Solar Today Summer 2016 : Page 10
A NEW PATH TO PROSPERITY IN INDIAN COUNTRY: Exploring Opportunities for Clean Energy Development on Tribal Lands By Karen Petersen, National Renewable Energy Laboratory
A New Path To Prosperity In Indian Country: Exploring Opportunities For Clean Energy Development On Tribal Lands
The new energy economy is young and thriving, with plenty of room for expansion—and with the sky as the limit, it’s making inroads in some unexpected places.
From the redwood forests of northern California to the green lowlands of upstate New York, from the high desert of southern Nevada to the frozen tundra of northern Alaska, visionary Native American leaders are forging a new path to economic vitality and community resiliency. It’s a new path that honors traditional ways, while addressing longstanding challenges and barriers.
There’s no denying the persistent gaps between American Indian and Alaska Native (AIAN) populations and the rest of the country in areas such as housing, healthcare, education, and employment. For generations, tribal leaders have worked to close those gaps and provide for their communities, and for some, gaming has provided one avenue for doing so. But forward-looking tribal governments are continually seeking new and innovative approaches to economic development. And increasingly, they are focusing on energy.
Within the broad swaths of mostly rural, often remote land Native Americans call “Indian Country” exist considerable untapped resources.
Despite representing less than 2% of the total U.S. land base, Indian lands contain an estimated 5% of all U.S. renewable energy generation potential, according to the U.S. Department of Energy’s (DOE’s) National Renewable Energy Laboratory (NREL).
When considered in light of the rapid decline in costs for clean energy technologies, the proliferation of policies that incentivize clean energy, and the increasingly urgent need for energy transformation, this disproportionate wealth in renewable resources represents a nascent opportunity—one not reserved for tribes alone.
“Indian Country is ripe with opportunity for profitable, mutually beneficial business engagements with tribes,” said DOE Office of Indian Energy Director Chris Deschene.
Positioning Tribes to Thrive
Deschene’s characterization of the opportunity for energy development on tribal lands is grounded in data-driven analysis and empirical evidence. In addition to funding technical resource and market analyses and contributing to intergovernmental energy and climate initiatives, the DOE Office of Indian Energy Policy and Programs has an established track record of cultivating propitious— and practicable—tribal energy visions. Since 2002, DOE has invested more than $50 million in nearly 200 tribal energy efficiency and renewable energy projects. Signaling its confidence in tribes’ ongoing success, DOE recently announced more than $9 million in funding for 16 clean energy projects in 24 tribal communities.
“In addition to supplementing the substantial economic investments tribes have made in energy projects through grants, the Office of Indian Energy has committed significant intellectual capital to growing the human capacity needed to deploy, maintain, and operate energy projects on tribal lands,” said Deschene. “Now we are at a critical moment—a turning point on the path to tribal energy and economic security where we have an opportunity to build on past investments and maximize the returns.”
Guided by energy visions and strategic plans ranging in scope from boldly enterprising to cautiously optimistic, AIAN communities are making headway.
In April Menominee Tribal Enterprises broke ground on a $2 million biomass energy plant in Wisconsin, and the Seneca Nation of Indians broke ground on a $6 million 1.5-megawatt (MW) wind project in New York. These projects, co-funded by DOE, are just two recent examples of tribal energy visions coming to fruition.
Leveraging federal and state government grants, incentives, and technical assistance, many other AIAN communities have amassed the resources, knowledge, and skills needed to harness their renewable resources and deploy holistic technology solutions designed to reduce their energy costs, create jobs, and build resilience.
“Clean energy is emerging as a new economic engine in tribal communities, and tribes are in the driver’s seat,” said Deschene. “By developing their indigenous energy resources, tribes are positioning themselves to not simply survive but thrive—and that goal is best realized through economic sovereignty.”
And yet the road to energy and economic sovereignty is not a solo journey. Tribal leaders recognize that there is a compelling business case for bringing a wide array of partners from government, academia, and industry on board. In many cases these partnerships, varying in scope and structure, are critical to making energy projects technically and economically viable for tribes.
And they have the potential to be win-win deals.
