[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
RENEWABLE ENERGY OPPORTUNITIES AND ISSUES ON FEDERAL LANDS: REVIEW OF
TITLE II, SUBTITLE B, GEOTHERMAL ENERGY OF EPACT; AND OTHER RENEWABLE
PROGRAMS AND PROPOSALS FOR PUBLIC RESOURCES
=======================================================================
OVERSIGHT HEARING
before the
SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES
of the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
Thursday, April 19, 2007
__________
Serial No. 110-18
__________
Printed for the use of the Committee on Natural Resources
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
or
Committee address: http://resourcescommittee.house.gov
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34-825 PDF WASHINGTON DC: 2007
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COMMITTEE ON NATURAL RESOURCES
NICK J. RAHALL II, West Virginia, Chairman
DON YOUNG, Alaska, Ranking Republican Member
Dale E. Kildee, Michigan Jim Saxton, New Jersey
Eni F.H. Faleomavaega, American Elton Gallegly, California
Samoa John J. Duncan, Jr., Tennessee
Neil Abercrombie, Hawaii Wayne T. Gilchrest, Maryland
Solomon P. Ortiz, Texas Ken Calvert, California
Frank Pallone, Jr., New Jersey Chris Cannon, Utah
Donna M. Christensen, Virgin Thomas G. Tancredo, Colorado
Islands Jeff Flake, Arizona
Grace F. Napolitano, California Stevan Pearce, New Mexico
Rush D. Holt, New Jersey Henry E. Brown, Jr., South
Raul M. Grijalva, Arizona Carolina
Madeleine Z. Bordallo, Guam Luis G. Fortuno, Puerto Rico
Jim Costa, California Cathy McMorris Rodgers, Washington
Dan Boren, Oklahoma Bobby Jindal, Louisiana
John P. Sarbanes, Maryland Louie Gohmert, Texas
George Miller, California Tom Cole, Oklahoma
Edward J. Markey, Massachusetts Rob Bishop, Utah
Peter A. DeFazio, Oregon Bill Shuster, Pennsylvania
Maurice D. Hinchey, New York Dean Heller, Nevada
Patrick J. Kennedy, Rhode Island Bill Sali, Idaho
Ron Kind, Wisconsin Doug Lamborn, Colorado
Lois Capps, California Vacancy
Jay Inslee, Washington
Mark Udall, Colorado
Joe Baca, California
Hilda L. Solis, California
Stephanie Herseth, South Dakota
Heath Shuler, North Carolina
James H. Zoia, Chief of Staff
Jeffrey P. Petrich, Chief Counsel
Lloyd Jones, Republican Staff Director
Lisa Pittman, Republican Chief Counsel
------
SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES
JIM COSTA, California, Chairman
STEVAN PEARCE, New Mexico, Ranking Republican Member
Eni F.H. Faleomavaega, American Bobby Jindal, Louisiana
Samoa Louie Gohmert, Texas
Solomon P. Ortiz, Texas Bill Shuster, Pennsylvania
Rush D. Holt, New Jersey Dean Heller, Nevada
Dan Boren, Oklahoma Bill Sali, Idaho
Maurice D. Hinchey, New York Don Young, Alaska ex officio
Patrick J. Kennedy, Rhode Island
Hilda L. Solis, California
Nick J. Rahall II, West Virginia,
ex officio
------
CONTENTS
----------
Page
Hearing held on Thursday, April 19, 2007......................... 1
Statement of Members:
Costa, Hon. Jim, a Representative in Congress from the State
of California.............................................. 1
Pearce, Hon. Stevan, a Representative in Congress from the
State of New Mexico........................................ 3
Statement of Witnesses:
Bar-Lev, Joshua, Vice President of Regulatory Affairs,
BrightSource Energy........................................ 68
Prepared statement of.................................... 70
Gough, Robert, Secretary, Intertribal Council on Utility
Policy..................................................... 51
Prepared statement of.................................... 53
Response to questions submitted for the record........... 58
Hughes, Jim, Acting Director, Bureau of Land Management, U.S.
Department of the Interior................................. 4
Prepared statement of.................................... 6
Response to questions submitted for the record........... 9
Jungwirth, Lynn, Executive Director, The Watershed Research
and Training Center........................................ 63
Prepared statement of.................................... 64
Kunz, Daniel, President and Chief Executive Officer, US
Geothermal Inc............................................. 23
Prepared statement of.................................... 25
Lutgen, Will, Jr., Executive Director, Northwest Public Power
Association................................................ 74
Prepared statement of.................................... 76
Swisher, Randall, Executive Director, American Wind Energy
Association................................................ 42
Prepared statement of.................................... 44
Response to questions submitted for the record........... 48
Tester, Jefferson, Meissner Professor of Chemical
Engineering, Massachusetts Institute of Technology......... 11
Prepared statement of.................................... 13
Thomsen, Paul A., Public Policy Administrator, ORMAT
Technologies............................................... 28
Prepared statement of.................................... 29
Additional materials supplied:
UTC Power, Statement submitted for the record................ 90
Information Retained in the Committee's Official Files
GAO Report to the Ranking Minority Member, Committee on
Energy and Natural Resources, U.S. Senate, ``RENEWABLE
ENERGY: Increased Geothermal Development Will Depend on
Overcoming Many Challenges''
Massachusetts Institute of Technology Summary Report ``The
Future of Geothermal Energy: Impact of Enhanced Geothermal
Systems (EGS) on the United States in the 21st Century''
OVERSIGHT HEARING ON RENEWABLE ENERGY OPPORTUNITIES AND ISSUES ON
FEDERAL LANDS: REVIEW OF TITLE II, SUBTITLE B, GEOTHERMAL ENERGY OF
EPACT; AND OTHER RENEWABLE PROGRAMS AND PROPOSALS FOR PUBLIC RESOURCES.
----------
Thursday, April 19, 2007
U.S. House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Natural Resources
Washington, D.C.
----------
The Subcommittee met, pursuant to call, at 2:05 p.m. in
Room 1324, Longworth House Office Building, Hon. Jim Costa
[Chairman of the Subcommittee] presiding.
Present: Representatives Costa, Sali, Pearce, Kennedy,
Solis, and McMorris Rodgers.
STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN CONGRESS FROM
THE STATE OF CALIFORNIA
Mr. Costa. The Energy and Mineral Resources Subcommittee of
the Natural Resources Committee will now come to order. This is
an oversight hearing dealing with renewable energy
opportunities and issues as it relates to our committee's
jurisdiction on Federal lands. Obviously there are a number of
areas where we have jurisdiction dealing with Title II and
Subtitle B as it relates to the Geothermal Energy Act and other
renewable programs and proposals for public resources.
We have here this afternoon two panels before us of
witnesses who are highly reputable and have experience and
expertise in their respective fields, and we look forward to
hearing that testimony. Let me indicate that we are challenged
with a roll call that will be coming up here shortly, and so in
conversation with the Ranking Member we have decided we would
give our opening statements if that is fine with you folks,
although we are not really putting it up for a vote, and then
we suspect we will be called to go over to the Floor and cast
our votes, and so that will be as of a form of a little break
for those of you who would like to have a little break and go
get some coffee or whatever.
Hopefully we will be back within 25 minutes but let us try
to get as far as we can here. We have a lot of other committees
that are currently holding hearings, and it is that time of
year, and I am mindful of my colleagues' time, and we want to
try to expedite it in a way that makes sense. So having said
all that, let me go through some formalities that I am supposed
to do as the Chairperson of this Subcommittee.
As was indicated, under Rule 4[g], the Chairman and the
Ranking Member may make an opening statement. If any Members
have other statements, we will include them in the record under
unanimous consent. Additionally, under Committee Rule 4[h],
additional material for the record should be submitted by the
Members or witnesses within 10 days of this hearing. I always
ask those who are testifying that when we submit questions from
our colleagues who could not be here because they had another
commitment or hearing, that you try to get your responses to
the questions to us sooner rather than later. That would
certainly be appreciated. So your cooperation is certainly
important.
Let me briefly open up in suggesting that this is part of a
larger effort to look at how we can complement previous efforts
that have taken place by those Congresses before us to enhance
our efforts to produce additional energy alternatives and
enhance other existing energy uses that we and our country
benefit from both economically as well as socially.
The testimony that we will receive this afternoon is from
nine individuals who have various experiences and expertise on
renewable energy technologies and policies. Those include but
are not limited to geothermal, solar, wind and biomass, four
technologies that have I believe significant potential to
produce additional energy for citizens of this country as it
relates to public resources on public lands.
Today we will look at the EPAct Section 211 that urges the
Secretary of Interior to seek in the next 10 years to have
approved additional energy from renewable sources on public
lands within a generation capacity of at least 10,000
megawatts. Frankly, I would like us to see us do better, and I
think we can.
There are a number of focuses as it relates to our current
energy uses and to all the management tools that currently are
available to us, and that in the future will be available to us
as we see new technology breakthroughs occurring. Certainly we
know that for any scenario that we envision that our current
sustainable energy uses of coal, oil and gas resources will
continue to provide a significant, significant amount of our
energy source as it does today.
But trying to use new technologies and use additional
energy sources I think is common sense. This opportunity to
look ahead then must look at the longer term not just the short
term, but the longer term to address prospects that include but
are not limited to climate change and change in terms of
economies on the world global market. Let me be clear in terms
of my own opinion of renewable energy. Renewable energy is an
important opportunity but I do not believe that it is a silver
bullet.
I do not think there is a silver bullet but I think that
continuing efforts, not just in these that we are testifying
about today, but I also serve on the Ag Committee and we are
looking at real opportunities that U.S. agriculture can play in
terms of providing additional energy sources to America, and if
we are successful here, obviously it will benefit other parts
of the world. We already see in Brazil where they have done
that very successfully.
So that is kind of what I am looking for today in terms of
the testimony. We have had a number of groups that have weighed
in. The Western Governors' Association has adopted a resolution
to develop an additional 30,000 megawatts of energy by the year
2015, and I think those are good goals. Increasing energy
efficiency by 20 percent in 2020. I know in California and
other western states there is an aggressive effort to do just
that.
Obviously we are going to have to also look at reliable
transmission, and I will be interested in hearing these
witnesses today talk about the challenges of transmission of
this energy from the source as it becomes a reality. So those
are among the many questions and concerns I have, and I am
anxiously looking forward to the testimony. I will now defer to
my colleague, the gentleman from New Mexico, for an opening
statement.
STATEMENT OF HON. STEVAN PEARCE, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEW MEXICO
Mr. Pearce. Thank you, Mr. Chairman. I want to thank you
for having this hearing on geothermal energy. We have lots of
hot water in New Mexico, and I find myself in it more than I
should. You and I both voted for the Energy Policy Act. I felt
like it was a positive landmark step in the effort to lower
energy prices for our constituents and reduce our dependence on
foreign sources of energy.
The Energy Policy Act sought to find a balance between the
use of conventional fossil fuels, the expansion of renewable
and alternative energy sources, and conservation to meet the
energy needs of our nation. We need to diversify our energy
resources as we go forward in time. For my part, last August we
convened a seminar in New Mexico declaring that we as research
scientists, we as the university people, businesspeople, and
consumer advocates felt like New Mexico could and should be the
leader in renewable, the alternative sources of energy. We are
well positioned with respect to wind, solar, geothermal,
biomass, hydrogen and nuclear, and so New Mexico can and should
be a leader in converting to those sources of energy.
However, there are problems in the transition, and that is
what I think the purposes of this committee are. This hearing
is going to focus on geothermal energy, the provisions in the
Act, and the opportunities for development of other renewable
energy sources on Federal lands. Among other policies, the
geothermal provisions allow us to lease geothermal resources
just like the oil and gas leasing program. It allows us to
revise and simplify the royalty assessments. It provides
incentives to companies to expedite construction, and also
allows us to regrow the BLM geothermal program staff with money
generated by geothermal leasing by the geothermal leasing
program itself.
We will hear from the witnesses on our first panel about
the opportunities for expanded use of geothermal resources that
are beyond our imagination when we crafted the geothermal
provisions of the Energy Policy Act in 2005. These witnesses
will illustrate once again that the geothermal technology
continues to evolve, and that Federal research dollars for
geothermal engineering and science research are a prudent
investment for our future.
We hope that in future budgets set by the Administration
that Department of Energy funding for geothermal research is
restored. Geothermal energy is an important energy resource to
my home state of New Mexico and to Chairman Costa's home state
of California.
We also included in the Energy Policy Act a sense of
Congress that the Secretary of the Interior should be
generating at least 10,000 megawatts from use of renewable
energy projects including hydroelectric within 10 years. To
that end, we will hear from Mr. Hughes the progress that BLM
has made in processing leases for wind energy, biomass,
geothermal and solar projects on Federal land.
The Federal lands will play a significant role for the
western public land states that have established renewable
portfolio standards. Both California and Nevada have renewable
portfolio standard requiring that 20 percent of the electricity
used in that state must come from renewable energy resources
within 10 years. I would like to remind people that while wind
and solar can augment our electrical energy generation, they
cannot provide base load power.
Fortunately geothermal and hydropower can provide that base
load power. In fact, today's hydropower provides the largest
percent of the renewable energy produced in the U.S. and also
some of the lowest cost energy available, as Mr. Lutgen can
testify to. Again, I thank all of the witnesses for their time,
and I look forward to the discussion on implementation of the
Energy Policy Act 2005 geothermal energy provisions. Thank you,
Mr. Chairman. I yield back.
Mr. Costa. Thank you very much, Congressman Pearce, for
that good statement. And what we will again try to do, asking
staff now to give us a hand on how far we are from our votes,
but again to try to expedite the time we are going to see since
it is five minutes each, 10 minutes now, let us try to see if
we can get through at least the first statement of our first
witness who is Mr. Hughes.
She is trying to confuse me. Mr. Hughes is no stranger to
this committee. He is the acting Director of the Bureau of Land
Management, U.S. Department of Labor. U.S. Department of
Interior. Excuse me. I put you in a different department.
Before us in the past and here again today, and we are glad to
have you. Please, we will have your statement and then we will
break for us to go cast our votes.
STATEMENT OF JIM HUGHES, DIRECTOR,
BUREAU OF LAND MANAGEMENT
Mr. Hughes. Thank you, Mr. Chairman, and members of the
Subcommittee.
Mr. Costa. Bring that mic a little closer to you, please.
Mr. Hughes. I appreciate this opportunity to appear before
you today to discuss renewable energy opportunities and issues
on Federal lands. With the 37th anniversary of earth day
approaching this Sunday, it is fitting that I am here today to
update you on the BLM's ongoing efforts to facilitate renewable
energy development on public lands and the progress the BLM has
made implementing the requirements of the Energy Policy Act of
2005.
The Energy Policy Act directs the Department of Interior to
take actions to promote the development of domestic renewable
energy supplies. The BLM has a clear mandate to provide access
to energy development on public lands in balance with other
multiple use purposes. Strict mitigation measures are employed
to minimize environmental impacts on public lands.
Through our land use planning process, the BLM works with
local communities and other interested stakeholders to consider
a range of concerns and opinions and provide for
environmentally sound management of the resources. The BLM has
supported the development of renewable energy projects on
public lands for decades but recent guidance from the Energy
Policy Act and increased interest in project development has
provided the impetus to improve our processes and focus
increased efforts in the area of renewable energy development.
Improved technology, higher fossil fuel prices, state
requirements to produce renewable energy, and extended tax
credits in the Energy Policy Act have all contributed to
increased interest in the applications for renewable energy
projects. Twenty-one states and the District of Columbia have
already instituted renewable portfolio standards. The BLM
continues to do its part to contribute to domestic energy
production through the implementation of the Energy Policy Act.
Through the Act, Congress affirmed the critical role of the
public lands in creating a balanced energy portfolio for the
Nation by direction the Bureau of Land Management to approve
enough projects on the public lands to generate at least 10,000
megawatts of electricity from nonhydropower renewable resources
by the year 2015.
The BLM is advancing the development of geothermal, wind,
solar and biomass energy from the public lands. The annual
electrical needs of 1.2 million homes are currently generated
by 55 geothermal leases on BLM managed lands. Another one
million homes could be powered in coming years by wind energy
produced on public lands. The BLM has approved nearly 300
geothermal lease applications since 2001, and more than 100
wind energy right-of-ways during that same period of time.
Interest in solar energy development is beginning to increase
on public lands with 43 applications currently pending.
Significant accomplishments in the geothermal, wind and
solar programs include the soon to be published geothermal
regulations. Also the release of the final programmatic wind
energy development environmental impact statement in 2005 has
also assisted our efforts, and just this month we released
updated policy guidance for processing applications for solar
energy projects on public lands.
Each of these milestones furthers the BLM's ability to
respond in a timely, efficient manner to applications for
renewable energy development on public lands. We have also been
working with state, tribal and local government partners as
well as private interests to develop strategies to increase the
commercial utilization of woody biomass and expand economic
opportunities for local communities to develop energy
generation industries.
Since implementation of its biomass strategy in 2004, the
BLM has increased its biomass offerings from 30,000 tons to
122,000 tons in the year 2006. When it comes to our own energy
consumption, the Secretary of the Interior has made it clear
that he welcomes the President's call for increased energy
efficiency in the Federal government, and that DOI will
continue to be a leader in energy efficiency.
The BLM has installed over 600 photovoltaic solar equipment
systems in our facilities to self-generate electricity, and we
expect to generate more. Energy efficiency as well as the
installation of renewable energy generation will be a focus in
future BLM facility improvements and construction projects, and
we have several current initiatives well underway.
I have just touched on a few of the highlights in each of
these areas of renewable energy development and BLM's own use
of these technologies. Each of these is explained in more
detail in my full testimony which the committee has. Mr.
Chairman, this concludes my opening remarks. I will be happy to
answer any questions when you return.
[The prepared statement of Mr. Hughes follows:]
Statement of Jim Hughes, Acting Director,
Bureau of Land Management, U.S. Department of the Interior
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to appear here today to discuss renewable energy
development on public lands.
Background
As steward of 258 million acres of this nation's lands, the Bureau
of Land Management (BLM) has tremendous responsibility to ensure
multiple-use management of these resources for all Americans. Today's
testimony will focus on one aspect of that multiple-use mandate:
renewable energy development.
