Solar developers shoot to beat buzzer for cash

By Alexandra Berzon

Sunday, March 22, 2009 | 2 a.m.

In the desert of Amargosa Valley, Rainer Aringhoff hopes to build a $1 billion solar plant filled with mirrors that concentrate heat from the sun to generate energy.

His company, the Germany-based Solar Millennium, announced an informal agreement this month to sell 250 megawatts of solar power to NV Energy.

Aringhoff, like many other solar developers, hopes to begin construction by the end of 2010.

It’s a deadline without a lot of wiggle room because by that date solar energy developers must begin construction in order to take advantage of a federal funding program for solar plants.

At stake for Solar Millennium: as much as $300 million.

The concern for Solar Millennium and backers of the other 67 utility-scale solar projects vying to use federal lands in Nevada is that they have yet to begin environmental reviews, which typically take 18 to 24 months.

Developers say that’s because Bureau of Land Management offices in the state haven’t been able to efficiently handle the sudden interest in solar.

“BLM was really hit by a tsunami of applications at the same time that they were understaffed,” Aringhoff said.

Developers have complained that under the Bush administration, the agency favored oil and gas applications — or at least better understood them.

This month, Interior Department Secretary Ken Salazar said he intends to change that. In his first secretarial order, issued March 11, Salazar decreed that “facilitating the production, development and delivery of renewable energy” should be top priorities for the department.

The message by then had been heard loud and clear at the Nevada BLM offices, its staffers say. The state is bringing on four new employees to work on renewable energy. At the Southern Nevada BLM office, which had 55 solar applications under review as of January, a project manager for renewable energy started three weeks ago.

“There is an effort to try to figure out how we can make this as fast a process as it can be,” said Patrick Putnam, the Pahrump office field manager.

Putnam said if everything goes as smoothly as possible, the environmental reviews could be completed in 14 to 16 months. That could allow solar developers to begin their projects in time to receive federal funding.

The race is on.

In the balance, developers and industry advocates say, may be the future of Nevada’s burgeoning solar industry.

Nevada’s abundant federal land (86 percent of the state) — coupled with its cloudless skies — has made it an attractive spot for would-be solar plant developers. But developers say the BLM permitting process for federal lands has been moving slowly. Some practices at the agency have at times appeared cumbersome or arbitrary.

“BLM is the bottleneck,” said Jim Baak, who directs utility-scale solar for the advocacy group Vote Solar.

Solar Millennium applied a year and a half ago to use 14,000 acres of land in Nye County for solar thermal. In the summer, along with other BLM solar applicants, the company was directed to revise its development plan to take into consideration new requirements.

“We had already submitted a plan of development but new criteria came in so we had to redo it, which was very detailed on the engineering side,” Aringhoff said.

Part of the problem, people familiar with the process say, is that the BLM didn’t have systems in place for solar applications, which it started receiving about two years ago.

BLM is studying how to make the process more efficient. The study should be finished early next year.

Local BLM staffers said in interviews last week that they are committed to moving solar projects along. At the same time, the agency doesn’t want to sacrifice careful environmental reviews, staffers say.

“We want to make sure everything is efficient, but accuracy is more important to us,” Las Vegas BLM spokeswoman Hillerie Patton said. “We don’t want to drag it out. We want to dispel the myths that BLM is holding up renewable energy.”

In a statement Tuesday, Salazar said he is establishing an energy and climate change task force that would identify and quantify renewable energy spots on public lands and work to “resolve obstacles to renewable energy permitting, siting, development and production without compromising environmental values.”

Developers say they’re hopeful the emphasis from top levels of the department will, in the long run at least, help. Whether changes will be fast enough to meet the 2010 deadline, and help access the grants, is less certain.

The grants — equal to 30 percent of a project’s cost — were inserted into the stimulus package to address a problem caused by the recession.

Congress in the fall passed $2.5 billion to fund tax credits for solar plants. Those tax credits don’t expire until 2016 and are expected to eventually create 2,800 megawatts of new solar power.

But because of current economic conditions, the market for tax credits has dried up. As a temporary measure, Congress in the stimulus package allowed the credits to temporarily be converted into grants. In keeping with the goals of the Recovery Act, Congress limited the grants to “shovel-ready” solar projects to spur quick job creation.

The act says construction must begin before Dec. 31, 2010, but does not define what constitutes construction.

The hope for developers is that by the end of 2010, economic recovery will be under way and they will again be able to take advantage of the tax credits.

Some developers say they’re not expecting approvals for federal land use by the deadline.

BrightSource Energy, for example, first applied for BLM land in Nevada nearly two years ago. A spokesman said the company doesn’t expect to begin construction on public lands before the end of 2010.

The Oakland-based company announced last week that it plans to generate as much as 600 megawatts of solar on private land owned by Harvey Whittemore for his planned Coyote Springs development, thus avoiding that key step. That project should get under way by the deadline.

That’s the same tack taken by two utility-size solar plants that are operating in the state. Both are on land owned by Boulder City, which didn’t require environmental reviews.

State Assembly Speaker Barbara Buckley would like to create a similar program for the state. Last week she introduced a joint resolution calling on Congress to pass a law deeding a small portion of BLM land to the state for renewable energy development.

“The BLM process is slow and cumbersome,” Buckley said. “In Nevada we’re committed to developing the state as a renewable energy leader and we have no doubt this would help us move much quicker.”

Buckley said her idea always receives an enthusiastic reception at town hall meetings.

Some worry the state won’t have the proper expertise to deal with such applications. Skipping the environmental reviews required by BLM lease applications also could lead to problems.

“It’s a way of speeding up the process, and I think that’s an interesting way to go,” said Charles Benjamin, Nevada director for Western Resource Advocates. “But then how would a review of environmental impacts take effect? This would be of concern to some conservation folks who have worked very hard to try to preserve federal lands.”

A spokesman for Senate Majority Leader Harry Reid, who has been a strong proponent of renewable energy development in the state, said the senator will have no comment on Buckley’s idea until it passes in the Legislature.

Either way, Aringhoff says his project hinges in part on the pace of federal bureaucracy — barring a nationwide economic recovery that would allow him to access the tax credits again or a liberal definition of “construction” to stretch the time line for solar projects to receive federal grants.

BLM permits are just one step he will need to take before construction begins.

“It’s on a critical time path,” Aringhoff said. “But on the other side, if all of what has been discussed in recent weeks happens, then I think we are confident of doing it in the time frame.”