Nevada’s choice: Use natural resources to go green or perish
With its brilliant sunshine, whipping winds, geothermal hot spots and vast tracts of empty land, Nevada has long held promise as a potential center of green power.
But even after years of talk about how the Silver State can capitalize on its natural renewable resources, the state still gets just 10 percent to 12 percent of its energy from green projects.
So what will it take for Nevada’s renewable-energy sector to take off, and could 2011 be the banner year green-power advocates have been waiting for?
Tom Fair, NV Energy’s vice president of renewable energy, stops short of forecasting 2011 as a breakthrough year for green energy.
But he did say Nevada’s renewable-power sector is nearing a tipping point that will yield big strides in the next couple of years.
Consider NV Energy’s performance on meeting the state-mandated renewable-energy portfolio standard, which requires utilities here to obtain a specific share of their power from green sources.
NV Energy barely met the 9 percent threshold in 2008, Fair said. The minimum rose to 12 percent in 2009, and the utility fell short of that mark, reaching 10.5 percent. In 2010, the mandate will stay at 12 percent; company executives don’t have final numbers yet, but preliminary data show the utility will surpass the year’s standard, Fair said. What’s more, NV Energy is set to easily exceed the 15 percent mark set for 2011. The standard is set to max out at 25 percent in 2025.
"There’s no way to have a smooth increase over time, because you have projects that get delayed while others come on line," Fair said. "But we completed a number of projects in 2009 that will be fully operational through 2010, and we’ll start to see the impact of all of these projects coming into play. I think we’ve turned the corner, I really do."
Kathleen Drakulich, an energy attorney and a partner with the Nevada law firm McDonald Carano Wilson, said 2011 likely won’t be a breakout year for green power as long as Nevada lacks transmission lines to carry green power from rural generation sites to city markets where it’s needed.
Green energy might not be poised for a big breakout in 2011, but Fair said he’s looking toward 2013 as a signature green-power year. That’s when NV Energy is scheduled to finish its One Nevada transmission line, or ON Line. The 235-mile line, scheduled to break ground later this year, will run from the company’s Harry Allen Generating Station near Apex to its Robinson Summit substation near Ely. It will connect Nevada’s northern and southern grids and allow NV Energy to use green energy generated in the countryside. NV Energy is building the line with New York-based electric developer LS Power, and NV Energy plans to use 100 percent of the $510 million, 550-kilovolt line’s capacity.
"ON Line is a big step," Fair said. "It will unify the state and enable us to fully tap the rural renewable-energy resources of Nevada, wherever they may be."
Bolstering 2013’s case is the 440 megawatts of green-power projects the Public Utilities Commission of Nevada approved in NV Energy’s 2010 integrated resource plan, which outlines how the power company will obtain its electricity over the next 20 years. Developments included in the plan are geothermal, photovoltaic, wind and solar plants, including the state’s first solar project with overnight thermal-storage capabilities. Combining those projects and ON Line sets the stage for 2012 and 2013, Fair said.
Drakulich agreed that ON Line will prove key to spurring renewable-energy growth in the Silver State.
"No one would go out into the middle of Nevada and build a 2,000-home development without a major highway through that development. There’d be no way to get to and from it," Drakulich said. "Renewable energy is the same way. You can’t just put it in the middle of Nevada without the ‘highway,’ without the transmission line to deliver the power."
But maximizing Nevada’s renewable potential will require going beyond ON Line, Drakulich added. The line will be an important component to providing Las Vegas and Reno with green energy, but if Nevada’s officials and power developers really want renewable energy to flourish here, they’ll need to add to ON Line, with additional transmission infrastructure linking the state’s grids to substations in Idaho and the Eldorado Valley, south of Las Vegas. Linking to those points will give Nevada’s power developers access to California’s massive energy markets, Drakulich said.
Transmission lines alone won’t do the trick, though.
Nevada’s leaders must meet with California’s officials to discuss how the Silver State might best serve the power needs of the Golden State, where a tough portfolio standard requires utilities to obtain 33 percent of their power from renewables by 2020.
"Our export market really is California. They have a tremendous need," Drakulich said. "We have to figure out if we can get there with transmission lines, and if they’ll buy our power. They may not be able to meet their needs on their own, and that’s where we’ll come in."
Still, several hurdles could delay renewable energy’s progress in Nevada in 2011 and beyond.
For starters, environmental opposition to renewable projects on federal desert land could slow green power’s advance, Fair said. Citizens have the right to file lawsuits blocking projects, Fair said, and they frequently do so out of concern for wildlife — especially when solar or wind projects are involved. It can already take years to guide even fast-tracked projects through the permitting and environmental-review processes required to build on federal land.
"To what extent can federal lands be used for renewable energy projects? The jury is somewhat out on that question," Fair said. "People in Washington support the industry and want it to happen, but some citizens are not particularly happy with the idea of having a lot of major solar facilities in the Mojave Desert. Maybe these kinds of challenges and obstacles can be overcome. We’ll see in the next couple of years."
Fair added that it’s difficult to forecast whether such licensing and legal issues are likely to ease appreciably. He did note that laws governing development on public lands are roughly 40 years old, and have changed little since policymakers wrote them.
Obtaining financing also presents an ongoing barrier to green power.
The renewable sector is still feeling the aftereffects of the credit crunch that followed Wall Street’s 2008 investment-bank meltdown. Finding the capital to build a project is as nettlesome these days as maneuvering the federal permitting process can be, though Fair said he expects tight investment markets to loosen as the economy continues to recover from its recession.
Drakulich agreed that permitting and financing will remain equally big issues for renewable projects. Building essential transmission lines relies on a lot of moving parts, all of which must come together to make a project happen, she said. A developer who wants to build transmission infrastructure must launch the permitting process at the same time he’s trying to find green-power developers who’ll commit to buying capacity on the line. With those commitments in hand, he can pursue financing. Drakulich called it a "two-way tie" as to whether permits or funds are tougher to come by these days.
"Transmission is not, ‘If you build it, they will come.’ It’s on the other end of the spectrum," she said. "You have to get all of the subscriptions lined up before the creditor will say you’ll get any money. Permitting is time-consuming because of all the federal land we have in Nevada."
Green-power builders must also grapple with today’s political climate, which has grown less friendly to energy subsidies and tax credits. With some forms of federal aid set to expire in coming months and years, developers could find themselves unable to finish a planned project that would have relied on financing help from government agencies, Fair said.
And then there’s the simple matter of resources.
Developers don’t always discover the abundant power source they expect when they begin exploring an area for its green potential — say, the proposed geothermal well that doesn’t find enough steam heat, or the wind corridor that’s too variable to provide affordable, steady energy. There’s no policy or financial fix for that kind of problem, Fair said.
Fair said he’s hopeful that myriad forms of green power will enjoy a bright future in Nevada. The industry’s success will help the state diversify not only Nevada’s economy, but its power sources, and any trend that reduces Nevada’s reliance on a single major energy base — in the Silver State’s case, natural gas — will help insulate consumers from fluctuating commodities prices, he said.
Building on the state’s renewable-energy resources will also generate jobs and position Nevada as an important exporter of an important future power source, Drakulich added.
"People need to invest in something to help this state recover," she said. "We’re looking to bring in industries with a pulse, and green energy happens to be one of them. At the end of the day, we have to put people back to work, and we have to create sources of revenue in this state. If we’re creating an export market, it’s not going to cost Nevadans anything."
Contact reporter Jennifer Robison at jrobison @reviewjournal.com or 702-380-4512.