“Building strong government and industry partnerships at the local, regional, and national level has been key to our steady progress toward our renewable energy and carbon reduction goals,” said Jana Ganion, energy director of the Blue Lake Rancheria (BLR).
Blue Lake Rancheria
Blue Lake Rancheria (BLR) is one of a growing number of tribes pursuing progressive clean energy goals by investing in energy projects that incorporate a variety of renewable energy and energy efficiency technologies.
The small northern California tribe established its holistic climate action plan in 2008, and in December 2014 it was one of 16 U.S. communities designated by the White House as Climate Action Champions for extraordinary leadership on the climate front. “Tribal governments are choosing to lead with fast transitions to clean energy, and we are seeing stunningly successful examples of this across the United States,” said Ganion.
This spring BLR began construction of its 500-kilowatt (kW) solar array. The solar system is a cornerstone of the tribe’s low-carbon community microgrid project, scheduled to be online by year-end. When complete, the project will incorporate more than 950 kilowatt-hours of battery storage with the tribe’s solar energy system and back-up generators.
In addition to being selected for the Office of Indian Energy’s Strategic Technical Assistance Response Team (START) Program in 2015 and securing funding through the California Energy Commission’s Electric Program Investment Charge (EPIC) in February 2016, the tribe has cultivated healthy partnerships with a broad array of other stakeholders. They include DOE, NREL, the Schatz Energy Research Center at Humboldt State University, Redwood Coast Energy Authority, Tesla, Siemens, and REC Solar, among others.
Although BLR has run up against obstacles, the tribe has established separate business entities that have enabled it to work seamlessly with its private sector partners to circumvent perceived barriers.
“Initially, there was some apprehension about entering into a contract with a tribal nation, in part because sovereign immunity is seen as a potential financial risk,” said Chris Fennimore, director of business development for REC Solar, the local firm that contracted for the design, engineering, and construction of BLR’s solar array. The assumption of risk proved unfounded, Fennimore said, crediting Serraga Energy, LLC with assuaging their concerns and streamlining the process.
A tribally organized limited liability company, Serraga was formed to “develop and manage energy-related projects at the rancheria, enable nimble day-to-day decision making and, as the contracting entity, facilitate specific agreement terms, including limited waivers of sovereign immunity,” explained Ganion.
“Through the business entity [Serraga], they waived their sovereign immunity directly related to us. And they had already secured the [EPIC] grant. That increased our comfort level,” said Fennimore. “We contracted with Serraga in December and started construction in May, and I can honestly say it's been a smoother process than we’ve encountered with some of our commercial solar projects.”
Fennimore said REC Solar’s experience with BLR has opened up the possibility of future work with tribal nations. “Now that we have a better understanding of how to navigate these projects and realize the obstacles are surmountable, we see an untapped market.”
Saint Regis Mohawk Tribe
Across the country, in another state where favorable renewable energy programs, policies, and incentives are fueling a burgeoning solar industry, the Saint Regis Mohawk Tribe is embarking on a similar path.
The tribe, located in northeastern New York along the U.S.-Canadian border, faces some of the highest energy costs in the state. Inspired by a sustainable energy vision and a plan that emphasizes energy efficiency and solar energy to reduce costs and improve the lives of community members, the tribe and the Akwesasne Housing Authority (AHA) are leveraging a variety of partnerships to achieve their clean energy goals.
In addition to receiving strategic energy planning technical assistance from the Office of Indian Energy in 2015, AHA has aligned itself with AMERIND Risk, the National American Indian Housing Corporation, New York State Energy Research and Development Authority, the U.S. Department of Agriculture, and the U.S. Department of Housing and Urban Development (HUD).
In 2013 AHA completed an expansion of its Sunrise Acres low-income tribal housing complex with funding from HUD and the American Reinvestment and Recovery Act of 2009. The 20 units and a training center are equipped with PV arrays, geothermal heat pumps, and other energy-efficient features that have helped offset nearly 50% of their energy costs.
