Wednesday, February 29, 2012

ENERGY: Uncertainty Clouds Obama’s Latest Solar Push

President Barack Obama wants to revive the renewable energy push that fostered a solar development boom in the first years of his administration, particularly across the sun-drenched deserts of Riverside and San Bernardino counties.
Wire mesh is wrapped around posts, so birds will not nest in them

But clouding his effort is the expiration of federal programs meant to spur investment, a backlash against the White House’s policies in the wake of the Solyndra debacle, and unresolved questions about where large-scale plants can be built.

“The biggest challenge for the industry comes around the uncertainty,” said Jim Baak, director of utility-scale solar power for Vote Solar, a San Francisco-based nonprofit that promotes clean energy. “In the political reality, it’s kind of hard to get that certainty moving forward.”

In his State of the Union address last month, Obama said the time has come to “double-down on a clean energy industry that never has been more promising.”

He announced plans to free up enough public land for solar and wind energy development sufficient to power 3 million homes, and he called on Congress to pass incentives to bolster the burgeoning industry.

His remarks, however, came after the clock ran out on two such incentives that brought billions of dollars to solar developments in Riverside and San Bernardino counties and the Southwest.


Solar projects have for years enjoyed federal support, including an investment tax credit which runs through 2016. The credit can cover as much as 30 percent of costs, but only profitable projects can take advantage of it. Since start-ups cannot generate enough money to do so, they rely on investment partners with enough income to benefit from the credit.

The Great Recession led to a shortage of such investors, who had become a major driver of solar development. Responding to concerns about the downturn’s impact on the industry at large, Congress in 2009 approved a Treasury Department grant program that allows projects and their investors to get a direct grant in lieu of the 30 percent tax credit.

As of late last year, the treasury had issued about $9.6 billion in grants to more than 22,000 small and large projects, helping to leverage $32.9 billion in investment — mostly from the private sector, according to Treasury Department figures.

Despite its popularity, the grant program was allowed to expire at the end of last year. Proponents are calling on Congress to restart it, potentially through language attached to a payroll tax cut extension lawmakers are expected to take up in the coming weeks.

The grants were an alternative to the tax credits, so it wouldn’t cost the government additional money to keep offering the grants, officials from BrightSource Energy reasoned. The Oakland-based company has one project under construction in San Bernardino County and three others in the region still in early stages.

The grant program’s expiration limits the private sector’s willingness and ability to invest in solar, they said.

“For California, it negatively impacts billions of private-sector investment that otherwise could go to work for the benefit of our citizens,” BrightSource spokesman Keely Wachs said.

A 3,600-acre BrightSource project in the Ivanpah Valley in northeast San Bernardino County was among four Inland solar developments to benefit from a separate federal program, administered by the Energy Department. The Ivanpah solar farm, supported by investments from Google and NRG Energy, has created hundreds of jobs and is expected to supply enough energy to power 140,000 homes.


The Energy Department’s loan guarantee program, also created by Obama’s 2009 Recovery Act, helped finance at least two dozen projects through guarantees totaling more than $16 billion. More than $5 billion in guarantees went to the four projects located in Riverside and San Bernardino counties. The guarantee means that if a company defaults on a loan, the federal government pays the debt.

In the Solyndra case, that promise cost U.S. taxpayers $535 million.

The now infamous Fremont-based company filed for bankruptcy soon after receiving the money. Critics seized on the Solyndra scandal as evidence that the administration’s renewable energy policies are misguided.

The program was allowed to end as scheduled last fall, but the Solyndra fallout continues. Inland Rep. Darrell Issa, chairman of the House Oversight Committee, is conducting an investigation into the Energy Department’s loan decisions.

Earlier this month, Issa sent a letter to Energy Secretary Steven Chu, threatening to subpoena his testimony on the subject if he does not appear before the panel, as previously requested.

“The American people have a right to know why DOE, under your leadership, has wasted billions of dollars of their money,” wrote Issa, who represents a large chunk of Riverside County.

Baak said the negative attention sparked by Solyndra has contributed to the current political climate — one in which re-starting the expired programs would be difficult.

“It’s unfortunate that it’s been such a lightning rod,” he said, noting Solyndra reflects only a small fraction of the program.

One project in Riverside County gave up a loan guarantee when the company changed the technology it planned to use. Others are proceeding as planned.

Among the projects that received loan guarantees was Desert Sunlight, a First Solar development near Desert Center. The government backed more than $1 billion of the loan the company obtained for the project. Other companies that have loan guarantees are Next Era Energy Resources, for a project near Blythe, and Abengoa, for a solar field near Barstow.

An independent consultant hired by the White House to review the agency’s loans issued a report Friday calling for stronger management and an “early warning” system to identify problems with individual loans.


Despite the setbacks, solar projects are moving forward. But progress is slow in designating solar zones that would eliminate some of the bureaucratic hurdles facing developers.

The Interior and Energy departments are reviewing thousands of public comments collected as part of an ongoing effort to create “solar energy zones” for development on public land. A draft proposal identified 17 zones totaling more that 285,000 acres. More than half of the total — almost 150,000 acres — is in a single zone in eastern Riverside County.

While some environmental concerns remain, there is consensus that the zones will help shape the nation’s future in solar energy. Federal officials began gathering public input more than a year ago, but a final decision on their size and location is not expected for several months.

Baak said the process has meant uncertainty in the short term but will help advance solar growth in the long run. In the meantime, he and other solar proponents say the public is behind them.

A poll, underwritten by BrightSource to assess community support, found that three-quarters of those surveyed support large-scale solar development in California’s desert.

“It shows that a lot of people support this,” he said. “People recognize that this is a homegrown resource and something that’s going to create new jobs.”


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