Private Land Does Not Equal Easy

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The US Bureau of Land Management has responded to industry concerns over its bureaucratic and convoluted project licensing process. Despite recent concerns that new regulations are pricing some solar development companies out of the game, CSP Today discovers that private land does not necessarily offer the easy alternative.

 

Despite the intense level of activity that the federal lands of Southwest America have attracted in recent years regarding solar project development it must be said that little has actually happened. Although 200 solar applications were filed, not a single one has been approved.

 

Developers speak of the long and drawn out process that swamps their applications to the BLM, where environmental groups, determined to protect public lands make obtaining permits extremely difficult. Today, much of the land deliberately set aside remains vacant.

 

Go Private

Developers do have another option open to them – private land. But does going private necessarily imply that developers can bypass problems experienced at a federal level, and work at the pace they want to for the prices that protect profit?

 

From a financial point of view, perhaps the answer to this question is yes. The Bureau of Land Management recently introduced a rent schedule scheme. For the first time, the industry now has a clear set of prices regarding rent per acre for solar energy right-of-way authorizations on public lands.

The scheme is intended to increase transparency and standardize rents and Ray Brady at the BLM is convinced that this is a beneficial step forward and will reduce the levels of frustration on all sides.

Clear though the rent prices may now be, developers are uneasy. It seems that the prices are higher (some say up to two or three times) than expected. Coupled with the megawatt capacity charge, this impacts on developers and has not been popular.

 

Ray Brady at the BLM defends the prices as accurate, pointing out that the main players in the solar industry themselves submitted data to help shape and inform the outcome of BLM figures. He also says that due to the fact that private land is bought whereas federal land is leased, comparisons are extremely difficult. The task was, “a bit like comparing apples and oranges. We had a difficult time comparing those transactions because there are very few out there”.

 

Go Federal

Site suitability is another consideration for developers and finding large enough private plots with all the requirements that CSP demands is far from straightforward. Take the example of the recently won contract for the Hualapai Valley Solar Project in the Mojave Desert, Arizona by Mohave Solar, an Abengoa Solar subsidiary. Requirements read, ‘the selected site on private land is flat, and has good access to major electric transmission lines, away from major residential areas to not adversely affect existing residents, while being close enough to employ the population base’.

 

And like other conventional power plants, most CSP technologies require access to an abundant water supply. Given that private land is usually farmland in the desert, such site applications often prove controversial.

 

As Rachel McMahon at Solar Millennium commented, “The private option is by no means necessarily the easier one. Each case is site specific and depends on local authorities. All projects must undergo similar permitting processes”.

 

In California for example, it comes under the California Environmental Quality Act and the state Energy Commission. Any species federally protected involves the U.S. Fish and Wildlife Service and in parallel to all this are federal requirements and those of the National Environmental Policy Act. Even if a project is sited on private land, but funded from federal loans, developers must enter the federal environmental review process.

 

So to recap: Financially, federal land is now more expensive. Logistically it is still easier to locate. Regarding environmental permits, there is little difference.

 

But which of the two is faster?

Recently, the BLM had something of a revolution. The Fast-Track renewable energy projects programme identified 14 solar projects, which could qualify for ARRA funding in 2010. Energies have then been focused on getting these projects through the permitting process quickly in order for them to break ground by December 2010.

 

Rachel McMohan at Solar Millennium welcomes this change. Speaking of their Blythe project in California she commented, “When we first started we were looking at a process of several years. The fast track programme was created and we will now have our permit in under a year, it has absolutely worked. It has been incredibly effective“.

 

Today, the question of whether private land has become more advantageous for developers than federal land is a very different one to that of the past. For those able to reach the fast track system, permitting and speed issues are no longer a problem.

 

Yes, pricing may have increased, but only three months in it is too soon to see whether some developers are being priced out of the market. With the immense profitability from power purchase agreements combined with the financial incentives offered by the Obama administration, there is the strong likelihood that costs will be absorbed and the US federal solar industry will continue its journey towards becoming a significant renewable energy contributor.

 

This topic will be discussed in more detail at the CSP Project Development Conference  taking place in Denver, October 25 -26.

 

Speakers on the session include, BLM, NREL, US Fish and Wildlife Service, Ashwill Associates, NRDC, Strata Equity Group and a comprehensive case study on will be provided by Albert Fong, Managing Director of Albiasa Solar.

 

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