The success of the Sunrise Acres project was an impetus for AHA to explore options for financing additional solar projects. “AHA has worked with us to identify opportunities to combine federal grants and state incentives with the significant tax credits available for solar PV,” said John Clancy, attorney and renewable energy consultant for AHA. “Since AHA is a nontaxable entity, this is accomplished by partnering with a taxable entity that can utilize and provide AHA with credit for the valuable 30% federal investment tax credit [ITC] for solar projects.”
A number of other tribes, including the Oneida Tribe of Indians of Wisconsin and Picuris Pueblo in New Mexico, are structuring deals based on the “partnership flip” model, which allows investors to take advantage of the ITC and lets tribes avoid the up-front capital costs while retaining the option to take ownership of the project once a target return on investment is realized.
While tribes like BLR and Saint Regis Mohawk pursue smaller community-scale renewable energy projects to reduce costs and achieve energy and climate-resiliency goals, others are leveraging various partnership and ownership structures to develop much larger projects.
Moapa Band of Paiute Indians
For tribes that have ample resource potential for utility-scale solar generation but elect not to develop, own, and operate such a project independently, one option is a land-lease agreement. Such is the basis of a successful deal between the Moapa Band of Paiute Indians and Arizona-based developer First Solar. This summer, the Moapa Paiutes will complete construction of a 250-MW solar project on their reservation in southern Nevada. The first utility-scale solar project on tribal land, the Moapa Southern Paiute Solar Project will deliver enough clean, renewable energy to serve the needs of nearly 100,000 California homes through a 25-year power purchase agreement with the City of Los Angeles. In the process, it will displace an estimated 178,000 metric tons of carbon dioxide emissions each year—the equivalent of taking 34,000 cars off the road.
In addition to benefiting the environment, the project has provided revenue, jobs, and long-term economic development opportunities for the tribe, which is leasing the land for the solar array to First Solar. As the project owner, technology provider, and construction contractor, First Solar is in turn procuring services from the tribe during construction, including gravel, recycling, and food services. A tribal hiring preference the tribe negotiated ensured that Native Americans made up 25% of the construction labor force, and nearly 40 of those employees were tribal members. “Every Moapa who wants a job on the site has one,” said Greg Anderson, vice chairman of the Moapa Paiutes. In addition, seven long-term operations and maintenance jobs will be filled by Native workers, and First Solar has already trained two Moapa Paiutes who are slated for those positions.
As First Solar’s initial foray into tribal project development, the Moapa project is a win-win on a variety of levels, according to Laura Abram, director of public affairs for First Solar. “The success of the Moapa Southern Paiute Project demonstrates the value of … bringing diverse economic and job opportunities to Native American tribes while providing the land and services solar developers need to meet their customers’ growing demand for clean, affordable solar energy,” she said.
With 780 MW of tribal projects in various stages of development, First Solar is actively pursuing opportunities to collaborate with tribes to develop other utility-scale projects on tribal lands, Abram said.
Soboba Band of Luiseño Indians
For tribes with robust resource potential that desire a greater ownership role in their projects, another option is to contract with an experienced consulting firm to represent the tribe’s interests on all phases of energy project development, from feasibility and planning through financing and construction.
That was the route the Southern California-based Soboba Band of Luiseño Indians took when it hired Optimum Group to assist with land use master planning in 2013. “As an owner representative, we bring our expertise to assess a particular technology or project, make the recommendation we feel is best for the client based on our experience and track record of successful projects, and then represent the tribe’s interests in going to the marketplace,” said Ali Sahabi, president of Optimum Group. As part of that effort, Optimum Group helped identify sites suitable for community-scale solar projects and demonstrate the technical and economic viability of the project, all of which supported the tribe in writing a successful grant application.
In January the tribe broke ground on a 1-MW solar array that will occupy a small parcel of land on its 7,000-acre reservation. The tribe invested more than $1 million in the $2.1 million PV project, which was co-funded by a $1 million DOE grant awarded in 2015.
The PV plant will help power the tribal administrative center, schools, and other community facilities, meeting 80% of the buildings’ annual energy needs and saving the tribe an estimated $6.4 million in electricity costs over the next 20 years. As the sole owner of the project, the tribe will receive credit for generation fed back to the grid through a net-metering agreement negotiated with Southern California Edison with assistance from Optimum Group.