In providing an appropriate mix of both renewable and conventional
energy supplies from the public lands, the BLM contributes to a more
secure and reliable energy future for our country. The BLM has
supported the development of renewable energy projects on public lands
for decades, but recent guidance through the Energy Policy Act of 2005
(EPAct) and increased interest in project development has provided
impetus to improve our processes and increase our efforts in the area
of renewable energy development.
While the quantity of domestic energy produced from renewable
resources is relatively small in comparison to conventional resources,
the Energy Information Administration projects that the use of
renewable technologies for electricity generation will grow steadily
through 2030, stimulated by improved technology, higher fossil fuel
prices, State requirements to produce renewable energy, and extended
tax credits in the EPAct.
Through the EPAct, Congress affirmed the critical role of the
public lands in creating a balanced energy portfolio for the nation by
providing a sense of the Congress that BLM should approve enough
projects on public lands to generate at least 10,000 megawatts (MW) of
electricity from non-hydropower renewable resources by 2015. The BLM
continues to implement the EPAct, which requires the development of
renewable energy resources as part of an overall strategy to develop a
diverse portfolio of domestic energy supplies for our future.
Protecting the Environment
The BLM's land use planning process seeks to ensure that energy
development on public lands is done in a way that protects the
environment. Strict mitigation measures are employed to minimize
impacts on wildlife from habitat fragmentation, ground disturbances, or
noise resulting from renewable energy development. Increasingly, BLM is
mitigating effects of energy production and other activities through
available land use planning tools.
In August 2006, an environmental review was completed for the
largest wind energy project on Federal land in the last 25 years.
Approval of the Record of Decision and right-of-way grant for the
Cotterel Wind Power Project on 4,500 acres of BLM-managed public land
cleared the way for the installation of up to 98 turbines on a ridge in
south-central Idaho. The right-of-way grant includes important measures
for mitigating the effects of wind generation on wildlife resources.
Best Management Practices, offsite mitigation, and adaptive management
strategies were incorporated into the project to address impacts to
sage-grouse, raptors, bats, and migratory birds. An interagency team of
Federal and state biologists developed the mitigation plan and will
continue to monitor wildlife impacts. In this case, the applicant has
executed a letter of commitment for annual contributions to be in an
amount equal to approximately one-half of one percent of the gross
revenues received from the project's electricity sales. The 200 MW
project will generate enough electricity to supply approximately 50,000
homes.
The Healthy Lands Initiative proposed in the FY 2008 budget is
another example of taking aggressive steps now to help avoid the need
for future restrictions on uses of public land that would directly
affect the Nation's economy and quality of life. Land health is being
affected by pressures such as community expansion, wildfires,
unprecedented demands for energy resources, ever-expanding recreation
uses, and weed invasion. These pressures often interact to affect large
landscapes and ecosystems, particularly those in the growing wildlife-
energy interface. The Healthy Lands Initiative represents a new concept
for meeting emerging challenges in managing natural resources with
flexible, landscape-level approaches for maintaining or improving land
health where lands continue to be available for multiple uses.
Renewable Energy Development on Public Lands
The BLM is advancing the development of geothermal, wind, solar,
and biomass energy from public lands. Recently, BLM began a
collaborative effort with the Department of Energy's National Renewable
Energy Laboratory (NREL) to focus on expediting the processing of
renewable energy projects on public lands. NREL will be providing
additional technical resources to assist BLM in the review of wind and
solar projects. In addition, NREL will provide additional assessments
to identify areas for possible future leasing.
Geothermal: Fully 90 percent of the existing and future geothermal
resources in the United States are on Federal lands. The BLM currently
manages 354 geothermal leases, 55 of which are producing and generate
over 1,250 MW of electrical power (enough to power 1.2 million homes).
In addition, the BLM manages a small number of direct-use leases, which
provide an alternative source of energy for greenhouses, fish farms,
and other commercial facilities. Demand for both electrical power and
direct-use from Federal geothermal resources is increasing. Since 2001,
the BLM has processed more than 200 geothermal lease applications,
compared to 20 lease applications received from 1997-2001. Geothermal
energy generates over $12 million in Federal revenues each year.
Title II of the EPAct made comprehensive changes to the Geothermal
Steam Act--the authorizing statute for geothermal development on public
lands--by requiring land nominated and made available for leasing to be
leased on a competitive basis; restructuring royalties; and revising
lease terms, conditions and rentals. As a result, the BLM and the
Minerals Management Service have rewritten their geothermal rules to
conform to the statutory changes. The Final Rule will be published in
the Federal Register in the near future, and is scheduled to take
effect 30 days after publication.
The BLM and Forest Service signed an Interagency Memorandum of
Understanding (MOU) in April 2006 in accordance with section 225 of the
EPAct. The MOU sets the foundation for increasing the collaborative
approach between the agencies. The BLM and Forest Service have decided
to prepare a Programmatic Environmental Impact Statement for Geothermal
Development to assist in geothermal leasing and permitting on BLM
public lands and National Forest lands. A draft of the Programmatic EIS
is tentatively scheduled for release in December 2007.
Wind Energy: Section 211 of the Energy Policy Act provides a sense
of the Congress that the Secretary of the Interior should seek to
approve at least 10,000 MW of non-hydropower renewable energy projects
on BLM-managed public lands by the year 2015. There are 330 MW of
installed wind energy projects on public lands, and another 599 MW
proposed or recently approved, creating the potential to power nearly
300,000 homes. Responding to increasing demand for wind power, the BLM
has granted over 100 authorizations associated with wind energy in the
last five years, compared with fewer than five issued between 1997 and
2001.
A programmatic Environmental Impact Statement (EIS) relating to the
authorization of wind energy projects was completed in 2005. This EIS
amended 52 BLM land use plans and provides the foundation for
environmental analysis of future wind proposals on BLM lands. The BLM
has identified 20.6 million acres of public land in the West with wind
energy potential. Because wind energy facilities require only small
amounts of land, actual development will involve just a fraction of
that acreage.
In 2006, the BLM updated internal policy that implemented Best
Management Practices and other mitigation measures for wind energy
projects to avoid impacts to sage-grouse, raptors, bats and migratory
birds, and to minimize habitat fragmentation, ground disturbance, and
noise. These measures, combined with advances in technology, are
allowing increased capacity to generate wind energy on public lands
while conserving other important resource values.
Solar: Recognizing the recent technological advancements in the
production of solar energy, this month the BLM updated policy guidance
for processing applications for solar energy projects on public lands.
The latest policy guidance directs BLM field offices to provide
adequate resources to review and process applications for solar energy
projects in a timely manner. The guidance also requires the BLM to
address solar development when revising or updating land use plans for
areas shown to have potential for commercial solar energy development.
The policy requires appropriate stipulations in authorizations to
mitigate environmental impacts of projects, as well as bonding to
ensure compliance and site reclamation. The guidance also describes the
level of environmental review required before an authorization can be
issued.
The development and use of solar energy has significant potential
in the Western states. The BLM is prepared to respond to industry
interest in this renewable energy resource.
Biomass: Biomass from the public lands managed by the BLM is
predominantly woody debris, the by-product of hazardous fuels removal
projects undertaken to reduce the risk of wildland fire and projects to
improve forest and rangeland health. Using stewardship contracting and
other tools provided in the Healthy Forests Initiative, the Healthy
Forest Restoration Act, and the Tribal Forest Protection Act, the BLM
has been working with state, Tribal, and local government partners, as
well as private interests, to develop strategies to increase the
commercial utilization of woody biomass and expand economic
opportunities for local communities to develop energy generation
industries. Woody debris that used to go up in smoke may instead be
converted to heat, light, and economic development. Since
implementation of its biomass strategy, the BLM increased its biomass
offering from 30,000 tons in FY 04 to 122,000 tons in FY 06.
BLM has undertaken biomass demonstration projects across the West,
including Alaska, California, Colorado, Idaho, and Oregon, in which
local field offices are working with nearby communities and
entrepreneurs to develop strategies for using biomass to generate
energy.
In 2006 in Lakeview, Oregon, the BLM, the Forest Service, and 20
others representing local government, business, and non-profit
organizations signed a Declaration of Cooperation in support of a 10-15
MW Biomass Energy Facility with the potential to supply electricity to
more than 14,000 homes. The proposed Biomass Energy Facility is
expected to be operational in 2008.
In Central Oregon, the BLM and Forest Service have committed to
offering 80,000 tons of woody biomass material annually to the
Confederated Tribes of Warm Springs. In addition, the proposal will
treat 10,000 acres per year of forest and grasslands hazardous fuels
for the next ten years. The Tribe will use the agencies' long-term
commitment to provide biomass material to expand its existing energy
facility near Warm Springs, Oregon.
Section 210 of the Energy Policy Act authorizes Federal grants for
biomass use. BLM assisted the Forest Service with reviews and
selections of Forest Service Biomass Grants in FY 2006 and 2007.
Eighteen small enterprises received $4.2 million in grants to develop
innovative uses for wood biomass as sources of renewable energy and new
products in 2006, and 26 small businesses and community groups received
grants totaling $6.2 million in 2007. The grant recipients were
selected based on their capacity to increase biomass use on Forest
Service land; however, 14 of them have the potential to also increase
biomass use on BLM lands. Together with the non-federal matches
required by the grant program, a total of approximately $12 million
will be spent on these biomass projects in FY 2007.
Walking the talk--use of renewable energy by BLM
In addition to its significant role in domestic energy production,
BLM is taking a leadership role by working to advance the use of
renewable energy resources at numerous facilities in the field. There
is significant potential for the installation and use of renewable
energy resources, such as solar, geothermal, and wind power at existing
and new BLM facilities.
The BLM generates a total of 185 megawatt-hours of electricity from
photovoltaic systems each year from over 600 installations. Varied uses
of photovoltaic energy include water pumping, outdoor lighting,
communication sites, weather and water monitoring, remote field
station, and visitor centers. Since 1995, the BLM has installed over
130 photovoltaic systems to replace fossil fuel powered generators. The
seasonal nature of the remote facilities and long summer sun hours have
made solar energy a cost effective approach to supplying power to these
facilities.
The BLM's Campbell Creek Science Center in Anchorage, Alaska,
recently completed a biomass demonstration project that provided
environmental education opportunities to demonstrate an alternative to
diesel fuel to many local villages. A newly installed biomass furnace,
fired by beetle-killed spruce, was added to the existing natural gas
system to provide dual-fuel capabilities to reduce heating costs at the
facility.
The BLM is expanding on the success of these efforts by
incorporating energy efficiency technologies and renewable energy into
more of its installations and facilities. A Greening Workshop was held
in March for BLM engineers, property and facility specialists, and
environmental specialists. The purpose of the workshop was to refine
the BLM Strategic Greening Plan and develop specific action plans for
the integration of ``greening'' activities in BLM, consistent with
Executive Order 13423 (Strengthening Federal Environmental, Energy and
Transportation Management, January 24, 2007). Energy efficiency as well
as installation of renewable energy generation (solar, wind and
geothermal) will be a focus in future BLM facility improvement and
construction projects.
BLM issued a Fleet Management Plan in 2005, establishing goals for
general purpose fleet size, reduction in fuel consumption, and the
acquisition of alternative fueled and more energy efficient vehicles.
As a result of this process, the BLM fleet size has been reduced by 5
percent since 2005 and fuel consumption has also been reduced.
Conclusion
In conclusion, Mr. Chairman, thank you for the opportunity to
highlight a few of the steps BLM has taken to encourage the development
of renewable energy resources on public lands and its own efforts to
employ renewable energy at its facilities. This concludes my testimony.
I would be happy to answer any questions you may have.
______
Response to questions submitted for the record by Jim Hughes, Director,
Bureau of Land Management
P lease describe how your agency is taking an integrated approach to
renewable energy generation on BLM lands, to ensure that
Congress, States, and the public will understand the total
footprint of renewables production in a given area, and
cumulative or total impacts on habitat or other natural
resources. Please provide an example of ways in which your land
use planning programs and your renewables staff have
collaborated recently.
The BLM requested that the National Renewable Energy Laboratory
(NREL) identify areas on the public lands with renewable resources that
showed potential for energy development. The NREL reported its findings
to the BLM in a February 2003 report, entitled ``Assessing the
Potential for Renewable Energy on Public Lands.'' This information was
prepared to assist in the incorporation of renewable energy resources
into future BLM land use planning efforts. It is through our land use
planning process that we integrate consideration of renewable energy
resources with other natural resources on the public lands and also
provide opportunities for State and public input.
For example, the BLM completed a Programmatic Wind Energy EIS in
June 2005, to specifically address wind energy development on the
public lands. This EIS amended 52 BLM land use plans and established a
set of best management practices to mitigate potential impacts on other
resource values from wind energy development on the public lands. The
BLM will be initiating shortly a similar effort for geothermal energy
development on the public lands. This effort will also amend applicable
BLM land use plans and the development of mitigation measures for
protecting other resource values.
P lease detail how and where the Department of the Interior is
identifying renewable energy resources zones that have the most
energy potential and connecting that information to the long-
distance transmission planning effort under Section 368 of the
Energy Policy Act. The National Renewable Energy Laboratory
(NREL) has mapped prime areas for various renewable power
generation; are you, for example, integrating the solar power
analysis in NREL's report ``Assessing the Potential for
Renewable Energy on Public Lands'' (or similar data) with data
on transmission constraints or congestion in the process of
identifying transmission corridors pursuant to Sections 368 and
1221 on the Energy Policy Act? If not, why not?
In preparing the Programmatic Environmental Impact Statement (PEIS)
for the West-wide energy corridors study pursuant to Section 368 of the
Energy Policy Act of 2005 (EPAct), the BLM and the Department of Energy
(DOE) incorporated the NREL maps showing the distribution of renewable
energy resources. These maps were used to identify areas in the West
where renewable energy production exists or may be developed in the
future. The informationwas then used during development of the
unrestricted conceptual West-wide energy distribution network. The
network that was developed and subsequently refined into the proposed
Section 368 corridors that will be included in the draft PEIS for the
implementation of Section 368 includes segments that directly intersect
with, or are within a relatively short distance of, known and potential
renewable energy sources. The proposed corridors are intended to
provide access to long-distance transmission paths for energy produced
from these renewable sources.
The NREL maps can be accessed at the following website: http://
www.nrel.gov/renewable_resources/
D escribe your current timeline and intended public review process for
the programmatic EIS for energy transmission corridors.
The BLM and the Department of Energy (DOE) are co-lead agencies for
preparing the Programmatic Environmental Impact Statement (PEIS),
pursuant to the National Environmental Policy Act (NEPA), for
implementing Section 368 of the EPAct. The United States Forest
Service, the Department of Defense and the Fish and Wildlife Service
are cooperating agencies in the effort. The Department of Commerce is a
consulting agency. The current schedule anticipates releasing the draft
PEIS for public review and comment at the end of July 2007. There will
be a 90-day public comment period, and we plan to have public meetings
beginning in September 2007 to give the public the opportunity to offer
their comments in an open forum. After the closure of the comment
period, the BLM, the DOE, and the cooperating agencies will carefully
review all comments received and prepare the final EIS.Questions
U nder the new Geothermal Rule, published in the Federal Register on
05/01/2007, is there a provision outside of the normal
competitive lease sale process for geothermal energy
development on public lands adjacent to geothermal energy
development projects on private lands?
The new Geothermal Rule provides for noncompetitive leasing under
four conditions:
1. Subpart 3204 provides that lands offered at a competitive lease
sale that receive no bids will be available for noncompetitive leasing
for a 2-year period beginning the first business day following the
sale.
2. Lands available exclusively for direct use of geothermal
resources may be noncompetitively leased under Subpart 3205.
3. The holder of a mining claim for which a current plan of
operations has been approved may obtain a noncompetitive lease for
lands subject to the mining claim.
4. If a lease application was pending on August 8, 2005, the
holder may obtain a noncompetitive lease under the leasing process in
effect on that date.
W hen will the Programmatic EIS on Energy Corridors on Federal lands be
published?
The BLM and the Department of Energy (DOE) are co-lead agencies for
preparing the programmatic Environmental Impact Statement (PEIS),
pursuant to the National Environmental Policy Act (NEPA), for
implementing Section 368 of the EPAct. The United States Forest
Service, the Department of Defense and the Fish and Wildlife Service
are cooperating agencies in the effort. . The Department of Commerce is
a consulting agency. The current schedule anticipates releasing the
draft PEIS for public review and comment at the end of July 2007. There
will be a 90-day public comment period, and we plan to have public
meetings beginning in September 2007 to give the public the opportunity
to offer their comments in an open forum. After the closure of the
comment period, the BLM, the DOE, and the cooperating agencies will
carefully review all comments received and prepare the final EIS.
______
Mr. Costa. And we appreciate that, Mr. Hughes, and we will
look forward to asking you those questions. However, I am
informed that we have about five minutes to vote at this time.
So I am going to take the prerogative of the Chair and ask that
we recess for the interim. I suspect that will last
approximately 15, 20 minutes.
We have a vote now, and then one following this, and so we
would hope to see all of you back, and we will proceed with the
other three witnesses on this panel, if I am counting
correctly, and then we will go through our first round of
questioning. So we hope to be back here within 15, 20 minutes.
So we will afford all of you a little opportunity to have a
break yourselves, and we will see you shortly. Thank you. The
committee is now in interim recess.
[Recess.]
Mr. Costa. All right. We hope you had a sufficient break,
and we will continue on with our first panel. Our next witness
I believe is Mr. Tester, and you are a Professor of Chemical
Engineering at MIT. Obviously a very distinguished university.
We look forward to your testimony on the future of geothermal.
Please begin.
STATEMENT OF JEFF TESTER, CHAIR,
MIT CLIMATE CHANGE PANEL
Mr. Tester. Thank you, Mr. Chairman. America's strength as
a nation can be connected to the diversity of our ideas and our
people. The time has come now to diversify our energy supply to
provide a more secure and sustainable future for our children
and their children. One such option that is too often ignored
is geothermal, produced both from conventional hydrothermal
systems as well as enhanced or engineered geothermal systems,
EGS.
For 15 months, starting in September of 2005, a
comprehensive independent assessment was conducted by an 18-
member international panel assembled to evaluate the
feasibility of EGS for becoming a major supplier of primary
energy, particular base load generation capacity by the year
2050. I had the privilege of chairing that panel, and this
afternoon I would like to share with you some of our findings
and recommendations.
