Monday, January 30, 2012

Large-Scale Solar Plants Fast-Tracked

Two large-scale solar plants planned for public land east of the Coachella Valley are on the list of high-priority projects federal and state officials have targeted for approval this year.

NextEra Energy's 750-megawatt McCoy project near Blythe and enXco's 150-megawatt Desert Harvest project near Desert Center were among those on a new list of nine solar “priority projects” that Secretary of the Interior Ken Salazar and California Gov. Jerry Brown announced Friday.

The list is a central piece of a new agreement to fast-track renewable energy projects, including transmission lines, in California that Salazar and Brown signed at a solar project near Sacramento.

The two photovoltaic projects together could create more than 500 jobs during construction, and about 25 permanent jobs, while pouring millions of dollars into the regional economy.

“California has made tremendous progress in permitting renewable projects,” Brown said in a news release. “Putting these construction projects on a fast track will put people back to work and keep California a leader in renewable energy.”

Large-scale projects such as McCoy and Desert Harvest are seen as critical for the state to meet its legal mandate, signed into law last year, to produce 33 percent of its power from renewable sources by 2020.

Erin Curtis of the Bureau of Land Management said the two projects made the priority list because no major environmental road blocks have been found in the review process for either one so far.

“The companies have shown they're ready to move if we give them some focused attention,” she said.

Steve Stengel, a spokesman for Florida-based NextEra, said Southern California Edison will buy the power from the first phase of the project, a total of 250 megawatts. The power purchase agreement still needs final approval from the California Public Utilities Commission. Stengel expects that to happen later this year.

Representatives for San Diego-based enXco were not available for comment Tuesday. The company is the U.S. affiliate of EDF Energies Nouvelles, a French renewable energy development firm.

The two projects also will be the first required to pay Riverside County's new $450-per-acre solar fee the Board of Supervisors passed in November.

The fee does not cover the total area of a project, only the acres where solar panels and other generating equipment are located, said Greg Neal, deputy director with the county's Planning Department.

So, while NextEra's project has a total area of 7,700 acres, the plant itself may cover only about 5,363 acres.

Both NextEra and enXco are negotiating with the county, Neal said, but it is too early to estimate how much the companies will pay or what kind of discounts they might get for local hires or other credits the county built into the fee structure.

If both projects are given the go-ahead this year, a total of five solar plants will have been approved in the Riverside East solar zone between Joshua Tree National Park and Blythe.

Only two — General Electric and NextEra's 550-megawatt Desert Sunlight and NextEra's 250-megawatt Genesis — are under construction.

The third, Solar Trust of America's Blythe project, is on indefinite hold since its parent company, Solar Millennium, filed for bankruptcy last month.

But even if both projects are approved, they could still face challenges in nailing down financing. In the aftermath of the August bankruptcy filing of Solyndra, the Northern California panel manufacturer that defaulted on a $535 million federal loan guarantee, federal support for such projects has slowed to a trickle.

Projects are still eligible for a 30 percent federal income tax credit, but the Department of Energy's loan guarantee program has ended, as has the Treasury Department's 1603 program, which allowed developers to take the 30 percent tax credit as a cash grant.

“We anticipate there's going to be more demand for project finance than supply, so only the best projects will get financed,” said Brett Prior, a senior analyst for Greentech Media, a renewable energy research and analysis firm.

And the cost of financing will also rise, he said.

“The return tax equity players can demand is higher. It's the basics of economics — when demand outstrips supply, the price moves.”


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