GOP fights funding for vital Nevada renewable projects

By Karoun Demirjian

Thursday, March 3, 2011 | 2:01 a.m.

Since it was officially announced in late 2009, the Crescent Dunes Solar Energy Project in Tonopah has been one of Nevada’s flagship commercial renewable energy projects.

The planned 110-megawatt energy storage facility — nearly twice the capacity of the state’s next largest solar plant — is expected to power about 75,000 NV Energy customers and create 600 jobs on-site. It would also be the first time that U.S.-developed, molten-salt technology has been put into operation anywhere in the world.

But the whole enterprise depends on federally backed loans that House Republicans marked for the chopping block in the budget they passed two Saturdays ago.

If the loans go away, project developers SolarReserve of Santa Monica, Calif., say, so will the Tonopah project.

“This will be the first large-scale tower project with storage,” said Kevin Smith, CEO of SolarReserve. The storage capacity, which allows for uninterrupted solar power distribution even when the sun’s not out, is what makes the project unique. “It’s U.S. technology and U.S. jobs — it would just be ridiculous for the U.S. government to clip its wings at the last minute.”

As far as the Republican caucus is concerned, the renewable energy loan guarantee program underlying projects such as the Tonopah solar facility — technically designated Section 1705 of the Energy Policy Act — has two strikes against it: It favors renewable energy projects; and it’s a creation of the American Recovery and Reinvestment Act, the stimulus bill of 2009.

Under that bill, the Obama administration created an incentive for companies such as SolarReserve to move quickly: Provided you break ground by the end of fiscal 2011, we’ll back you.

But that was before the midterm elections.

Republicans swept into Washington on a pledge to pull back all unobligated stimulus funding. Republicans identified more than $10 billion in unspent funding under energy efficiency, or renewable energy accounts — a significant percentage of their $61 billion budget reduction aims. They didn’t cut all that — $5.4 billion was excised from energy and water-related projects — but the Republicans’ budget did identify reductions in what they termed “loan guarantees for lower-demand programs.” In the case of the Section 1705 program, that’s a total stripping of what’s left.

But loan guarantees are politically tricky. Although some loan programs do carry the stigma of their stimulus origins, they’re also primarily geared toward encouraging private-sector investment. Neither are they handouts — they’re loans that have to be paid back.

Senate Majority Leader Harry Reid, who envisions rebuilding Nevada’s economy with a green-jobs revolution, recently called the loan guarantee program “exactly the kind of public-private partnership that Nevada and the nation need to help us lead the world in clean energy jobs.”

Affordable loans can be hard to come by in the renewable energy industry — projects are often so new that ideas are pretty much the only collateral.

But one has to believe in those ideas to back them — and that’s where Nevada’s Republicans find themselves at odds with other Republicans.

Nevada Republicans may not side with Democrats on every clean energy vote, but all the delegation’s Republicans in Congress have supported the initiatives behind various projects in the past.

That’s not the case with the GOP nationwide. Solar and wind energy projects simply don’t have the same cachet in oil-rich Texas, an area of the country far more concerned with oil and gas subsidies. Likewise in the South, another conservative Republican stronghold, environmental conditions just don’t make solar, wind or geothermal energy viable enterprises.

And even though they’re loans, the short-term price tag is considerable.

Nevada’s much-praised One Nevada high-speed transmission line — which breaks ground this year — received a Section 1705 loan guarantee last month, for $363 million of the $500 million the project is expected to cost.

The Tonopah project is even more expensive: Developers are looking for about $600 million in loan guarantees that they say will help draw another $200 million or so from private investors.

NV Energy has signed a 25-year contract to purchase the energy produced.

But even with those guarantees, backers say they simply won’t be able to get the project off the ground without the government’s help.

“We are nervous about it ... but we’re so far down the road in the program, that there’s no turning back,” Smith said. “We certainly are making sure that the political parties are well aware where this project is.”

But even if they are aware, there may be little they can — or will — do, given the political climate.

“Congressman Heller supports renewable energy development in Nevada and believes it has the potential to be a growing industry in the state,” said Stewart Bybee, communications director for Republican Rep. Dean Heller, whose district encompasses the Crescent Dunes project.

Heller, who backs the Tonopah-based project, is no shrinking violet when it comes to bucking the party line — last month, he waged a vocal campaign against a line item in the House Republicans’ budget that sought to preserve Yucca Mountain as a nuclear dumpsite, fighting back with an amendment that ultimately failed on a voice vote. Heller did end up voting for the bill.

But Heller’s not signaling that he plans to wage anywhere near a similar fight for this project — suggesting that its potential untimely death may just be what Nevada has to take for the team.

“Since coming to Congress, (Heller) has supported federal policies such as tax credits and a renewable portfolio standard that promote the production of renewable energy in our country,” Bybee continued. “However, with government spending at record levels, it is necessary to evaluate what the best role for the federal government is in encouraging growth in this industry.”

Section 1705, like all points of the House bill, are subject to negotiations in the next two weeks. The clock runs out at midnight on March 18.