In simple terms, the major question that we tried to answer
was whether there was a feasible path from today's hydrothermal
system----
Mr. Costa. Pardon me, Professor, on my time. Since my eyes
are not as good as I would like them to be, is this included in
the book that you distributed for us?
Mr. Tester. Yes. Absolutely.
Mr. Costa. Would you refer which page it is?
Mr. Tester. It is also in my testimony, the written
testimony as a part of the record. This particular slide is not
but the question is in both that document as well as in the
report itself.
Mr. Costa. OK. Very good. On your time.
Mr. Tester. Is there a feasible path from today's
hydrothermal systems in the United States with about 3,000
megawatts of capacity to tomorrow's EGS with 100,000 or more
capacity by 2050? The reason we picked 100,000 megawatts was to
put it on the same level as our current combined pumped hydro
and conventional hydro as well as our nuclear capacity that we
have right now in the country. We have about a terawatt of
total generating capacity. So this would place geothermal at 10
percent or more.
The study itself had four major components. The first dealt
with the resource itself, the second with the technology, the
third with the environmental attributes and constraints
associated with geothermal, and the fourth with economic
projections. If we look at the resource--these maps are also in
the record in the report and in my written testimony--
geothermal in simple terms can be characterized in terms of
three dimensions. The first has to do with the gradient itself,
the second with the permeability or connectivity of rock within
that reservoir, and the third is the amount of fluid that is
present in the form of liquid, water or steam.
High grade hydrothermal resources have high average
gradients, high rock permeability and connectivity, sufficient
natural fluids in place. All other geothermal resources lack at
least one of these, and the goal of enhanced geothermal systems
is to provide a pathway to achieve a means of emulating the
characteristics of natural commercial geothermal systems.
EGS will be the enabler that carries us across this
geothermal continuum from today's hydrothermal sites that are
given to us by nature to tomorrow's universal heat mining
plants that will be deployed where we need them. So I would
like to quickly move to the other three graphs that we have in
here. This illustrates again what happens as you go deeper into
the surface beneath our feet from three kilometers, three and a
half kilometers down to 10 kilometers, and that is how we
defined our overall resource base for EGS.
You can see that most of the country when we get to 10
kilometers begins to look like what we might envision would
exist in Yellowstone in terms of the stored thermal energy.
When we add all this up, we come up with a rather
extraordinarily large figure of 14 million exajoules. That
amount of energy is obviously many times the amount that we are
consuming annually, and from our perspective the fraction that
could be captured and ultimately recovered shown with the blue
bars in the graph will not be limited by the resource itself.
It will depend only on extending existing extractive
technologies for conventional hydrothermal systems and for oil
and gas recovery.
Much has been learned, many lessons and much progress in
the field programs that have occurred around the world.
Starting in the site in the 1970's at the Fenton Hill, New
Mexico site in northern New Mexico to where we are now
operating around the world in such places as Cooper Base in
Australia and the Soultz site in Europe, a lot has been
learned.
Let me just summarize a few of the issues that relate to
why we should be reinvesting now in enhanced geothermal systems
as part of the geothermal continuum. This is a large and
indigenous resource, and it is accessible to us. Again, the
extractive amount of energy will not be limited by resource
size. It fits into the portfolio of sustainable renewable
energy options. EGS and geothermal complement the DOE's
renewable portfolio. It does not hamper the growth of the
others.
It is scalable and environmentally friendly, carbon free.
We have a graph in our testimony that illustrates that at
different levels. Many of the elements on feasibility are in
place right now, and the economic projections are favorable for
high grade areas, so-called early targets of opportunity as we
refer to them in our report, and the longer term looks quite
attainable. In fact, the recommendations that we made in this
panel in terms of deployment costs and supporting research seem
very reasonable, averaging about $55 million per year for about
a 10 to 15-year commitment would demonstrate this technology at
a commercial scale to achieve these kind of levels of
diffusion. All of this amounts to something less than the price
of one clean coal plant. Thank you very much.
[The prepared statement of Mr. Tester follows:]
Statement of Jefferson Tester, Meissner Professor of Chemical
Engineering, Massachusetts Institute of Technology, Cambridge,
Massachusetts
Overview: Recent national focus on the value of increasing our
supply of indigenous, renewable energy underscores the need for
reevaluating all alternatives, particularly those that are large and
well-distributed nationally. One such option that is often ignored is
geothermal energy, produced from both conventional hydrothermal and
Enhanced (or engineered) Geothermal Systems (EGS). For 15 months
starting in September of 2005, a comprehensive, independent assessment
was conducted to evaluate the technical and economic feasibility of EGS
becoming a major supplier of primary energy for U.S. base-load
generation capacity by 2050. The assessment was commissioned by the
U.S. Department of Energy and carried out by an 18-member,
international panel assembled by the Massachusetts Institute of
Technology (MIT). This testimony provides a summary of that assessment
including the scope and motivation behind the study, as well as its
major findings and recommendations. Supporting documentation is
provided in the full report (Tester et al., 2006).
In simple terms, any geothermal resource can be viewed as a
continuum in several dimensions. The grade of a specific geothermal
resource depends on its temperature-depth relationship (i.e.,
geothermal gradient), the reservoir rock's permeability and porosity,
and the amount of fluid saturation (in the form of liquid water and/or
steam). High-grade hydrothermal resources have high average thermal
gradients, high rock permeability and porosity, sufficient fluids in
place, and an adequate reservoir recharge of fluids; all EGS resources
lack at least one of these. For example, reservoir rock may be hot
enough but not produce sufficient fluid for viable heat extraction,
either because of low formation permeability/connectivity and
insufficient reservoir volume, or the absence of naturally contained
fluids.
A geothermal resource is usually described in terms of stored
thermal energy content of the rock and contained fluids underlying land
masses that that are accessible by drilling. The United States
Geological Survey and other groups have used a maximum accessible depth
of 10 km (approx. 30,000 ft) to define the resource. Although
conventional hydrothermal resources are already being used effectively
for both electric and non-electric applications in the United States,
and will continue to be developed, they are somewhat limited by their
locations and ultimate potential. Beyond these conventional resources
are EGS resources with enormous potential for primary energy recovery
using heat-mining technology, which is designed to extract and utilize
the earth's stored thermal energy. In addition to hydrothermal and EGS,
other geothermal resources include coproduced hot water associated with
oil and gas production, and geopressured resources that contain hot
fluids with dissolved methane. Because EGS resources have such a large
potential for the long term, the panel focused its efforts on
evaluating what it would take for EGS and other unconventional
geothermal resources to provide 100,000 MWe of base-load electric-
generating capacity by 2050.
Three main components were considered in the analysis:
1. Resource--mapping the magnitude and distribution of the U.S.
EGS resource.
2. Technology--establishing requirements for extracting and
utilizing energy from EGS reservoirs, including drilling, reservoir
design and stimulation, and thermal energy conversion to electricity.
Because EGS stimulation methods have been tested at a number of sites
around the world, technology advances, lessons learned and remaining
needs were considered.
3. Economics--estimating costs for EGS-supplied electricity on a
national scale using newly developed methods for mining heat from the
earth, as well as developing levelized energy costs and supply curves
as a function of invested R&D and deployment levels in evolving U.S.
energy markets.
Motivation: There are compelling reasons why the United States
should be concerned about the security of our energy supply for the
long term. Key reasons include growth in demand as a result of an
increasing U.S. population, the increased electrification of our
society, and concerns about the environment. According to the Energy
Information Administration (EIA, 2006), U.S. nameplate generating
capacity has increased more than 40% in the past 10 years and is now
more than 1 TWe. For the past 2 decades, most of the increase resulted
from adding gas-fired, combined-cycle generation plants. In the next 15
to 25 years, the electricity supply system is threatened with losing
capacity as a result of retirement of existing nuclear and coal-fired
generating plants (EIA, 2006). It is likely that 50 GWe or more of
coal-fired capacity will need to be retired in the next 15 to 25 years
because of environmental concerns. In addition, during that period, 40
GWe or more of nuclear capacity will be beyond even the most generous
relicensing accommodations and will have to be decommissioned.
The current nonrenewable options for replacing this anticipated
loss of U.S. base-load generating capacity are coal-fired thermal,
nuclear, and combined-cycle gas-combustion turbines. While these are
clearly practical options, there are some concerns. First, while
electricity generated using natural gas is cleaner in terms of
emissions, demand and prices for natural gas will escalate
substantially during the next 25 years. As a result, large increases in
imported gas will be needed to meet growing demand--further
compromising U.S. energy security beyond just importing the majority of
our oil for meeting transportation needs. Second, local, regional, and
global environmental impacts associated with increased coal use will
most likely require a transition to clean-coal power generation,
possibly with sequestration of carbon dioxide. The costs and
uncertainties associated with such a transition are daunting. Also,
adopting this approach would accelerate our consumption of coal
significantly, compromising its use as a source of liquid
transportation fuel for the long term. It is also uncertain whether the
American public is ready to embrace increasing nuclear power capacity,
which would require siting and constructing many new reactor systems.
On the renewable side, there is considerable opportunity for
capacity expansion of U.S. hydropower potential using existing dams and
impoundments. But outside of a few pumped storage projects, hydropower
growth has been hampered by reductions in capacity imposed by the
Federal Energy Regulatory Commission (FERC) as a result of
environmental concerns. Concentrating Solar Power (CSP) provides an
option for increased base-load capacity in the Southwest where demand
is growing. Although renewable solar and wind energy also have
significant potential for the United States and are likely to be
deployed in increasing amounts, it is unlikely that they alone can meet
the entire demand. Furthermore, solar and wind energy are inherently
intermittent and cannot provide 24-hour-a-day base load without mega-
sized energy storage systems, which traditionally have not been easy to
site and are costly to deploy. Biomass also can be used as a renewable
fuel to provide electricity using existing heat-to-power technology,
but its value to the United States as a feedstock for biofuels for
transportation is much higher, given the current goals of reducing U.S.
demand for imported oil.
Clearly, we need to increase energy efficiency in all end-use
sectors; but even aggressive efforts cannot eliminate the substantial
replacement and new capacity additions that will be needed to avoid
severe reductions in the services that energy provides to all
Americans.
Pursuing the geothermal option: The main question we address in our
assessment of EGS is whether U.S.-based geothermal energy can provide a
viable option for providing large amounts of generating capacity when
and where it is needed.
Although geothermal energy has provided commercial base-load
electricity around the world for more than a century, it is often
ignored in national projections of evolving U.S. energy supply. Perhaps
geothermal has been ignored as a result of the widespread perception
that the total geothermal resource is only associated with identified
high-grade, hydrothermal systems that are too few and too limited in
their distribution in the United States to make a long term, major
impact at a national level. This perception has led to undervaluing the
long-term potential of geothermal energy by missing a major opportunity
to develop technologies for sustainable heat mining from large volumes
of accessible hot rock anywhere in the United States. In fact, many
attributes of geothermal energy, namely its widespread distribution,
base-load dispatchability without storage, small footprint, and low
emissions, are very desirable for reaching a sustainable energy future
for the United States.
Expanding our energy supply portfolio to include more indigenous
and renewable resources is a sound approach that will increase energy
security in a manner that parallels the diversification ideals that
have made America strong. Geothermal energy provides a robust, long-
lasting option with attributes that would complement other important
contributions from clean coal, nuclear, solar, wind, hydropower, and
biomass.
Approach: The composition of the panel was designed to provide in-
depth expertise in specific technology areas relevant to EGS
development, such as resource characterization and assessment,
drilling, reservoir stimulation, and economic analysis. Recognizing the
possibility that some bias might emerge from a panel of knowledgeable
experts who, to varying degrees, are advocates for geothermal energy,
panel membership was expanded to include other experts on non-
geothermal energy technologies and economics, and environmental
systems. Overall, the panel took a completely new look at the
geothermal potential of the United States. This study was partly in
response to short- and long-term needs for a reliable low-cost electric
power and heat supply for the nation. Equally important was a need to
review and evaluate international progress in the development of EGS
and related extractive technologies that followed the very active
period of U.S. fieldwork conducted by Los Alamos National Laboratory
during the 1970s and 1980s at the Fenton Hill site in New Mexico.
The assessment team was assembled in August 2005 and began work in
September, following a series of discussions and workshops sponsored by
the Department of Energy (DOE) to map out future pathways for
developing EGS technology. The final report was released in January of
2007.
The first phase of the assessment considered our geothermal
resource in detail. Earlier projections from studies in 1975 and 1978
by the U.S. Geological Survey (USGS Circulars 726 and 790) were
amplified by ongoing research and analysis being conducted by U.S.
heat-flow researchers and were analyzed by David Blackwell's group at
Southern Methodist University (SMU) and other researchers. In the
second phase, EGS technology was evaluated in three distinct parts:
drilling to gain access to the system, reservoir design and
stimulation, and energy conversion and utilization. Previous and
current field experiences in the United States, Europe, Japan, and
Australia were thoroughly reviewed. Finally, the general economic
picture and anticipated costs for EGS were analyzed in the context of
projected demand for base-load electric power in the United States.
Findings: Geothermal energy from EGS represents a large, indigenous
resource that can provide base-load electric power and heat at a level
that can have a major impact in the United States, while incurring
minimal environmental impacts. With a reasonable investment in R&D, EGS
could provide 100 GWe or more of cost-competitive generating capacity
in the next 50 years. Further, EGS provides a secure source of power
for the long term that would help protect America against economic
instabilities resulting from fuel price fluctuations or supply
disruptions. Most of the key technical requirements to make EGS
economically viable over a wide area of the country are in effect.
Remaining goals are easily within reach to provide performance
verification and demonstrate the repeatability of EGS technology at a
commercial scale within a 10- to 15-year period nationwide.
In spite of its enormous potential, the geothermal option for the
United States has been largely ignored. In the short term, R&D funding
levels and government policies and incentives have not favored growth
of U.S. geothermal capacity from conventional, high-grade hydrothermal
resources. Because of limited R&D support of EGS in the United States,
field testing and support for applied geoscience and engineering
research have been lacking for more than a decade. Because of this lack
of support, EGS technology development and demonstration recently has
advanced only outside the United States, with limited technology
transfer, leading to the perception that insurmountable technical
problems or limitations exist for EGS. However, in our detailed review
of international field-testing data so far, the panel did not uncover
any major barriers or limitations to the technology. In fact, we found
that significant progress has been achieved in recent tests carried out
at Soultz, France, under European Union (EU) sponsorship; and in
Australia, under largely private sponsorship. For example, at Soultz, a
connected reservoir-well system with an active volume of more than 2
km3 at depths from 4 to 5 km has been created and tested at fluid
production rates within a factor of 2 to 3 of initial commercial goals.
Such progress leads us to be optimistic about achieving commercial
viability in the United States in the next phase of testing, if a
national-scale program is supported properly. Specific findings
include:
1. The amount of accessible geothermal energy that is stored in
rock is immense and well distributed across the U.S. The fraction that
can be captured and ultimately recovered will not be resource-limited;
it will depend only on extending existing extractive technologies for
conventional hydrothermal systems and for oil and gas recovery. The
U.S. geothermal resource is contained in a continuum of grades ranging
from today's hydrothermal, convective systems through high- and mid-
grade EGS resources (located primarily in the western United States) to
the very large, conduction-dominated contributions in the deep basement
and sedimentary rock formations throughout the country. By evaluating
an extensive database of bottom-hole temperature and regional geologic
data (rock types, stress levels, surface temperatures, etc.), we have
estimated the total U.S. EGS resource base to be about 14 million
exajoules (EJ). Figure 1 and Table 1 highlight the results of the
resource assessment portion of the study. Figure 1 shows an average
geothermal gradient map and temperature distributions at specific
depths for the contiguous U.S. while Table 1 lists the resource bases
for different categories of geothermal. Figure 2 compares the total
resource to what we estimate might be technically recoverable. Using
conservative assumptions regarding how heat would be mined from
stimulated EGS reservoirs, we estimate the extractable portion to
exceed 200,000 EJ or about 2,000 times the annual consumption of
primary energy in the United States in 2005. With technology
improvements, the economically extractable amount of useful energy
could increase by a factor of 10 or more, thus making EGS sustainable
for centuries.
2. Ongoing work on both hydrothermal and EGS resource development
complement each other. Improvements to drilling and power conversion
technologies, as well as better understanding of fractured rock
structure and flow properties, benefit all geothermal energy
development scenarios. Geothermal operators now routinely view their
projects as heat mining and plan for managed injection to ensure long
reservoir life. While stimulating geothermal wells in hydrothermal
developments is now routine, understanding why some techniques work on
some wells and not on others can come only from careful research.
3. EGS technology advances. EGS technology has advanced since its
infancy in the 1970s at Fenton Hill. Field studies conducted worldwide
for more than 30 years have shown that EGS is technically feasible in
terms of producing net thermal energy by circulating water through
stimulated regions of rock at depths ranging from 3 to 5 km. We can now
stimulate large rock volumes (more than 2 km3), drill into these
stimulated regions to establish connected reservoirs, generate
connectivity in a controlled way if needed, circulate fluid without
large pressure losses at near commercial rates, and generate power
using the thermal energy produced at the surface from the created EGS
system. Initial concerns regarding five key issues--flow short
circuiting, a need for high injection pressures, water losses,
geochemical impacts, and induced seismicity--appear to be either fully
resolved or manageable with proper monitoring and operational changes.
4. Remaining EGS technology needs. At this point, the main
constraint is creating sufficient connectivity within the injection and
production well system in the stimulated region of the EGS reservoir to
allow for high per-well production rates without reducing reservoir
life by rapid cooling (see Figure 3). U.S. field demonstrations have
been constrained by many external issues, which have limited further
stimulation and development efforts and circulation testing times--and,
as a result, risks and uncertainties have not been reduced to a point
where private investments would completely support the commercial
deployment of EGS in the United States. In Europe and Australia, where
government policy creates a more favorable climate, the situation is
different for EGS. There are now seven companies in Australia actively
pursuing EGS projects, and two commercial projects in Europe.
