Renewable Energy Projects Under Pressure from Feds and Environmental Groups

At the close of 2010, the Obama administration announced an ambitious plan to preserve massive amounts of land, particularly in the West. Pursuant to a regulatory change instigated by the administration, the Interior Department’s Bureau of Land Management (BLM) has been instructed to survey its vast holdings – some 250 million acres – and designate suitable tracks as “wild lands.” Under this proposal, millions of acres of resource rich public land would be declared off-limits to all forms of commercial development.

While this is a well-intentioned idea designed to preserve open space, it is, ironically, making it harder for renewable energy projects to get off the ground, projects the administration desires. By restricting large amounts of land, much of it remote and isolated, BLM is removing some of the cheapest and best land for renewable energy projects from the market. In addition, it drives up the price of the more scarce, available land, making the already thin margins on renewable energy projects even more precarious.

Recently, the Arizona solar market received a huge boost as Australian-based EnviroMission moved forward on plans to build a massive solar tower in Arizona’s La Paz County. This solar tower will be twice as tall as the Empire State building, 2,600 feet tall, making it the second-tallest building in the world and will be able to produce clean, cheap electricity for 150,000 homes with its 200 megawatt power generation capacity for up to 80 years. One of the reasons why a project of this immense size can be built is because the solar tower will be located in isolated, desert north of Quartzsite, Arizona on about 5,500 acres. Land that is not as remote may be too expensive to purchase for a project this size.

However, what if this land were restricted to any development as a part of BLM’s wild lands program? EnviroMission would be forced into land that may not be as cost-effective, potentially ruining the financial viability of the project. It is basic economics: if the government starts restricting the supply of available land, then the demand is going to increase and so is the price. But this is the risk the Obama administration and other local municipalities are facing as they work to restrict more and more land, potentially making it harder and more costly for company’s like EnviroMission to find land to build these types of projects on.

On top of federal pressure, renewable energy project developers are getting pressure from an unlikely source: environmentalists. Vashti Supplee, the director of bird conservation for the Arizona chapter of the National Audubon Society, is concerned about the EnviroMission project saying that it is possible that birds migrating along the Colorado river might be confused by it. “This thing seems to be a weird black hole at the moment…I don’t know what’s going on with it,” Supplee said. Damned if you do, damned if you don’t.

Environmentalists are fighting large-scale projects in the California solar market as well. As one example, in an arid expanse of rangeland and barbed wire 50 miles southeast of Hollister in the Panoche Valley, the Santa Clara Valley Audubon Society, the Sierra Club, and a group of local residents known as Save Panoche Valley are suing to block a $1.8 billion, 399-megawatt solar farm claiming the 4 million solar panels that would be constructed across the roughly 3,200 acres west of Interstate-5 would harm endangered species and disrupt the rural character of the area. The case is pending in court as we speak.

Also recently, SunPower Corporation and a subsidiary of First Solar Inc. announced that they had reached a settlement agreement with between Sierra Club, Defenders of Wildlife, and Center for Biological Diversity relating to development of the 250 MW California Valley Solar Ranch and the 550 MW Topaz Solar Farm. Part of the objection of the environmental groups was the impact of the solar farms on local endangered species. As part of the settlement, First Solar and SunPower agreed to purchase an additional 36 square kilometers of land for preservation, in addition to the 69 square kilometers the companies had committed to, and to remove 48 kilometers of fencing from the area. Additionally, the companies will not use rodenticides in the construction and operation of the projects, and to make additional financial contributions to help San Luis Obispo County acquire lots in undeveloped areas nearby for wildlife conservation.

Ultimately, these lawsuits have the same effect as federal land restrictions, they drive up the costs of developing solar farms. In a time with high unemployment, high energy prices and a major dependence on foreign oil, it seems counter-intuitive to make it harder and more expensive to develop renewable energy projects, like solar farms. This is particularly relevant as many states such as California, Arizona, Hawaii, New Jersey, and Massachusetts have aggressive renewable energy standards mandating renewable energy production.

Restricting land use and endlessly litigating with those companies who are trying to provide renewable energy solutions is an excellent way to prevent future development of renewable energy projects. The economics of these projects are tenuous, at best, particularly with today’s debt markets, and any increase in cost, whether from increased land costs or litigation, puts them in peril. The U.S. government and environmental groups need to take a hard look at the economic and energy future of this country and realize that their actions are making it harder not only to create jobs but the infrastructure this country needs to grow in a sustainable manner.