In addition to freeing up discretionary funds to address vital community needs, the project will provide jobs for tribal members and advance the tribe’s long-term energy vision. After completing the first phase of the project this summer, the tribe plans to move forward with a two-phased expansion that will bring the total generation to 3 MW—nearly 35% of the Soboba community’s total energy needs.
“Native people have long been ‘Keepers of the Earth,’ and with that, the tribe takes tremendous pride in this new environmentally safe development that is taking Soboba one step closer to becoming a self-sustaining tribe,” said Tribal Council Chairwoman Rosemary Morillo.
Solar Energy in Rural Alaska
While the excellent solar generation potential in the Southwest has created one of the more palpable market opportunities for tribal energy development, other, less conspicuous opportunities are arising much farther north. Although it may seem counterintuitive, there are significant solar energy investment opportunities in Alaska Native villages. Rural Alaska’s geographic isolation, heavy dependence on fossil fuels for electricity generation and heating, vulnerability to the impacts of climate change, and disproportionately high energy costs often make developing and deploying various combinations of clean and renewable energy technologies economically attractive.
According to a new report from the Office of Indian Energy entitled “Solar Energy Prospecting in Remote Alaska: An Economic Analysis of Solar Photovoltaics in the Last Frontier State,” Alaska’s solar resource is comparable to that of Germany, which leads the world in solar installations with roughly two averagesized 250-Watt solar PV panels per capita. The analysis, conducted by NREL, finds that solar can be an affordable option to reduce diesel fuel usage in certain locations throughout Alaska.
Last October, DOE convened solar industry leaders in Anchorage to kick off a collaborative effort to advance innovative financing and technical solutions for integrating solar energy generation onto islanded microgrids serving villages in Alaska. DOE is also working with a variety of Alaskan stakeholders to examine how public-private partnerships can be used to facilitate and attract increased financing for solar and other energy technology development statewide as part of the National Strategy for the Arctic Region.
Office of Indian Energy Senior Policy Advisor Doug MacCourt worked with Energy Secretary Ernest Moniz to present the Solar Prospecting report’s findings at a field hearing of the U.S. Senate Energy and Natural Resources Committee in Bethel in February. “Our research shows a clear path for integrating solar PV systems at a feasible price point to reduce high diesel fuel costs and create cleaner, more resilient energy systems in remote Native villages,” he said.
NREL Senior Finance Analyst Paul Schwabe, who authored the report, sees a unique opportunity for industry to partner with Alaska Native Corporations (ANCs), which are for-profit corporations involved in myriad business operations for the primary benefit of their tribal members. “The business expertise, combined with the local knowledge and influence of ANCs, could open up a variety of business structures for rural Alaska, from direct ownership to third-party financing,” said Schwabe.
Driving Innovation, Creating Prosperity
These collaborative efforts to amplify solar energy opportunities in Alaska reflect DOE’s broader, mission-driven efforts to advance national and global energy and climate goals by increasing clean energy investment and building a clean energy economy.
“By facilitating mutually beneficial energy development opportunities between tribes and industry, the Office of Indian Energy can help bridge the gap between the demand for electrification, energy infrastructure, and energy service reliability and the application of innovative technologies on tribal lands,” Deschene said.
A key strategy for this is developing an industry-tribal network to address barriers to tribal energy innovation. To initiate this dialogue, the Office of Indian Energy is planning to host business round tables with tribal, energy industry, and financial sector representatives to identify opportunities as well as barriers and make recommendations.
The ultimate goal, according to MacCourt, is the creation of an independent organization dedicated to process improvements and partnerships that facilitate and accelerate clean energy development on tribal lands.
“The challenges hindering energy development on tribal lands are largely access to capital, distribution, and human capacity,” said MacCourt. “Working closely with industry and tribal leaders, we can and must meet these challenges through public-private partnerships. The Department of Energy leads some of the world’s most successful industry partnerships to commercialize clean energy technology. Applying that success to AIAN communities means bringing new business models and innovations in finance, and opening a new dialogue between business and tribal leaders who see the value of a clean energy future.”
For more information on energy development and investment opportunities on tribal lands, visit energy.gov/indianenergy.
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