5. Impact of Research, Development, and Demonstration (RD&D). Focus
on critical research needs could greatly enhance the overall
competitiveness of geothermal in two ways. First, such research would
lead to generally lower development costs for all grade systems, which
would increase the attractiveness of EGS projects for private
investment. Second, research could substantially lower power plant,
drilling, and stimulation costs, thereby increasing accessibility to
lower-grade EGS areas at depths of 6 km or more. In a manner similar to
the technologies developed for oil and gas and mineral extraction, the
investments made in research to develop extractive technology for EGS
would follow a natural learning curve that lowers development costs and
increases reserves along a continuum of geothermal resource grades.
Examples of benefits that would result from research-driven
improvements are presented in three areas:
Drilling technology--Evolutionary improvements building
on conventional approaches to drilling such as more robust drill bits,
innovative casing methods, better cementing techniques for high
temperatures, improved sensors, and electronics capable of operating at
higher temperature in downhole tools will lower production costs. In
addition, revolutionary improvements utilizing new methods of rock
penetration will also lower costs. These improvements will enable
access to deeper, hotter regions in high-grade formations or to
economically acceptable temperatures in lower-grade formations.
Power conversion technology--Although commercial
technologies are in place for utilizing geothermal energy in 70
countries, further improvements to heat-transfer performance for lower-
temperature fluids, and to developing plant designs for higher resource
temperatures in the supercritical water region will lead to measurable
gains. For example, at supercritical temperatures about an order of
magnitude (or more) increase in both reservoir performance and heat-to-
power conversion efficiency would be possible over today's liquid-
dominated hydrothermal systems.
Reservoir technology--Increasing production flow rates by
targeting specific zones for stimulation and improving downhole lift
systems for higher temperatures, and increasing swept areas and volumes
to improve heat-removal efficiencies in fractured rock systems, will
lead to immediate cost reductions by increasing output per well and
extending reservoir lifetimes. For the longer term, using CO2 as a
reservoir heat-transfer fluid for EGS could lead to improved reservoir
performance as a result of its low viscosity and high density at
supercritical conditions. In addition, using CO2 in EGS may provide an
alternative means to sequester large amounts of carbon in stable
formations.
6. EGS systems are versatile, inherently modular, and scalable.
Individual power plants ranging from 1 to 50 MWe in capacity are
possible for distributed applications and can be combined--leading to
large ``power parks,'' capable of providing thousands of MWe of
continuous, base-load capacity. Of course, for most direct-heating and
heat pump applications, effective use of shallow geothermal energy has
been demonstrated at a scale of a few kilowatts-thermal (kWt) for
individual buildings or homes and should be continued to be deployed
aggressively when possible. For these particular applications,
stimulating deeper reservoirs using EGS technology is not necessary.
Nonetheless, EGS also can be easily deployed in larger-scale district
heating and combined heat and power (cogeneration) applications to
service both electric power and heating and cooling for buildings
without a need for storage on-site. For other renewable options such as
wind, hydropower, and solar PV, such co-gen applications are not
possible.
7. A short term ``win-win'' opportunity. Using coproduced hot
water, available in large quantities at temperatures up to 100oC or
more from existing oil and gas operations, makes it possible to
generate up to 11,000 MWe of new generating capacity with standard
binary-cycle technology, and to increase hydrocarbon production by
partially offsetting parasitic losses consumed during production.
8. The long term goal for EGS is tractable and affordable.
Estimated supply curves for EGS shown in Figure 4 indicate that a large
increase in geothermal generating capacity is possible by 2050 if
investments are made now. A cumulative capacity of more than 100,000
MWe from EGS can be achieved in the United States within 50 years with
a modest, multiyear federal investment for RD&D in several field
projects in the United States. Because the field-demonstration program
involves staged developments at different sites, committed support for
an extended period is needed to demonstrate the viability, robustness,
and reproducibility of methods for stimulating viable, commercial-sized
EGS reservoirs at several locations. Based on the economic analysis we
conducted as part of our study, a $300 million to $400 million
investment over 15 years will be needed to make early-generation EGS
power plant installations competitive in evolving U.S. electricity
supply markets.
These funds compensate for the higher capital and financing costs
expected for early-generation EGS plants, which would be expected as a
result of somewhat higher field development (drilling and stimulation)
costs per unit of power initially produced. Higher generating costs, in
turn, lead to higher perceived financial risk for investors with
corresponding higher-debt interest rates and equity rates of return. In
effect, the federal investment can be viewed as equivalent to an
``absorbed cost'' of deployment. In addition, comparable investments in
R&D will also be needed to develop technology improvements to lower
costs for future deployment of EGS plants.
To a great extent, energy markets and government policies will
influence the private sector's interest in developing EGS technology.
In today's economic climate, there is reluctance for private industry
to invest funds without strong guarantees. Thus, initially, it is
likely that government will have to fully support EGS fieldwork and
supporting R&D. Later, as field sites are established and proven, the
private sector will assume a greater role in cofunding projects--
especially with government incentives accelerating the transition to
independently financed EGS projects in the private sector. Our analysis
indicates that, after a few EGS plants at several sites are built and
operating, the technology will improve to a point where development
costs and risks would diminish significantly, allowing the levelized
cost of producing EGS electricity in the United States to be at or
below market prices.
Given these issues and growing concerns over long-term energy
security, the federal government will need to provide funds directly or
introduce other incentives in support of EGS as a long-term ``public
good,'' similar to early federal investments in large hydropower dam
projects and nuclear power reactors.
9. Geothermal energy complements other renewables such as wind,
solar and biomass operating in their appropriate domains. Geothermal
energy provides continuous base-load power with minimal visual and
other environmental impacts. Geothermal systems have a small footprint
and virtually no emissions, including no carbon dioxide. Geothermal
energy has significant base-load potential, requires no storage, and,
thus, it complements other renewables--solar (CSP and PV), wind,
hydropower--in a lower-carbon energy future. In the shorter term,
having a significant portion of our base load supplied by geothermal
sources would provide a buffer against the instabilities of gas price
fluctuations and supply disruptions, as well as nuclear plant
retirements. Estimates of the carbon emission reductions possible for
different levels of EGS capacity are shown in Figure 5.
Recommendations for re-energizing the U.S. geothermal program:
Based on growing markets in the United States for clean, base-load
capacity, the panel believes that with a combined public/private
investment of about $800 million to $1 billion over a 15-year period,
EGS technology could be deployed commercially on a timescale that would
produce more than 100,000 MWe or 100 GWe of new capacity by 2050. This
amount is approximately equivalent to the total R&D investment made in
the past 30 years to EGS internationally, which is still less than the
cost of a single, new-generation, clean-coal power plant. Making such
an investment now is appropriate and prudent, given the enormous
potential of EGS and the technical progress that has been achieved so
far in the field. Having EGS as an option will strengthen America's
energy security for the long term in a manner that complements other
renewables, clean fossil, and next-generation nuclear.
Because prototype commercial-scale EGS will take a few years to
develop and field-test, the time for action is now. Supporting the EGS
program now will move us along the learning curve to a point where the
design and engineering of well-connected EGS reservoir systems is
technically reliable and reproducible.
We believe that the benefit-to-cost ratio is more than sufficient
to warrant such a modest investment in EGS technology. By enabling
100,000 MWe of new base-load capacity, the payoff for EGS is large,
especially in light of how much would have to be spent for deployment
of conventional gas, nuclear, or coal-fired systems to meet replacement
of retiring plants and capacity increases, as there are no other
options with sufficient scale on the horizon.
Specific recommendations include:
1. There should be a federal commitment to supporting EGS resource
characterization and assessment. An aggressive, sufficiently supported,
multiyear national program with USGS and DOE is needed along with other
agency participation to further quantify and refine the EGS resource as
extraction and conversion technologies improve.
2. High-grade EGS resources should be developed first as targets of
opportunity on the margins of existing hydrothermal systems and in
areas with sufficient natural recharge, or in oil fields with high-
temperature water and abundant data, followed by field efforts at sites
with above-average temperature gradients. Representative sites in high-
grade areas, where field development and demonstration costs would be
lower, should be selected initially to prove that EGS technology will
work at a commercial scale. These near-term targets of opportunity
include EGS sites that are currently under consideration at Desert Peak
(Nevada), and Coso and Clear Lake (both in California), as well as
others that would demonstrate that reservoir-stimulation methods can
work in other geologic settings, such as the deep, high-temperature
sedimentary basins in Louisiana, Texas, and Oklahoma. Such efforts
would provide essential reservoir stimulation and operational
information and would provide working ``field laboratories'' to train
the next generation of scientists and engineers who will be needed to
develop and deploy EGS on a national scale.
3. In the first 15 years of the program, a number of sites in
different regions of the country should be under development.
Demonstration of the repeatability and universality of EGS technologies
in different geologic environments is needed to reduce risk and
uncertainties, resulting in lower development costs.
4. Like all new energy-supply technologies, for EGS to enter and
compete in evolving U.S. electricity markets, positive policies at the
state and federal levels will be required. These policies must be
similar to those that oil and gas and other mineral-extraction
operations have received in the past--including provisions for
accelerated permitting and licensing, loan guarantees, depletion
allowances, intangible drilling write-offs, and accelerated
depreciations, as well as those policies associated with cleaner and
renewable energies such as production tax credits, renewable credits
and portfolio standards, etc. The success of this approach would
parallel the development of the U.S. coal-bed methane industry.
5. Given the significant leveraging of supporting research that
will occur, we recommend that the United States actively participate in
ongoing international field projects such as the EU project at Soultz,
France, and the Cooper Basin project in Australia.
6. A commitment should be made to continue to update economic
analyses as EGS technology improves with field testing, and EGS should
be included in the National Energy Modeling System (NEMS) portfolio of
evolving energy options.
References
The references listed below are part of those cited in the Synopsis
and Executive Summary of The Future of Geothermal Energy, by Tester,
J.W., B.J. Anderson, A.S. Batchelor, D.D. Blackwell, R. DiPippo, E.
Drake, J. Garnish, B. Livesay, M.C. Moore, K. Nichols, S. Petty, M.N.
Toksoz, R.W. Veatch, R. Baria, C. Augustine, E. Murphy, P. Negraru, and
M. Richards, MIT report, Cambridge, MA (2006). A list of all the
literature that was reviewed and evaluated is in the full report which
is available at http://geothermal.inel.gov/publications/
future_of_geothermal_energy.
pdf
Armstead, H. C. H. and J. W. Tester. 1987. Heat Mining. E and F. N.
Spon, London.
Blackwell, D. D. and M. Richards. 2004. Geothermal Map of North
America. Amer. Assoc. Petroleum Geologists, Tulsa, Oklahoma, 1
sheet, scale 1:6,500,000.
Bodvarsson, G. and J.M. Hanson. 1977. ``Forced Geoheat Extraction from
Sheet-like Fluid Conductors.'' Proceedings of the Second NATO-
CCMS Information Meeting on dry hot rock geothermal energy. Los
Alamos Scientific Laboratory report, LA-7021:85.
Energy Information Administration (EIA). 2006-2007. Annual Energy
Outlook and other EIA documents, U.S. Department of Energy
(DOE), web site http://www.eia.doe.gov/
McKenna, J., D. Blackwell, C. Moyes, and P. D. Patterson. 2005.
``Geothermal electric power supply possible from Gulf Coast,
Midcontinent oil field waters.'' Oil & Gas Journal, Sept. 5,
pp. 34-40.
Sanyal, S. K. and S. J. Butler. 2005. ``An Analysis of Power Generation
Prospects From Enhanced Geothermal Systems.'' Geothermal
Resources Council Transactions, 29.
U.S. Geological Survey, Circulars 726 and 790, Washington, DC (1975,
1979)
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Mr. Costa. Less than one what?
Mr. Tester. Less than one clean coal plant which would be
roughly of the order of a billion dollars. So if we summed up
the average commitment over that 15-year period, it would be of
that order.
Mr. Costa. Very good.
Mr. Tester. Thank you, Mr. Chairman.
Mr. Costa. Thank you, and we will look forward to getting
back to you with some questions. Our next witness I believe is
Mr. Daniel Kunz, President and Chief Executive Officer of U.S.
Geothermal Inc. Mr. Kunz.
STATEMENT OF DANIEL KUNZ, PRESIDENT,
US GEOTHERMAL, INC.
Mr. Kunz. Thank you, Mr. Chairman and members of the
Subcommittee. I appreciate this opportunity to discuss your
oversight of renewable energy opportunities and issues on
Federal lands. Geothermal has a unique and growing importance
in the supply of green energy because it can supply clean,
reliable, low-emission power 24 hours a day, 365 days a year.
Geothermal energy currently provides nearly 3,000 megawatts of
reliable electric power in the U.S. This represents only a
small fraction of the U.S. resource potential.
There is a study out right now that identifies geothermal
resource potential of about 22,000 megawatts and in areas of
undiscovered or unidentified resource, the potential could be
as high as 127,000 additional megawatts. Currently there is the
possibility of adding 5,000 megawatts of generation capacity in
the U.S. within the next 5 to 10 years.
The MIT study just presented by Professor Tester talks
about the future of geothermal, and that future needs to be
addressed today in order for us to get there. I believe that
the potential for geothermal development can be substantial if
we can move the EGS concept forward and bring it to a point
where we can demonstrate that this technology can work.
I believe also that if you ask the question what is needed
to significantly move geothermal energy forward today, the
answer I believe is to have more current and future
expenditures on exploration, and this means in geological
investigations on private and public lands. Thermal gradient
and geofluid exploration well drilling is desperately needed in
order to advance the understanding of where the resources are
and what kind of capacities they have for generating power.
This is a high-risk application generally speaking in the
renewable sector. Other energy sources, such as solar and wind,
do not have this particular aspect. Robust investment
incentives, grants, cost sharing and other methods that will
reward risk takers for geothermal drilling for both
conventional and the EGS development on Federal and other lands
are needed to stimulate this area.
I believe that the Federal government should extend its
support to geothermal energy through programs such as an
enhanced investment tax credit for all geothermal drilling that
would not be offset against any current credits available, such
as the production tax credit. The investment tax credit I am
proposing would be intended to address the crucial and very
different set of risks and attract the capital necessary early
on in geothermal development that is involved in this drilling
that I have been talking about.
Also enhanced funding for Department of Interior's work to
allow these agencies to accelerate land and resource management
plans identify the highest priorities for geothermal
exploration and conduct the new lease options I think is needed
to move this work forward. Committed research funding is also
required I think to move focus forward on EGS and conventional
geothermal resource discovery and evaluation, drilling
technology and low to medium temperature energy conversion.
With regard to the production tax credit, my company, US
Geothermal, Inc., is developing Raff River, the site in Idaho.
It will be one of the first new plants to benefit from the
production tax credit. This tax credit was previously only
available to the wind sector, and has now been made available
to all of the renewable energy sectors. This is an important
credit, and I think it should be extended in a much more
significant way for geothermal projects. Other renewable energy
technologies have had this PTC for about a decade, and
geothermal needs this similar period of time to benefit from a
shift in capital investment toward geothermal sectors. I urge
Congress to extend the production tax credit 5 to 10 years.
I want to thank the Subcommittee for scheduling this
hearing and inviting me to present testimony on public lands,
and I will be happy to answer any questions. I have an
additional testimony already provided in writing. Thank you,
Mr. Chairman.
[The prepared statement of Mr. Kunz follows:]
Statement of Daniel Kunz, President and Chief Executive Officer,
US Geothermal Inc.
Mr. Chairman and Members of the Subcommittee, I appreciate the
Committee's interest in geothermal energy, its oversight on renewable
energy opportunities and issues on Federal lands and its review of
Title II, Subtitle B--Geothermal Energy of the EPAct.
I have knowledge that the Geothermal Energy Association (``GEA'')
submitted a Statement for the Record of this hearing. As a member of
the board of directors of the GEA, I endorse that Statement of Record.
To avoid duplication with GEA's statement, my testimony that follows
comes from the viewpoint of a small but experienced geothermal
developer who already has a new geothermal power plant under
construction in Idaho and has the skill and ambition to construct and
operate more geothermal power plants in the future. My testimony covers
the issues that impact development of geothermal resources on public
lands, some of which may be beyond the Bureau of Land Management's area
of responsibility.
Geothermal has a unique and growing importance in the supply of
green energy because it can supply clean, reliable, low emission power
24 hours a day, 365 days a year. Geothermal energy could also support
our national hydrogen initiative and national biofuels goals, both of
which will require significant amounts of energy to produce alternative
domestic transportation fuels. Geothermal energy currently provides
nearly 3,000 MW of reliable electric power in the US. But, according to
the U.S. Geological Survey (USGS), this represents only a small
fraction of U.S. resource potential. Representatives from the USGS
testified before the Subcommittee on Energy and Mineral Resources of
the House Resources Committee, U.S. House of Representatives, on May 3,
2001 that their 1978 report still represents the best available
resource estimate. According to that report, there is an identified
geothermal resource potential of 22,000 MW, and an undiscovered,
unidentified geothermal resource potential of an additional 72,000 to
127,000 MW. This estimate totals some 150,000 MW of geothermal
potential.
Recent reports issued by the GEA, National Renewable Energy
Laboratory and Massachusetts Institute of Technology (``MIT'') have
identified the substantial potential for geothermal energy production
from a range of technology applications. Each of these studies supports
the potential to achieve 100,000 MW or more from the geothermal
resource base.
A recent report published by MIT on Enhanced Geothermal Systems
(``EGS''), called the ``future of geothermal energy'', highlights the
fact that there is an enormous energy potential right beneath our feet
within the rock of our earth. The technology needed to convert this
heat to electricity is tried and true as it relates to the above-ground
aspects of project development: the power plant, turbines, generators,
control systems and the electrical distribution equipment.
The technology risks related to the development of EGS power
sources are limited to deep drilling and fracturing of rock. Deep
drilling technology has already been advanced a long way by the oil and
gas industry. That know-how can be transferred to the geothermal
industry and, with some additional work on better drill bits and faster
drilling technology, we can assume that deep drilling will become a low
risk aspect of EGS development. That leaves rock fracturing for
reservoir development as the main risk area that requires advancement.
The only way to reduce the development risk of rock fracturing is to
create sites where the technologies can be advanced. It would be most
desirable to provide proper investment incentives to private enterprise
with funding support from the U.S. government.
