Tom Vinson, vice president of the American Wind Energy Association.
Competitive auctions guarantee costs will go up. Rental payments and a proposed megawatt capacity fee that factors in wholesale power prices — like a royalty on oil and gas production — will make projects even more expensive, representatives from the Solar Energy Industries Association and SunEdison Inc. said in a meeting the White House Office of Management and Budget.
Federal regulators are tweaking the fee structure, but the Power Company of Wyoming contends the proposed version would hike rent and megawatt capacity charges for its Chokecherry and Sierra Madre wind farm by as much as 55.6 percent.
The extra costs come with the promise of faster permitting and more clarity in the long run. Because broad environmental analysis is front-loaded in the designated zones, the Bureau of Land Management argues the new strategy could cut permitting times in half.