I mention the future of geothermal energy first because the United
States will not get to the future of geothermal power production--a
future that holds the promise of delivering clean, renewable energy to
drive economic development and quality of life--without initially fully
understanding the present geothermal condition.
Geothermal energy is currently available with low technology risk.
What is needed is a full appreciation of and recognizable way to
finance the significant exploration and geologic risks related to this
type of energy. Conventional and binary cycle geothermal energy under
development and production today is based on geologic investigations
that took place decades ago. What is needed to significantly move
geothermal energy forward? Much more current and future expenditures on
exploration and geologic investigations in the U.S. on public and
private lands. Thermal gradient and geofluid exploration well drilling
is desperately so that our nation can have harder information about the
extent of geothermal resources suitable for power production.
Geothermal projects are unique because of the early capital costs
involved prior to project confirmation. The exploration technologies
available require confirmation of the resource by drilling, and
drilling geothermal wells is expensive, with costs ranging from a few
million to over ten million dollars for a single well. Exploration is
usually financed with high cost equity that takes a long time to be
paid back. Exploration can take place up to a decade before any power
is produced. The cost and risk of exploration for new geothermal
resources is as high as or higher than those in the oil and gas
industry, and the ability to attract capital to finance geothermal
exploration is far more difficult.
Once an oil or gas discovery well is drilled, it can immediately be
turned into a profitable cash flow generator. Geothermal wells are just
the beginning of significant capital investment. A geothermal well
cannot become profitable without an additional well drilled for
injection of the fluids back into the reservoir. Then there is a
requirement to drill more well pairs, build a plant, construct fluid
pipelines, make transmission connections and deploy system controls.
After that, the project can begin to generate income. So the geothermal
drilling risks need to be recognized in a much different way than oil
and gas drilling.
Robust investment incentives, grants, cost sharing and other
methods that will reward risk takers for geothermal drilling for
conventional and EGS geothermal development on Federal and other lands
are needed to stimulate this area. I ask that Congress consider these:
1. Geothermal receives little support from the federal government
relative to other forms of renewable energy and its untapped potential
is vast. It is an indigenous and baseload energy supply with the
highest availability of any renewable power source.
a. Nevertheless, the pace of growth of geothermal energy can
benefit greatly from federal government improvements and
deployment of human and other resources in federal land leasing
programs, specific technology commercialization support, and
the extension of critical high voltage transmission
infrastructure in the West.
2. The federal government should extend its support to geothermal
energy with a multi billion dollar program over five years that
provides:
a. An enhanced Investment Tax Credit (``ITC'') for all
geothermal drilling that is not offset against any other
federal credits. The ITC is intended to address a crucial and
very different set of risks and attract capital to the early
and highest risk stages of geothermal development involving
drilling and proving the productive capacity of the geothermal
resource.
b. Enhanced funding of $25 million to $50 million per year to
the Department of the Interior (BLM, U.S. Geological Survey and
Forest Service) to allow these agencies to accelerate land and
resource management plans, identify highest priority areas for
geothermal exploration and new lease auctions and clear
existing 10+ year backlog and institutional roadblocks to the
growth of geothermal exploration and project development.
c. Committed research funding of $75 million to $100 million
per year administered by the Department of Energy with research
focused on EGS, conventional geothermal resource discovery and
evaluation, drilling technology, and low to medium temperature
energy conversion (which will lead to additional applications
in waste heat to energy conversion at industrial sites)
3. A $1 billion to $2 billion dollar program in support of
geothermal power over five years could generate:
a. Tens of thousands of megawatts of new geothermal power
generation over the next 10 years;
b. Tens of billions of dollars of capital investment in
renewable infrastructure;
c. Multibillion dollars in tax receipts associated with
profits on capital spent;
d. Important rural development and thousands of good permanent
jobs; and
e. Multibillion dollars per year of tax receipts associated
with operating profits.
Public Land Leasing System
US Geothermal Inc. was not entirely in favor of the rule changes
for federal geothermal land leasing resulting in a competitive auction
environment. There are significant risks already embedded in the
geothermal exploration and development effort and the new rules will
add more risk for a developer. A leasing system similar to gold mineral
exploration would have been more appropriate because of the
intellectual and monetary capital required to advance geothermal lands
to a stage where leasing or claim staking is merited. People will
develop geologic ideas and theories about the possibility of the
existence of a geothermal resource using their own capital and know-
how. When the new BLM leasing rules are completed, they will be
required to offer those ideas to a system that will create a public
auction of their ideas.
I am not advocating changing the auction/leasing system now under
way because it will mean that the entire process will again grind to a
halt while rules are changed. BLM must keep pushing the current rule
change process forward as efficiently as possible and make the new
rules available so that people can plan accordingly. BLM should move
ahead and set up the auction processes and get them going. It has been
two years since any activity has resulted in new leases. We need to
have access to the public lands so that risk expenditures can begin.
The only prescription for this particular discussion I would offer
is this: when changes are being made to a leasing system like this, it
would be more productive to avoid creating a logjam by stopping the
requests already in the system. In the case of geothermal development
the protracted lead-time for permitting, discovery, development and
production of power is already much longer than desired. With the BLM
rules, we have added another two years or more to the already long
timeline. Given that new rules will now exist, I think more human
resources need to be committed to the BLM and Dept of Interior
specifically for the geothermal energy lease situation to implement the
changes and accelerate the process.
Production Tax Credit
The Energy Policy Act of 2005 (EPAct) has already provided a
significant and positive impact on the geothermal energy industry. To
be specific, my company, US Geothermal Inc.'s Raft River geothermal
project currently under construction in southeast Idaho is the first
new installation that will qualify for the all-important Section 45
Production Tax Credit (PTC). This PTC, previously available only to
wind and closed-loop biomass projects, was finally made available to
the geothermal energy sector as part of the 2005 EPAct. To qualify, US
Geothermal Inc. scrambled to fast track the development of the Raft
River project to be constructed and online before the end of 2007. This
is because the 2005 EPAct initially set that 2007 limit on the projects
that could qualify. The deadline was subsequently extended one year so
that any project coming online before the end of 2008 now can qualify.
This is good but geothermal projects require many more years to
develop than most other renewable energy projects and I believe that
the Production Tax Credit should be extended in a much more significant
way for geothermal projects. Other renewable energy technologies have
had the PTC for about a decade. Geothermal needs a similar period to
benefit from a shift of capital investment into the geothermal sector.
The PTC should be preserved for geothermal for a period of time at
least equal to the time the tax credit has been available to the wind
industry before any changes or reductions are made to it. This
preservation of the existing PTC will allow capital planners to time
needed to shift investment to the sector and gain the longer-term
returns on investment needed to make the shift.
I urge Congress to extend the credit five to ten years. We also
urge Congress to allow geothermal and other baseload projects to
qualify once they have binding contracts and are under construction.
Build and sustain the momentum that EPAct has given geothermal
energy and it will become a major U.S. energy source with an
environmental profile we can be proud to promote.
Conclusion
I thank the Subcommittee for scheduling this important hearing and
inviting me to present testimony on our public lands' potentially vast
stores of geothermal energy that can help our nation address is energy
and environmental needs.
The production tax credit is helping to spur renewed geothermal
energy development. I urge Congress to support the BLM in its efforts
to complete the new rules for public land leasing and provide the human
resources needed to focus much more effort on geothermal energy. I also
urge Congress to boldly support this domestic energy source by enacting
a long-term extension of the production tax credit, modifying placed in
service treatment for baseload power plants, and providing specific
incentives for new geothermal exploration.
______
Mr. Costa. Thank you, Mr. Kunz, for not only your testimony
but your suggestions on how we might further increase
opportunities for geothermal and for staying within the five-
minute rule. Our next witness on this panel--actually the last
witness on this panel I believe--is Mr. Paul A. Thomas, who is
a Public Policy Administrator with ORMAT out of Nevada I do
believe.
STATEMENT OF PAUL THOMSEN, PUBLIC POLICY ADMINISTRATOR, ORMAT
NEVADA
Mr. Thomsen. Thank you, Mr. Chairman, members of the
Subcommittee. Just for clarification, it is Thomsen. But it is
my honor to testify today on----
Mr. Costa. Thomsen. I stand corrected for the record.
Mr. Thomsen. That is all right.
Mr. Costa. I do apologize.
Mr. Thomsen. It is a unique spelling. I am here today on
behalf of ORMAT Technologies, and by way of introduction, ORMAT
Technologies is a New York Stock Exchange registered company.
You can find us under the ticker ORA, and ORMAT is a unique
geothermal company in the fact that we manufacture, design, own
and operate geothermal power plants around the world. ORMAT is
responsible for over 900 megawatts of generation throughout the
world and 300 megawatts right here in the United States in the
State of Nevada, California and Hawaii, in no particular order.
To date ORMAT has arranged for over one billion dollars in
geothermal projects and corporate financing.
Now I want to talk about the impact of the EPAct. I had the
pleasure of testifying to the Senate approximately a year ago
on this issue, and at that time ORMAT agreed with GAO's report
findings that it was simply too early to accurately assess the
impact of the EPAct on the geothermal industry, and that was
simply because at that time we only had one geothermal power
plant that qualified for the production tax credit.
The new regulations for BLM and MMS were still being
drafted, and the DOE geothermal research program had just been
zeroed out. Today, unfortunately, little has changed. Since
that time we have only had one geothermal power plant--which
happens to be ORMAT's--qualify for the production tax credit.
As you heard from Mr. Hughes, BLM and MMS regulations are still
being drafted and have yet to be released. And finally, the DOE
geothermal research budget again has been zeroed out, and I
believe reestablished at a mere $5 million.
I agree with the Chairman that we can do better. That being
said, ORMAT truly believes that the geothermal power can
provide a significant domestic base load energy supply to this
country, especially the PTC, the production tax credit, will
enhance the ability of geothermal projects to compete with
fossil fuel technology. The PTC, as I am sure you are all
aware, can effectively lower the price of geothermal energy by
approximately 1.97 cents a kilowatt hour, making more resources
of geothermal energy cost competitive, enabling the full
development of the 5,600 megawatts of near term economically
viable geothermal resources in the western United States.
The John Rishel amendment to the Geothermal Steam Act will
simplify processes allowing the BLM and other Federal and state
agencies to work in the spirit of that legislation, encouraging
expanded geothermal production. And finally, the significant
increase in funding authorized by the EPAct for DOE's renewable
research programs including geothermal will facilitate
collaboration between researchers and industry.
For an example of what can be done, I turn to the fact that
ORMAT has signed a cooperative research and development
agreement with the Department of Energy to validate the
feasibility of our proven technology in coshared production
with oil production in the U.S. The project will be conducted
at the Department of Energy's Rocky Mountain oil test center,
known as RMOTC, near Casper, Wyoming, and it will use the ORMAT
Organic Rankine Cycle power generation system to produce
commercial electricity.
ORMAT is willing to supply the ORC power unit as its own
expense while DOE will install and operate the facility for a
12-month period. ORMAT and DOE are sharing the total cost of
the test and the study with ORMAT bearing approximately two-
thirds of the less than one million dollar investment.
The information gathered from this project will have
implications to some 8,000 similar type wells that have been
identified in Texas by Professor Richard Erdlac at the
University of Texas at Permian Basin and the U.S. Department of
Energy geothermal research project office. And Lyle Johnson,
the senior engineer at the Rocky Mountain oil test center
stated that the introduction of geothermal energy production in
the oil field will increase the life and productivity of those
fields.
While ORMAT recognizes that DOE research programs are
outside the primary jurisdiction of this committee, last year
the House passed the GEO Fund section of the DOER Act which
looked at creating a funding mechanism for these types of cost
shared pilot projects for coshared oil resources, and we hope
this committee does the same.
This is one small example of the substantial needs for
improvements in geothermal technology, information and
efficiencies for which Federal research is vital. Instead of
seeking to terminate the geothermal research program, ORMAT
agrees with the comments of Congressman Pearce that we should
be working with industry, universities and a laboratory
research community to develop the tools necessary to access
this massive domestic base load resource base. Thank you very
much.
[The prepared statement of Mr. Thomsen follows:]
Statement of Paul A. Thomsen, Public Policy Administrator,
ORMAT Technologies
Mr. Chairman, members of the committee, it is my honor to testify
today on behalf of ORMAT Technologies.
By way of introduction ORMAT Technologies, is a New York Stock
Exchange registered company (symbol ``ORA''). ORMAT technologies
develops, owns, and operates geothermal and recovered energy facilities
throughout the world. ORMAT has supplied 800 MWs of geothermal power
plants in 21 countries. Here in the United States ORMAT owns and
operates 250 MWs of geothermal power plants in the states of
California, Hawaii, Nevada, and we are pleased to be providing US
Geothermal Company with the technology needed to bring Idaho's first
geothermal power plant online. To date ORMAT has arranged over $1
billion dollars in geothermal projects and corporate financing which is
particularly significant since geothermal projects require the upfront
financing of a continuous lifetime supply of fuel.
Now..on to the Impact of EPAct:
I had the pleasure of testifying in the Senate approximately a year
ago and at that time we agreed with the GAO report's findings that it
was too early to accurately assess the impact of EPAct on the
geothermal Industry at that time
WHY? BECAUSE (i) only one operating 20 MW project, which happens to
be ORMAT's, has qualified to date for the PTC; (ii) the new regulations
to implement the Rishell Amendment to the steam act are still currently
being drafted, and (iii) the DOE Geothermal Research Program funding
for Fiscal Year 2007 was zeroed out by the administration, causing
uncertainty and delay.
Today, unfortunately, little has changed: (i) only one operating 20
MW project, which happens to be ORMAT's, has qualified to date for the
PTC; (ii) the new regulations to implement the Rishell Amendment to the
steam act are still currently being drafted, and (iii) the DOE
Geothermal Research Program funding for Fiscal Year 2007 was zeroed out
by the administration causing uncertainty and delay.
The Potential Impact of EPAct:
That being said, the Ormat truly believes that despite the fact
that geothermal power currently provides approximately a significant
portion of renewable energy produced in the United States, the
geothermal provisions in EPAct, specifically the PTC will enhance the
ability of geothermal projects to compete with fossil fuel
technologies. The PTC can effectively lower the price of geothermal
energy by 1.9c/KWh making more resources of geothermal energy cost
competitive, enabling the full development of the 5,600 MW of near-
term, economically viable capacity that's considered available in the
Western United States over the next decade. I would note that Ormat is
in advanced construction of four plants which will qualify for PTC, two
plants will be operated by third parties and two by Ormat.
The John Rishel Amendment to the Geothermal Steam Act will simplify
processes allowing the BLM and other federal and state agencies to work
in the spirit of the legislation, encouraging expanded geothermal
production.
The significant increase in the funding authorized by EPAct for
DOE's renewable research programs, including geothermal energy will
facilitate collaboration between researchers and industry to harness
the underutilized geothermal resources through out this country.
For example ORMAT has signed a cost-shared Cooperative Research and
Development Agreement (CRADA) with DOE to validate the feasibility of
proven technology already used in geothermal and Recovered Energy
Generation (REG).
The project will be conducted at the DOE Rocky Mountain Oil Test
Center (RMOTC), near Casper Wyoming, and will use an Ormat Organic
Rankine Cycle (ORC) power generation system to produce commercial
electricity. The test will use a commercial air-cooled, skid mounted
standard design Ormat Organic Rankine Cycle system. Ormat will supply
the ORC power unit at its own expense while the DOE will install and
operate the facility for a 12- month period. Ormat and the DOE will
share the total cost of the test and the study, with Ormat bearing
approximately two thirds of the less than $1M total investment.
Presently there are two large unutilized sources of hot water at
the RMOTC Naval Petroleum Reserve No. 3, which produces water in excess
of 190 degrees Fahrenheit and at flow rates sufficient for generation
of approximately 200 kW. The project will consist of the installation,
testing and evaluation of a binary geothermal power unit in the field
near these hot water sources. The ORC power unit will be interconnected
into the field electrical system and the energy produced will be used
by RMOTC and monitored for reliability quality.
Some 8,000 similar type wells have been identified in Texas, by
Prof. Richard Erdlac of the University of Texas of the Permian Basin,
and the U.S. DOE Geothermal Research Project Office. Ormat is now
assessing the feasibility of utilizing some of these wells to support
on site power generation by employing Ormat's factory integrated sub
megawatt geothermal power units, based on the Company's proprietary ORC
technology, which has been field proven in installations totaling 900
MW world wide.
While Ormat recognizes that DOE research programs are outside of
the primary jurisdiction of this Subcommittee, last year the house
passed a GEO Fund section in the DOER Act which looked at creating a
funding mechanism for cost shared pilot projects looking at these types
of projects. We believe it is important to recognize that EPAct
included a significant increase in the funding authorized for DOE's
renewable research programs, including geothermal energy.
There are substantial needs for improvements in geothermal
technology, information, and efficiencies for which federal research is
vital.
Instead of seeking to terminate the geothermal research program,
the Department of Energy should be working with industry, the
university, and the laboratory research community to develop the tools
needed to access this massive resource base.
So how do we make this committee's will a reality?
ORMAT believes that the Production Tax Credit should be extended
five to ten years for geothermal facilities. This may be accomplished
by qualifying geothermal facilities for the PTC before the operational
placed in service date if: (i) the facility has a power purchase
contract in place and (ii) has begun construction. This is not without
precedent. For some other tax provisions with similar time-certain
requirements, the law allows investments to qualify based upon having
binding contracts in place that meet specified requirements.
ORMAT believes that the BLM and other state agencies need to move
quickly on the pending lease applications and complete regulations that
will implement the new law. BLM needs to hold new lease sales in every
western state. Let's implement the new law and urge Congress to
actively oversee the process to ensure that all agencies keep the
spirit of the legislation--to boost production of geothermal energy.
Then and only after a thorough review of the results, should industry
ask Congress to take action on any changes that may be needed.
ORMAT believes that the full geothermal potential of the western
United States can be brought online in the near term with the
assistance of DOE. In the next decade ORMAT feels that the DOE research
program can benefit by focusing its funding in the following areas: (i)
improve accuracy of exploration technology to reduce risk; (ii) improve
drilling technology to reduce risk and cost; (iii) improve
identification, and characterizations of geothermal resource areas;
(iv) share in the cost of exploration and drilling in these new areas;
and (v) continue investigations into future technologies such as
Enhanced Geothermal Systems (EGS), Oil and Gas applications, and Geo-
pressured systems.
On behalf of ORMAT, I want to applaud this committee for its
interest in the secure domestic baseload energy supply that is
geothermal energy. We humbly realize that the decisions made by this
committee impact our nations energy security. This concludes my
prepared comments I am happy to respond to any questions the committee
might have.
______
Mr. Costa. Thank you very much. The testimony I think is
very important, and we will reflect on that in terms of our
questioning which we are coming up to at this point in time.
Normally and for all who come and attend the various committee
hearings and subcommittee hearings there is a process under
which staff is notified for the purpose of photographing or for
family purposes, and that did not occur in this particular
instance but I am willing to ask unanimous consent to those who
have identified themselves for that purpose and put you on
notice at the same time, and if there is no objection we will
allow you to continue to witness. Is there any objection?
Mr. Pearce. No, I do not have an objection, Mr. Chairman,
but I should get unanimous consent to be forgiven because I am
the one that directed him from the elevator to here.
Mr. Costa. Well thank you, I think.
Mr. Sali. Mr. Chairman, I object. How about that? The
forgiveness.
Mr. Costa. OK. All right. We try to be accommodating here
but please there are rules that we follow, and so for those who
are interested in filming I mean there is a requirement and
Members do have an opportunity to object if they want to. So
anyway that is said. Let us get back to the questions.
Mr. Hughes, you heard your fellow panel members testify,
and it seems to me that notwithstanding your efforts that it
seems to be that the ability to try to process these permits in
light of the recent Act has not been as effective as one might
hope, given the nature of the potential of this resource. Do
you think that your systems, your database, your technologies,
your staff that you envision to provide additional support we
need to be looking at this in the Congress so that you can
handle your renewable energy portfolio in an efficient and
effective way?
Mr. Hughes. Mr. Chairman, obviously we want to work with
the Congress to monitor our resources to advance the cause of
renewable energy. In the case of geothermal, I think a lot of
frustration has occurred because we had to shut down our
leasing program basically while we rewrote a new leasing
program based on the Energy Policy Act of 2005.
Mr. Costa. That was referenced in the testimony, and they
say they are still looking for the rules. Where are we?
Mr. Hughes. We should have the final rule out on the street
within the next 30 days. It will be effective 30 days after
that, and that should lead us to a lease sale this summer.
Mr. Costa. For certain?
Mr. Hughes. I am as certain as a bureaucrat could be, sir.
Mr. Costa. Oh my gosh. Well we are going to want to try to
keep you to that timeline.
Mr. Hughes. But having said that, I think in the case of
wind energy, for instance, in 2005 we completed a programmatic
EIS which has helped us greatly. That EIS amended 58 land use
plans across the country. It makes our ability to process wind
energy projects much easier. We are looking to do that with
geothermal. We should have a draft programmatic EIS on the
street in December. We are also considering I guess looking at
ways to improve our processing of solar applications at the
same time, sir.
Mr. Costa. So what you are saying is you are going to try
to have an even-handed commonality of process for the various
renewables?
Mr. Hughes. Yes, sir.
Mr. Costa. The issue was raised on the hearing Tuesday--you
may have not been aware of it--but the impact on a footprint on
various renewable production, and the cumulative or total
impacts on habitat and other natural resources. Your approach
is integrated and complementary in working together with states
when you process these permits for renewable sources of energy?
Mr. Hughes. Yes, sir. Part of the environmental analysis
that we go through we work with state game and fish agencies,
also the Fish and Wildlife Service, and also obviously with the
companies to try and come up with ways to look at site issues,
to address environmental issues that will impact wildlife or
the land there. That is part of the process we go through. In
many cases there are conflicting uses out there.
Mr. Costa. We understand that, but you are committed to the
process and making it seamless as possible?
Mr. Hughes. Yes, sir.
Mr. Costa. Let me move on. The area of transmission, of
course, with geothermal as well as with wind, the transmission
corridors are an issue. Finding the source of energy is one
thing but getting that energy to where it is needed is another.
You know that there is an effort with energy corridor
designation process under Sections 368 as well as 1221 under
the Energy Policy Act. I am interested, therefore, in what
efforts you are pursuing with the Department to identify energy
renewable resource zones so that we can maximize our
opportunities for transmission to take place.
Mr. Hughes. Yes, sir. We are part of an effort that is
being led by Department of Energy, as you know, which had the
lead on those energy corridors. We have been working closely
with them. Initially there were concerns by a great number of
people regarding where some of these corridors may go, existing
designated areas that Congress had designated for special uses
like parks, wildlife refuges, wilderness areas. We think we
have worked out the vast majority of those issues. I think we
are down to discussing maybe just about three wildlife refuges
now where there may be issues involved that we try and
mitigate.
But you are correct, and I think the other witnesses will
tell you the issue of building lines or infrastructure to get
that energy out of these locations--because in many cases they
are not near existing transmission lines. So that is a major
challenge we have, and we look forward to working with the
companies and then all interested groups to route those
properly.
Mr. Costa. My time has expired, but do you have a timeline
on when you and the Department of Energy will be able to
publish this effort as it relates to corridors for transmission
purposes?
Mr. Hughes. I would have to provide that for the record. I
am sorry.
Mr. Costa. Please do.
Mr. Hughes. Yes.
Mr. Costa. The gentleman from New Mexico.
Mr. Pearce. Thank you. I thank the Chairman. Mr. Hughes, I
would echo the Chairman's concern that we expedite access. If
you were to give me an understanding of all say the wind, the
geothermal projects to date that have been requested, how many
of those are without some environmental objection? In other
words, I think that is going to be the largest hindrance. So
give me a feel if you would.
Mr. Hughes. Mr. Pearce, through our NEPA requirements when
we go project-by-project, obviously people come forward with
issues. My guess is probably 95 percent of the projects have
some issue, and that is the purpose of a NEPA evaluation is to
identify the extent of that problem, and then define ways to
mitigate it. Most of the time we are able to find ways to
mitigate those impacts but whether it is in the case of wind
power, it can be obviously the bat issue, birds, site issues.
Mr. Pearce. Yes. But you have objections almost all the
time, 95 percent of the time, and then we have to work through
some process. OK.
Mr. Hughes. That is correct.
Mr. Pearce. Mr. Tester, when you say that we need to get to
100,000 megawatts of power, I am trying to get that in my mind
a fixed compared to the total power of the United States. I am
not a college professor so you will have to help me here. I am
trying to compare 100,000 megawatts to 3,660 billion kilowatts,
and when I do the math--and you are going to have to verify
it--I start crossing out zeros and I get a relationship of
about 1 to 36,660. Is that correct?
Mr. Tester. Mr. Pearce, I do not think that we are talking
about the same exact thing. When I quoted a terawatt of
capacity, a terawatt is a million megawatts.
Mr. Costa. Bring the mic a little closer please.
Mr. Tester. A terawatt is one million megawatts, and that
is the capacity that the EIA reports right now for the United
States. Of that capacity, we were viewing roughly 10 percent of
it would have the kind of impact that would be comparable to
what we have for all of our nuclear generating capacity today,
slightly over 100 plants at about 1,000 megawatts a plant, and
all of the hydro. If we consider our conventional hydro and
pumped hydro, I believe the number comes slightly over 100,000
megawatts. So that is where we came up with the 100,000.
Mr. Pearce. OK. But the 100,000 megawatts is still a very
small percent of the overall base load for the U.S.
Mr. Tester. It seems fairly large if we compare it with
where we are now which is 3,000.
Mr. Pearce. But when you consider coal and natural gas and
all the other sources of energy. Yes, it is a tremendous
increase in what we are doing now, and I support that 100
percent. I am just trying to get in mind----
Mr. Tester. Mr. Pearce, it would be comparable to what all
of the hydro capacity we have now in the United States. I think
that is a fairly large component of our generating capacity.
The nuclear capacity, it is also exactly the same as that.
Mr. Pearce. OK. Thank you. Mr. Hughes, if we are to take
that consideration, you have heard the discussion, how possible
is it to get all those projects permitted? In other words, we
have already talked about the fact that 95 percent are going to
meet some resistance. How feasible is it to get that many
projects permitted and get them online within the technology
even that exists?
Mr. Hughes. It will present a tremendous challenge to us.
Mr. Pearce. OK. That is enough. In other words, we are
talking about tremendous challenge. We are not talking just
trying to get through it. Mr. Kunz, what is the cost of
renewable per KW more or less? Just range.
Mr. Kunz. It is a function of largely an exercise in
amortizing the capital----
Mr. Pearce. Approximately.
Mr. Kunz. Roughly $60 a megawatt, $65.
Mr. Pearce. So six?
Mr. Kunz. Six cents.
Mr. Pearce. Six cents per KW?
Mr. Kunz. Yes.
Mr. Pearce. Three cents more or less for hydroelectric. Six
cents. What is nuclear? What does nuclear cost? About 7 to 10
cents on coal fired.
Mr. Kunz. So it is comparable.
Mr. Pearce. OK. Comparable. What kind of temperature do we
have to get to? What kind of temperatures work for geothermal?
Mr. Kunz. Right now we are exploiting a 280 degree
Fahrenheit resource in Idaho, and it is a mile below the
surface of the earth. So that is----
Mr. Pearce. Now sometimes when we drill oil wells, we get
very hot oil, very hot water. Is there ever a chance of
colocating? In other words, using that water that is coming up
to generate?
Mr. Kunz. Absolutely. They are called geopressured systems
in Texas and other areas like that. It happens to be quite a
briny, nasty solution that has lots of dissolved solids. So you
have an issue to deal with there.
Mr. Pearce. Yes, it is. Cleanliness. OK, Mr. Chairman. I
see my time is out. It looked like maybe Mr. Thomsen or Mr.
Tester wanted to say something.
Mr. Costa. Sure. Quickly.
Mr. Thomsen. Well that is exactly the type of project that
ORMAT is doing at the Rocky Mountain oil test center, taking
that hot water and running it through our Organic Rankine Cycle
system to draw out that extra heat from that process. So we can
send you more details on that if you would like more
information.
Mr. Costa. Thank you. The gentleman from Rhode Island, Mr.
Kennedy.
Mr. Kennedy. Thank you, Mr. Chairman. Welcome. I am
interested in hearing about this notion of how you guarantee
the long-term sustainability of geothermal when so much of the
science is predicated on such a mix of factors, stimulating
large rock volumes, the connectivity of reservoirs, the
fluidity, the permeability, the flow. I mean it seems as though
you have got to have not only the right heat but it has to be
the right flow of fluids, and it has to be the right chemical
mix, but it cannot be too hot. But it has got to have the right
pressure, and it cannot be too cold, and if you draw too much
out it might reduce the pressure.
I mean it just seems to me you are working with a bag of
tricks here, if any one of which comes undone, you are
jeopardizing the whole mix. So how do you guarantee when you
drill this thing and you have it online that you are going to
be able to sustain a nameplate capacity?
Mr. Thomsen. If I can, Mr. Chairman, through you to Mr.
Kennedy, you have brought up some very crucial points, and
first I would like to separate the idea of the resource
definition and maintenance and the equipment needed to produce
the electricity. ORMAT has designed and manufactured the
equipment for over 40 years. We are very confident with the
technology there.
Maintaining the reservoirs is a key component to adding
reliability to the geothermal process. Our technology is what
we call a closed loop system. The water we pump up to draw the
heat from we reinject to the same reservoir. We let it reheat
and then pump it back up again, and we have been doing this in
the city of Reno, Nevada for over 20 years. We have been able
to maintain the reservoir through heavy duty geology,
monitoring those temperatures, making sure we do not draw up
too much water, making sure we do not reinject too close to the
hottest parts of those reservoirs so that we can maintain that
heat and produce the same amount of power.
So with the closed loop system, we are getting much, much
better at doing exactly that, monitoring the amount of heat we
are using, the amount of flow that is going through our system,
and that we are reinjecting back into the earth. The technology
is pretty mature in that area. In our technology we heat a
working fluid that then vaporizes and turns the turbine. That
working fluid that we use has very specific characteristics
that we can then monitor and maintain.
So we are taking out a lot of those aspects of risk, and
those are the key components to a successful geothermal
project. Finding those resources, maintaining those resources
is the key component, and that is why we are here today saying
we need a robust subsurface DOE budget to help us find
additional resources like that that we can maintain and
utilize.
Mr. Kennedy. Explain the talk about similarities in
hydrothermal. What are those in terms of technology and
capturing this power base?
Mr. Thomsen. I can, Mr. Chairman through you and to Mr.
Kennedy. The two types of technology in California for example
you have the geysers which were an incredibly hot resource that
we were able to drill to.
Mr. Kennedy. Right.
Mr. Thomsen. When the water comes up, it reacts with the
atmosphere and the change in pressure, and it starts to boil,
and then we simply put a steam turbine on that and are able to
produce power. Incredible amounts of power using an incredibly
hot resource that as it comes up reaches the boiling point of
212 and beyond.
The resources that ORMAT tends to utilize are temperatures
much lower than that at the surface. We like to pump up water
that is about at depth 300 degrees Fahrenheit. We keep it in a
closed system. Let me go back to the first system. The flash
system then turns to steam, turns the turbine, and then goes
into the atmosphere, to then come down as rain, recharge and to
be used again.
The closed loop system that we have we pump up the water,
we keep it under pressure. There is no boiling. There is no
sediment that comes out of it. It heats an intermediary working
fluid that does the vaporization and turns the turbine. We take
that water and reinject it back into the earth to preserve that
reservoir. We do not have any evaporation. We do not have some
of the environmental concerns of what happens when hot brine
comes up and mixes with oxygen and things like that. Those are
the two basic designs there.
Mr. Kennedy. Very good. Well thank you very much for those
explanations.
Mr. Costa. The gentleman's time has expired but we will
allow an opportunity to come back if you choose. Mr. Sali, the
gentleman from Idaho.
Mr. Sali. Thank you, Mr. Chairman. Mr. Kunz, I was reading
your material, and you are talking about the leasing system and
while you are not advocating that we change anything right now
because it will only slow things down, if I understand the
system that exists today the BLM has gone out and put together
their idea of what resources are out there, and they are
offering those up for bid. But you are asking for a system that
is similar to gold mining where people would go out and stake a
claim, a certain area and whatnot. Do I understand that
correctly?
Mr. Kunz. Well almost, Congressman. Today if you know of
some lands that you want to lease from the BLM, you file
applications for that land. So you have some intellectual
capital knowledge about why you would want to have that land.
You submit it to the BLM, and then they conduct an auction
process so that you can acquire those leases by bidding.
Mr. Sali. And your idea would be just if you have the
information about what might be there, similar to a gold mine?
Mr. Kunz. Exactly.
Mr. Sali. If you believe there is something there----
Mr. Kunz. You go stake it.
Mr. Sali. You go stake it.
Mr. Kunz. There is enough risk in this whole equation as it
is but as I said in my testimony, I am not advocating any
changes. I just wanted to make our personal views known on that
particular topic.
Mr. Sali. You are not advocating a change now.
Mr. Kunz. No.
Mr. Sali. But you would encourage Congress to move that
direction or the agency to move in that direction. Is that a
fair statement?
Mr. Kunz. Well only if it meant that it did not create any
delays in the current procedures.
Mr. Sali. Right. Mr. Hughes, why did we not do that?
Mr. Hughes. We think the system we are setting up through
our regulations is what the Energy Policy Act directed us to.
We also have an obligation under the Federal Land Policy
Management Act for a fair market return for resources that are
out there. That is why I think this year we are going to start
a programmatic EIS which will include an assessment of areas,
reassessment of areas that I think was done in 1979, and then
updated with some maps in 2004 but working with USGS, Forest
Service and ourselves to go out there and so we will know where
those areas are. But we think there is a public interest in the
way we have set it up. That we satisfy the public interest in
doing that.
Mr. Sali. Well Mr. Kunz and Mr. Thomsen have described an
industry that requires a really significant amount of risk
getting in on the front end, and if I understand Mr. Kunz'
complaint, basically he is saying he can go find a place where
he believes there is a resource, and when that is put out for
bid, he could essentially lose that part of his investment if
he does not get the lease. How is that fair to the people who
are involved?
Mr. Hughes. Our position is it is not fair to the American
public. That we have a public interest to protect.
Mr. Sali. But can you not protect that through the lease
though and the amount that they pay for the lease?
Mr. Hughes. Again, we have people competing in the
marketplace to bid on those leases, and that is what we are
required to do to protect the public interest.
Mr. Sali. So you could not end up with a protection of the
public interest through the leasing terms and basically these
people if they go out and believe there is an area that could
be exploited for geothermal energy, if they do not get the
lease then they are just out of luck?
Mr. Hughes. That is the way we run our oil and gas program
where companies nominate those parcels for lease, and then they
have to go and compete with other companies.
Mr. Sali. And you do not believe that there is a difference
in that risk, Mr. Hughes?
Mr. Hughes. There may be a difference there, but again we
have a public interest standard that we have to protect the
public's interest to get the proper revenue for the people, and
we would do that through a bidding system where there is a
competitive bid in the marketplace.
Mr. Sali. Thank you, Mr. Chairman.
Mr. Costa. Thank you. Mr. Hughes, I am told--and I do not
know if it is applicable or not--that the example that Mr. Kunz
used with regards to adjacent property in which they have
already fulfilled the process that there is no provisions to
allow without going back through the competitive bid. Under the
process where you have coal use in that area, if it is adjacent
under that current process as I again have been told--and I do
not pretend to understand it completely--that is not required.
Would you think that such a change should be considered
applicable for geothermal?
Mr. Hughes. Perhaps I misunderstood the discussion we just
had. I was under the assumption that we were talking about an
area where there is no geothermal, and somebody wants to stake
it. I am not sure. I would have to discuss this with our folks
how we have handled that in the regulations.
Mr. Costa. You are not sure. But I think that is something
that we should look at. The Subcommittee should look at.
Mr. Hughes. Right. I think we would be willing to look at
that.
Mr. Costa. OK. All right. We will take Mr. Kunz admonition
that he does not want us to have you rewrite the rules. We are
not suggesting that.
Mr. Hughes. Right.
Mr. Costa. OK. Mr. Tester, you I think with your
technological background indicated what I believe are under the
category of good news potential that is available with regards
to geothermal but first of all you picked the year 2050, if I
understand you correctly.
Mr. Tester. Correct.
Mr. Costa. Which is 40 years away or a little more, and I
know it is important we think long-term for the purposes of our
discussion but in terms of today's geothermal generation what
might be possible with the current technology and the
technologies that you see that are currently evolving in a
shorter timeframe, like 2015. I think I cited in my opening
statement the Western Governors' Association targeted goals on
2015 and 2020.
Mr. Tester. The near term hydrothermal certainly is a large
element of the potential that we would have in this 15-year
period for sure. If you look at the curve that we provided in
our written testimony that I would be happy to show you, Mr.
Chairman, if you like at this moment, we were not really
talking about EGS coming online in terms of any impact until
out about 15 years or so.
Mr. Costa. Why is that?
Mr. Tester. Well because there has to be a period of time
where you would demonstrate this technology. Going back to Mr.
Kennedy's points earlier, the verification of connectivity in
the subsurface is an important development issue that needs to
be worked out. The 30 years or so of testing that has occurred
already around the world has established major elements of that
but there still are additional thresholds that have to be
achieved, a factor of two or three let us say in well
productivity but in order to bring down risk you are going to
have to operate those field sites for a period of time.
So what we were trying to do was to superimpose what would
be a realistic research and development and deployment scenario
on where we are now with the zero budget to where we might be
15 years from now, and if you also continue on that curve you
will see that after about a 15-year period the costs associated
with EGS would be in line with the current energy prices that
we have for all electricity.
Mr. Costa. For all electricity what date did you say
because I was----
Mr. Tester. Well 15 years from the starting point of the
program. So if we started it today, it would----
Mr. Costa. Geothermal would be cost effective?
Mr. Tester. No. This is not geothermal. This is the more
advanced, enhanced geothermal.
Mr. Costa. Enhanced geothermal?
Mr. Tester. Right. Now to come back to your earlier point
though about hydrothermal, one of the issues that we raised in
this analysis was the need for reenergizing the resource
assessment elements carried out by the USGS and others. That
would have to be done as well starting now, not waiting 15
years.
Mr. Costa. So you think that needs to be expedited?
Mr. Tester. Absolutely. Right. I think there----
Mr. Costa. And listening to what Mr. Hughes said,
promulgation of rules to be published in 30 days, and then 30
days for a comment period, and then the following lease, based
on that timeline different regions of the country, how much
different sites do you think need to be developed in the next
10 to 15 years to prove the reduced risk and then therefore
lower the development costs?
Mr. Tester. Our recommendation was to first go to high
grade EGS sites which we refer to in our report as targets of
opportunity. They would be on the margins of today's most
characterized systems that we have in place, the hydrothermal
systems that we have discussed this afternoon. Much of the
infrastructure would be in place. A lot of information about
the geology is known. Water issues and other issues are well
manageable at those sites, and we recommended five or six of
those in our assessment over this period of time.
Mr. Costa. And those five or six sites would be all
located. I mean each site would be within a precise area. How
much megawatts of power would you anticipate coming from a
site?
Mr. Tester. OK. During that early period, we would be
talking about a typical sized plant in the range of maybe 20 to
50 megawatts per plant. So you can take that factor and
multiply it by five or so. So these would be small plants. This
is not to compete necessarily with where we might want to be at
the end of 2050 but it is to establish the base of technology
for going forward.
Mr. Costa. OK. My time has expired. The gentleman from New
Mexico.
Mr. Pearce. Thank you, Chairman. Mr. Tester, now this USGS
requirement under the 2005 Energy Policy Act to assess the
geothermal, do you think that is going to be adequate to tell
us what we need to know about geothermal systems resource
assessment?
Mr. Tester. I am not familiar with the details of it but
our feeling was that a serious geothermal assessment of the
United States has not been carried out for roughly 30 years.
The last major study published by the USGS was in 1979. We feel
that a lot of technology has been developed certainly during
that period of time that would alter the amount of near term
geothermal that could be obtained and deployed. I think the
Western Governors' Conference recently looked at this and would
agree with that. The people within the USGS certainly feel that
it needs to be done, and I think we have to get started soon on
it.
Mr. Pearce. Does EPAct require a new assessment, Energy
Policy Act?
Mr. Tester. Yes.
Mr. Pearce. Yes. I think the Energy Policy Act.
Mr. Hughes. Yes, I think that correct.
Mr. Pearce. Yes. So it is required already. Mr. Hughes, if
I were going to look at the footprint of a well drilled for
geothermal purposes, what size casing do they generally run in
a geothermal well? Do they actually drill a well down to 3 to
8, 10,000 feet? Do you know what size casing? Mr. Kunz, you may
be a little bit better or Mr. Thomsen.
Mr. Kunz. We are just completing drilling some wells in
Idaho that are about a mile deep, and the casing starts at
about 28 inches in diameter at the surface. That is the collar,
and then by the time we get to that bottom depth we are still
at about 13 and seven-eighths inches.
Mr. Pearce. That is a big bit. Mr. Hughes, then so the
footprint on public lands is going to be very similar or maybe
even a little larger than for an oil well for each geothermal
well?
Mr. Hughes. Yes.
Mr. Pearce. Very similar.
Mr. Hughes. For a thousand megawatt power generation, our
figures show we think a geothermal footprint would be about
7,000 acres. That would compare to oil about 1,700 and natural
gas about 3,700 acres.
Mr. Pearce. And if we----
Mr. Hughes. The original footprint.
Mr. Pearce. Sure. I do not know exactly which one of you
might be best qualified to answer this but if we are going to
extract tremendous amounts of geothermal, what kind of spacing
are we going to have to have between wells? Professor Tester,
that might be you. In other words, what is it going to look
like? What is the land going to look like when we get a serious
field that is extracting geothermal?
Mr. Tester. Absolutely. Let me try to answer this in
several levels of detail. The first is----
Mr. Pearce. Not too many levels. I have only about two
minutes.
Mr. Tester. No. I will be short here. The first is we
looked at the footprint of geothermal over the full fuel cycle
or lifecycle of this and compared it with other electrical
generating systems that we have in the U.S., and if you look at
coal or others, I think you will see that the footprint is
quite favorable.
Another feature that is important here I think in the
overall impact is the capacity factor geothermal plants are
very high. Over 90 percent or so is sort of the experience
worldwide with this. That is an important issue with respect to
the impact it might have in terms of net generation of not just
kilowatts or megawatts but megawatt hours or kilowatt hours.
But each site is going to be slightly different in terms of the
spacing of wells both injectors and production wells.
We have a lot of experience with that in the hydrothermal
development in this country and in other countries, and our
feeling is that that is of the order of--I can give you the
exact figures for the record, and I would be happy to provide
that. It is in the report, and it maps out over a range that I
think is quite reasonable compared to what we have for
alternatives.
Mr. Pearce. OK.
Mr. Kunz. Mr. Pearce, I might add just one thing. I had a
letter drawn up to me from the Geothermal Energy Association on
this very topic, and I would like to submit it for the record.
Mr. Pearce. With unanimous consent.
Mr. Costa. Without objection.
Mr. Pearce. To put that in.
Mr. Costa. Yes, thank you.
Mr. Pearce. Mr. Thomsen, these are pretty high risk
ventures though. Am I correct that if you drill a geothermal
well you can fail just as easily as you can fail at an oil
well?
Mr. Thomsen. Well no. I think you have a different type of
risk in the fact that if you have an oil well that you have had
a water break and it is already producing water, you can
evaluate that resource because it is there at the surface and
so forth. The Rocky Mountain oil test center project for
example they kind of knew the temperature, gradient and the
flow rate that they had. We could evaluate that and base our
decisions on that.
When we look at a green field for a new geothermal project,
it takes approximately two to five years for development to
have our geologists evaluate the resource, do the drilling that
is required, and then you are absolutely correct. There is a
high capital cost to do that initial drilling and large amounts
of risk. The EGS that you have heard about today as well hopes
to limit some of that risk. If you find a hot resource that
maybe does not have the medium, the water or brine, you can
maybe then add that to the system. All of these technologies
are tempting and doing it effectively reducing the blind risk
of just drilling for the very first time somewhere.
Mr. Pearce. You bet. Thanks. I appreciate it, Mr. Chairman.
Mr. Costa. Just one quick question, Mr. Kunz, and we will
go to the next panel. Mr. Tester has described a vision of 2050
and then in a more reduced time period of potential megawatt
production and he used another term-of-art. Do you agree with
those potential as hydrothermal in terms of the totality of its
source of energy for the U.S. over the long term?
Mr. Kunz. I do. I think that the shorter term hydrothermal
possibilities say over the next 5 or 10 years is on the order
of about 5,000 to 10,000 megawatts, and then from there it
depends on what we do today to grow beyond that in terms of
pursuing EGS and so on.
Mr. Costa. Well thank you and your comments, suggestions
about credits we will take into account, and we will move on to
the next panel. Thank all of you for your good testimony and
for your patience, and the next panel is going to have to bear
with us I think in a similar fashion, although we want to get
started because again time is valuable for all of us. But we
have been notified that we will have to go for a vote here some
time in the next 10, 15-minute period but during that time let
us begin on the second panel.
We have Mr. Swisher, Executive Director of American Wind
Association. Mr. Robert Gough, Secretary for the Intertribal
Council on Utility Policy. Ms. Lynn Jungwirth, Executive
Director, Watershed Research and Training Center. Mr. Joshua
Bar-Lev, Vice President Regulatory Affairs, Bright Source
Energy. And Mr. Will Lutgen, Executive Director for the
Northwest Public Power Association.
I will do as we did with the other panel, and you will have
to go with the flow here my friends, and that is we will open
up with the first witness, and when they tell us we have about
five minutes left to go and vote, we will recess temporarily
and then come back. So with that said, let us begin with our
first witness, Mr. Randall Swisher, the Executive Director of
American Wind Energy Association. Bring that mic a little
closer please so that we can all hear you.
STATEMENT OF RANDALL SWISHER, EXECUTIVE DIRECTOR, AMERICAN WIND
ENERGY ASSOCIATION
Mr. Swisher. Thank you for the opportunity to address you
today. My name is Randall Swisher, and I serve as Executive
Director for the American Wind Energy Association, the national
trade association for the U.S. wind energy industry, based here
in Washington, D.C. I am here to discuss the topic of wind
energy and Federal lands.
In terms of the current status of the wind industry, the
wind industry is one of the fastest growing sources of
electricity generation in the world with a worldwide average
annual growth rate of 36 percent since 1994 which shows no sign
of diminishing in the foreseeable future. U.S. wind electric
generation has more than quadrupled in the last six years.
The potential for U.S. jobs is enormous. In fact, before
the Senate Finance Committee last week the President of GE
Energy stated we believe wind and solar energy are likely to be
among the largest sources of new manufacturing jobs worldwide
during the 21st century.
In terms of the potential for wind power in the U.S., the
wind resource in the U.S. is almost unlimited. In fact, U.S.
winds could generate more electricity in 15 years than all of
Saudi Arabia's oil without being depleted. For a number of
years the wind industry has had a goal of 100,000 megawatts of
wind developed in the U.S. by 2020. That would represent about
6 percent of the nation's electricity. That target is
achievable.
In fact, at this point it is clear that there are no
technical barriers to wind energy providing as much as 20
percent of the nation's electric power which is how much wind
is currently providing to meet Danish electricity needs. The
environmental payoff would be huge. According to our
preliminary analysis, if wind were to provide 20 percent of
U.S. power generation by 2030, it would avoid over 15 percent
of expected power generation CO2 emissions.
In terms of major challenges facing the wind industry to
achieve that kind of potential, the wind industry's future in
this country is bright but one barrier--and I appreciated the
Chairman's reference to transmission. That is the single
largest constraint facing this industry in the future. But one
barrier the U.S. will have to address to achieve its wind
potential is the lack of a predictable permitting regime.
In terms of wind development on public lands, the U.S. is
blessed with a huge expanse of public lands. Many of those
lands, especially in the western U.S., are appropriate for wind
development and have a significant wind resource as do the
offshore areas, particularly the northeast coast. The wind
energy industry has a long relationship with the Bureau of Land
Management going back to the 1980s when some of the nation's
first wind projects were developed in the southern California
area near Palm Springs and Tehachapi.
BLM managers in that region took the time to understand the
industry and how best to oversee the development process on BLM
land, and in the last five years as wind development began to
spread across the country, it became clear that the effort was
needed to share lessons learned with public land managers that
had little or no experience with wind development.
BLM initiated--as was mentioned earlier--a programmatic
environmental impact statement in 2004 that was intended to
address many of the issues that were generic to wind
development. The objective was to analyze many of wind energy's
impacts broadly so that site specific environmental assessments
could deal with the particular issues at a site. The wind
industry was consulted through the public process, and the end
result was positive. Best management practices were established
as part of the process. Approximately 5,000 people participated
in the scoping process which addressed BLM lands in 11 states.
As of June 2005, approximately 500 megawatts of wind
capacity has been installed under right-of-way authorizations
administered by the BLM with about the same amount of capacity
approved for construction but not yet built. We are
conservatively expecting around 2,000 megawatts of additional
wind development on BLM lands over the next decade, and the
potential is considerably larger. We applaud BLM for their
consultative approach. It clearly provides the best outcome for
all parties involved, and an agency cannot effectively regulate
without understanding the business practices involved, and BLM
took the time to achieve that.
How is the wind industry applying some of the lessons
learned in the development process? Collaboration is the answer
with public agencies and nonprofits. Two examples are the bats
and wind energy cooperative and the grassland species
collaborative. There are a number of specific recommendations
in my testimony, written statement, related to BLM, and I will
ask that that be entered in the record. Thanks for this
opportunity to be with you.
[The prepared statement of Mr. Swisher follows:]
Statement of Randall Swisher, Executive Director,
American Wind Energy Association
Chairman Costa and members of the subcommittee, thank you for the
opportunity to address you today. My name is Randall Swisher and I
serve as Executive Director for the American Wind Energy Association
(AWEA), the national trade association for the U.S. wind energy
industry, based here in Washington, D.C.
My testimony will cover four major topics:
1. The current status of the wind industry in the U.S.;
2. The potential contribution of the wind industry to U.S.
electricity needs over the next few decades;
3. The major barriers to achieving that potential, and
4. The role of federal lands in achieving that potential, as well
as the experience of the wind industry in working with agencies under
this Committee's jurisdiction.
Current Status of the Wind Industry
The wind industry is one of the fastest growing sources of
electricity generation in the world, with global manufacturing capacity
for wind turbines having expanded from annual production of 368
megawatts (MW) in 1994 to 11,200 MW in 2005. This worldwide average
annual growth rate of 36 percent shows no sign of diminishing in the
foreseeable future, and has been driven by a number of factors,
especially competitive economics, the environmental benefits of wind,
and utility interest in being able to rely upon a diverse mix of
electric generating options.
After many years of limited growth through the 1990s, the wind
industry has begun to come of age in this country, and U.S. wind
electric generation has more than quadrupled in the last six years. In
fact, in the last two years, more new wind generating capacity (4,885
MW) was installed than in the industry's first 20 years (1981-2000).
The U.S. wind energy industry enjoyed a record year in 2006,
installing 2,454 megawatts (MW) of new generating capacity, making wind
one of the largest sources of new power generation in the country and a
mainstream option with which to meet growing electricity demand. Last
year the industry grew 27 percent in the U.S., bringing the industry to
a total installed capacity of 11,603 MW at the end of 2006, with
commercial-scale projects spread over two dozen states. Energy
production will vary from site to site based upon the strength of the
wind resource, but on average, one megawatt of wind power produces
enough electricity to serve 250 to 300 homes each day.
This year will be another record, with approximately 3,500 MW of
new wind capacity going on line. In fact, since 2005, the U.S. has held
the status of being the largest single annual market in the world for
new wind generating capacity.
Despite the rapid growth in the market for wind, we have not taken
full advantage of the economic development potential of this
technology. A lack of consistent policy support in the U.S. has been a
much greater deterrent to investment in manufacturing than in project
development. Because of the policy uncertainty, manufacturers have been
slow to invest in U.S.-based turbine manufacturing capacity, and only
one of the top ten wind turbine manufacturers in the world is based in
this country. Although the U.S. was a pioneer in wind technology,
establishing the world's first wind farms in California in 1981, tax
incentives for wind power were suddenly dropped in 1986, and most of
our nascent manufacturing capability disappeared at that time. We
largely ceded policy leadership and market dominance to European
countries. Today, about 70 percent of the world's installed wind
capacity is to be found in Europe, and seven of the ten leading global
turbine manufacturers are based in the three countries of Denmark,
Germany and Spain.
But last year's extension of the wind production tax credit through
the end of 2008 provided an important signal to the market, and because
of a strong interest among U.S. electric utilities in wind, and this
country's almost unlimited wind potential, there is movement to
establish manufacturing facilities in the U.S. The potential for U.S.
jobs is enormous. In fact, last week, before the Senate Finance
Committee, Jon Krenicki, President of GE Energy stated: ``We believe
wind and solar energy are likely to be among the largest sources of new
manufacturing jobs worldwide during the 21st Century.''
New jobs can be expected from other sources besides major turbine
manufacturers such as GE. Manufacturers of components such as wind
turbine towers, blades and generators, for example, will also provide
an enormous number of jobs. In addition, rural America will be rewarded
with a steady number of stable, well-paid jobs in operations and
maintenance from the wind power plants popping up throughout the Great
Plains and other rural areas.
As the U.S. market for wind has expanded, it has attracted well-
capitalized global energy and financial companies with the capability
to continue driving the industry's growth--manufacturing companies such
as General Electric, Siemens and Mitsubishi; project developers or
owners such as FPL Energy, Shell, BP, American Electric Power and AES;
and international companies such as Babcock & Brown, Iberdrola and
Electricite de France.
The surging interest in wind power among electric utilities has
been sparked in part by increasingly strong technical performance by
modern wind turbines. Technology has been steadily improving, including
rotor blade airfoils specially designed for wind turbines, variable-
speed generators, power electronics and sophisticated computer modeling
of design changes. The scale and efficiency of wind turbines has
progressed markedly, and new, larger turbines (1 MW to 3 MW each)
generate 120 times as much electricity as 1980s models at one-fifth the
cost per unit of output. Performance data from almost 5,000 MW of
operating wind turbines in the Midwest shows energy production per
turbine almost 50 percent higher in 2005 than from turbines deployed in
the years prior to 1999.
Owing to land constraints, Europe has been the leader in regard to
offshore wind development. We expect offshore wind development to play
a role in the U.S., but because it is more expensive compared to land-
based development, offshore wind, outside of a few pioneering projects,
won't see significant development here until after 2010. Nonetheless,
the Department of Energy estimates 900,000 MW of wind energy potential
is located off the east coast of the U.S., strategically located near
many population centers.
Potential for the Wind Industry in the U.S.
The growth in the wind industry in the last few years has lead to a
more robust vision of the potential role wind could play in the U.S.
electric industry.
The wind resource in the U.S. is almost unlimited, with endless
expanses of plains and agricultural land well suited for wind
development. In fact, U.S. winds could generate more electricity in 15
years than all of Saudi Arabia's oil, without being depleted.
For a number of years, AWEA has had an established goal of 100,000
MW of wind developed in the U.S. by 2020. That would represent about 6
percent of the nation's electricity. We believe that with proper policy
support that this is a realistic and achievable goal, building upon the
current installed capacity in this country of about 12,000 MW.
Over the last six months, the American Wind Energy Association has
been working in cooperation with a number of other entities--the U.S.
Department of Energy, the National Renewable Energy Laboratory, Black &
Veatch, and other organizations--to develop a more thorough
understanding of how much of America's electricity could be generated
from the wind within the next few decades.
Specifically, the organizations are evaluating the costs and
benefits of wind providing 20 percent of America's electricity by 2030,
as well as the major barriers that would need to be overcome. The
analysis is yet to be completed, but it is clear at this point that
there are no technical barriers to wind energy providing as much as 20
percent of the nation's electric power, which is how much wind is
currently providing to meet Danish electricity needs.
The environmental payoff would be huge. The existing U.S. wind
turbine fleet (11,603 MW) displaces more than 19 million tons of carbon
dioxide each year, based on the current average U.S. utility fuel mix.
Robert Socolow and his colleagues at Princeton have already identified
wind as one of the invaluable ``wedges'' that will together be required
to achieve climate stabilization. According to our preliminary
analysis, if wind were to provide 20 percent of U.S. power generation
in 2030, it would avoid over 15 percent of expected power generation
CO2 emissions.
Major Challenges Facing the Wind Industry
The wind industry's future in this country is bright, but the U.S.
will have to address the following major barriers to achieve its wind
energy potential:
1. Lack of consistent policy support--The wind industry, and
especially the manufacturing sector, has been constrained by the lack
of consistent federal policy support. The on-again, off-again nature of
the federal production tax credit, which has been allowed to expire
three times, has been a significant disincentive to investment. Long-
term, stable policy, such as a ten year extension of the wind
production tax credit and a federal renewable portfolio standard, will
be essential to establish the U.S. as a manufacturing center for the
rapidly growing global wind energy industry.
2. Worldwide turbine shortage--Record growth in the wind industry
has lead to turbine shortages on a worldwide basis. More stable federal
policies will help assure the creation of a robust global supply chain
to meet the growing demand.
3. Transmission constraints--The need for transmission
infrastructure serving major wind resource areas on the Great Plains is
the most significant long-term constraint on the growth of the wind
industry. The electric industry as a whole has substantially
underinvested in transmission relative to the needs of our wholesale
electric markets, so lack of transmission is not an issue that the wind
industry faces alone. But transmission constraints are particularly
critical to a resource such as wind that is distant from major cities.
Despite the level of transmission investment required, the cost is
modest relative to the value of cost-competitive, clean and renewable
electricity that would be made available.
4. Balkanized electric markets--Electric utilities have grown up
relatively isolated and their operations have been designed to reflect
the characteristics of conventional generating technologies such as
coal or gas-fired generation. For wind to achieve its potential, it is
important that the Federal Energy Regulatory Commission (FERC),
regional transmission organizations, and individual electric utilities
begin to operate more as regional pools, in which variable resources
such as wind can flourish. Strong progress has been made in this area
in recent years, such as the introduction of the Midwest ISO covering
15 states, but other regions have a much longer way to go.
5. Environmental costs of fossil fuels not recognized in market
cost--Wind power produces no air emissions and makes no contribution to
problems associated with air pollution or global warming. For wind to
receive a level playing field in the market, the environmental costs of
conventional electricity must be fully internalized.
6. Need to continue reducing the cost of wind power--In the end,
wind energy's market share will be determined to a significant extent
by economics. The cost of wind has declined by about 90 percent since
the mid-80s, but in the last few years, wind turbine prices have
increased due to turbine shortages and increases in the costs of
materials such as steel and fiberglass (as they have with conventional
resources). The industry must focus on continuing to reduce the cost of
wind-generated electricity, and there are opportunities to do that as
the industry scales up.
7. Lack of a predictable permitting regime--Siting, regulatory and
permitting agencies at the state and federal level are still learning
how to deal with wind development, and some permitting processes take
considerably more time than is in the public interest. Without a more
predictable and comprehensive permitting or regulatory regime, it will
be difficult to move from the current pace of about 3,500 MW annually
and achieve installation rates of 10,000 MW or more per year, which is
the level required for wind to fully contribute to our national effort
to reduce the impacts of global warming.
Wind Energy Development on Public Lands
The U.S. is blessed with a huge expanse of public lands in many
parts of this country. Many of those lands, especially in the western
U.S., are appropriate for wind development and have a significant wind
resource, as do the offshore areas of the northeast coast.
The wind energy industry has a long relationship with the Bureau of
Land Management, going back to the 1980s when some of the nation's
first wind projects were developed in the Palm Springs and Tehachapi
areas of southern California. BLM managers in that region generally
took the time to understand the industry and how best to oversee the
development process on BLM land, but wind development presents some
unique issues to land managers, and in the last five years, as
development began to spread around the country, it quickly became clear
that an effort was needed to systematically share lessons learned in
California, Wyoming and a few other pioneering areas with public lands
managers that had little or no experience with wind development.
As a tool to ensure each office didn't have to ``reinvent the
wheel,'' BLM initiated a Programmatic Environmental Impact Statement
(PEIS) in 2004 that was intended to address many of the issues that
were generic to wind development but not always familiar to agency
personnel. The objective was to analyze many of wind energy's impacts
broadly so that site-specific Environmental Assessments could deal with
the particular issues at a site. The wind industry was consulted
through the public process and the end result was a document that many
in the industry and elsewhere support. Best Management Practices (BMPs)
were established as part of the process, and involved extensive
consultation with a wide range of interests. Approximately 5,000 people
participated in the scoping process, which addressed BLM lands in
eleven states: Arizona, California, Colorado, Idaho, Montana, Nevada,
New Mexico, Oregon, Utah, Washington and Wyoming.
As a brief overview, the conclusion of the PEIS reads as follows:
``it appears that the proposed action would present the best approach
for managing wind energy development on BLM-administered lands. The
proposed Wind Energy Development Program is likely to result in the
greatest amount of wind energy development over the next 20 years, at
the lowest potential cost to industry. Simultaneously, the proposed
action would provide the most comprehensive approach for ensuring that
potential adverse impacts are minimized to the greatest extent
possible. And, finally, the proposed action is likely to provide the
greatest economic benefits to local communities and the region as a
whole. As a result, the proposed action appears to best meet the
objectives of the National Energy Policy recommendations to increase
renewable energy production on federal lands.''
At the conclusion of the process, in January 2006, the Department
of Interior issued its decision, and AWEA stated the following:
``The U.S. wind energy industry welcomes the Department of
Interior's record of decision on the final wind energy
Programmatic Environmental Impact Statement, both for the
inclusive manner in which it was developed, and for the end
result: a process that encourages the responsible development
on BLM land of a clean, domestic, and strategic energy
source.''
As of June 2005, approximately 500 MW of wind capacity was
installed under Right Of Way authorizations administered by the BLM. We
are conservatively expecting around 2,000 MW of additional wind
development on BLM lands over the next decade. The potential is
considerably larger, as the projected economically developable wind
resources on BLM-administered lands in these eleven states is 160,100
acres.
We applaud BLM for their consultative approach, and wish other
agencies were as open to public input. It clearly provides for the best
outcome for all parties involved, and most certainly the interests of
the public at large.
The wind industry likewise has a long history with the U.S. Fish &
Wildlife Service, although the Service has not always been as effective
at achieving the agency's objectives. Nonetheless, the wind energy
industry is pleased that the Department of the Interior has finally
announced the Wind Turbine Guidelines Federal Advisory Committee. This
effort has real potential to revise the ineffective 2003 Interim
Guidelines on wind and wildlife that were developed essentially without
wind industry or other stakeholder input, and to move the issue forward
in a collaborative fashion. We applaud the Department and look forward
to the Secretary naming a constructive group to this important
committee.
The wind industry's relationship with the Minerals Management
Service (MMS) is relatively new. MMS was given oversight for offshore
wind development as part of the Energy Policy Act of 2005, assuming
responsibilities for which the U.S. Army Corps of Engineers had
previously been the lead. Although there are no major offshore wind
development projects that have been built in U.S. waters (in contrast
to Europe, where offshore is a major focus for the industry), two
significant projects off the coasts of Massachusetts and Long Island
had spent months in the permitting process, only to have jurisdiction
transferred to MMS midway through the process. One of those projects,
Cape Wind, proposed off the Massachusetts coast, had filed its original
permits in 2001, and a 4,000 page draft Environmental Impact Statement
had been completed by the Corps with 16 federal and state agencies
involved. Although AWEA supported the transfer of jurisdiction to MMS,
we were lead to believe that already proposed projects would be treated
with more fairness, in part because the legislation included a 270 day
timeline for implementation of the offshore provisions of EPAct (which
would have resulted in action by May, 2006). Therefore we were
disheartened to learn that MMS recently announced that the release of
their final rule would once again be delayed, this time until the fall
of 2008.
How is the wind industry applying some of the lessons learned in
the development process? What are some of the most effective means of
identifying and institutionalizing wind development best practices?
AWEA Siting Committee's Wind/Wildlife Initiative--The
wind industry has worked collaboratively with government agencies and
non-governmental organizations on a number of levels--locally, state-
wide, regionally or nationally--to develop ways to minimize wind
energy's biological impacts. AWEA's Siting Committee is looking to
replicate this model on a bigger scale by proactively meeting with NGOs
and government agencies to determine how to work together most
effectively as the industry continues to scale up. Many of the
questions surrounding wind energy's impacts are evolving, and more
research is often needed. The best model we have identified is
collaboration which provides the credible scientific work that all
parties require, and we are part of some effective public/private
partnerships today:
Bats & Wind Energy Cooperative--This collaborative was set
up immediately after the industry discovered higher-than-expected bat
mortality at a wind project in West Virginia. AWEA, Bat Conservation
International, the U.S. Fish & Wildlife Service, and the National
Renewable Energy Laboratory partnered to determine what research is
needed to address this issue, and then raised the funds necessary to
get it done. Collaboration among diverse parties is challenging, but we
are seeing tremendous progress on an important issue.
The Grassland/Shrub-Steppe Species Collaborative is set up
in a similar way, with industry, conservation organizations and
government agencies. In this instance, the collaborative is attempting
to find out if prairie chickens, an important grassland species in the
Plains, are adversely affected by the presence of wind turbines. Again,
it is only through the partnership of wind companies, The Nature
Conservancy, NREL, and a state wildlife agency that we are able to fund
the necessary research to answer this question.
Based upon years of work with BLM, and the more recent experience
of developing the PEIS, what are some of the wind industry's potential
concerns moving forward?
The wind industry would like to ensure that as BLM's
policy is carried out in the field, the important analytic work
underlying the PEIS is systematically relied upon and used as means of
speeding project approvals to the extent feasible and in the public
interest.
The wind industry is a dynamic industry. It is important
to establish best management practices (BMPs) but there must be
recognition that this is still a relatively young industry, and as it
grows, management practices and scientific research are still evolving,
and there should be a way of ensuring that agency BMPs can keep pace.
Agency personnel can be competent and collaborative, but
overwhelming workloads on limited budgets can be detrimental to timely
decision-making. As the wind industry strives to maximize its
contribution to our nation's energy and environmental needs, a more
predictable and comprehensive permitting or regulatory regime is needed
at the state and federal levels, cutting across multiple agencies.
Without such a consistent framework, it will be difficult to move from
the current pace of about 3,500 MW annually and achieve the desired
installation of 10,000 MW or more per year.
I appreciate the opportunity to be with you today, and welcome any
questions you might have.
______
Response to questions submitted for the record by Randall Swisher,
Executive Director, American Wind Energy Association
H ave technologies for wind generation changed in terms of their
impacts on bird mortality?
Yes, wind turbine technology has changed tremendously since the
first commercial wind energy projects were installed in the early
1980s. Turbines are much larger in energy capacity and physical size.
Turbines also are sleeker, with tubular towers and internal ladders and
access points. And years of study has documented that bird mortality at
wind energy projects is low. In fact, a recent study released by the
National Research Council of the National Academies concludes:
``Compared to relatively high raptor fatalities at some older
facilities in California [the Altamont Pass, described in more detail
below], direct impacts of wind energy development on passerines at the
current level of development appear to be minimal.'' In addition, when
compared to all of the other human-related causes of bird collisions:
``Clearly, bird deaths caused by wind turbines are a minute fraction of
the total anthropogenic bird deaths--less than 0.003% in 2003 based on
the estimates of Erickson et. al. (2005).''
Wind technology has evolved dramatically over the last fifteen
years. Most turbines deployed in the Altamont Pass in California, where
the only instance of relatively high bird mortality, specifically
raptors, has occurred in the U.S., were built in the 1980s. The first
generation technology deployed in the Altamont, along with some of the
attributes of the site, makes it the avian impact anomaly that it
remains today. First, the turbines are small and sited relatively
closely together, so there is not that much space between the swept
area of one rotor and the swept area of the next. Second, smaller and
older turbine rotors have a high RPM, a factor which some experts
believe may contribute to problems; and third, these turbines have
lattice towers with horizontal reinforcement bars that provide
convenient perching locations for birds. Modern machines are designed
to provide few or no perching locations.
Beyond the technology, the Altamont Pass site also has a number of
attributes that may make it more harmful to birds: it houses one of
nation's largest concentrations of federally-protected raptors, there
is an abundant prey base, and there is also heavy year-round raptor
use. Thankfully, the experience in the Altamont has not been repeated
elsewhere, and the industry is now taking steps in partnership with
groups like the Golden Gate Audubon Society to make changes there to
reduce the raptor mortality, including even shutting down the turbines
for a couple of months out of the year and eventually replacing all of
the older machines with newer machines (at a ratio of about 10 or 15 to
1), which is expected to reduce mortality there.
C an you tell us about other technological changes or best management
practices which are in the works to address wildlife issues
which wind development will encounter on public lands?
The BLM, working in cooperation with the industry, developed Best
Management Practices (BMPs) as part of the Programmatic Environmental
Impact Statement completed in 2005. These BMPs lay out some of the
requirements of how to deal with wildlife issues on BLM-managed lands,
and they provide clear guidance to developers and BLM field offices of
how to handle wind energy projects. Examples of BMPs include:
``Operators shall evaluate avian and bat use of the
project area and design the project to minimize or mitigate the
potential for bird and bat strikes (e.g., development shall not occur
in riparian habitats and wetlands). Scientifically rigorous avian and
bat use surveys shall be conducted; the amount and extent of ecological
baseline data required shall be determined on a project basis.''
``Facilities shall be designed to discourage their use as
perching or nesting substrates by birds. For example, power lines and
poles shall be configured to minimize raptor electrocutions and
discourage raptor and raven nesting and perching.''
As far as technological changes, the wind energy industry is active
in a number of wildlife research collaboratives and there has been
technology tested in the past.
Bats & Wind Energy Cooperative (BWEC)--A relatively new
wildlife concern is turbine impacts on bats. While bats were found at
projects during post-construction monitoring in the past, they were not
discovered in large numbers until 2003 at a project in West Virginia.
The wind industry immediately moved to partner with Bat Conservation
International, the U.S. Fish & Wildlife Service, and the Department of
Energy's National Renewable Energy Laboratory to create the BWEC.
BWEC's purpose is to identify and fund research needed to understand
why and how bats are being impacted and to explore ways to minimize
impacts through deterrent methods. BWEC's current 2-pronged research
plan is looking at how to determine if a site is risky for bats,
because mortality is not widespread at projects across the country, and
testing of a device that would emit an ultrasonic frequency to warn
bats away from turbines. This type of collaborative effort is producing
great results and something the wind industry hopes serves as a model
for other wildlife issues and maybe for other industries.
Grassland/Shrub-Steppe Species Collaborative (GS3C)--
Another collaborative industry participates in is the GS3C. The GS3C is
identifying and conducting research on the potential avoidance of
certain keystone avian species from areas with wind turbines. Species
such as prairie chickens and sage grouse have demonstrated avoidance
from structures such as power lines and roads, so the GS3C is
attempting to discover if the same is true for wind turbines and how
such impact may be avoided or mitigated.
Testing has also taken place in the past with regard to raptor
impacts at the Altamont Pass (described above), the only site in the
U.S. with demonstrated high avian mortality due to turbine collisions.
The industry has tested technologies such as painting blades or
nacelles in specific patterns to increase their visibility to raptors.
Additionally, advances such as tubular towers to discourage perching on
new machines and deploying perch guards on older machines have been
methods to attempt to reduce mortality.
I n your oral and written testimony, you state that American Wind
Energy Association has an established goal of generating
100,000 MW of wind in the U.S. by 2020--or 6 percent of the
nation's electricity. Your testimony says you ``conservatively
expect that 2,000 MW will be developed on BLM lands over the
next decade.'' Could you comment on why you project that a
relatively small proportion of AWEA's goal will be reached on
public lands, given the vast developable wind resources in the
west?
Some of this conservative estimate is just that, conservative. With
more access to transmission lines and new lines installed, the figure
could be higher. BLM itself through the development of the PEIS
projected the megawatt (MW) capacity installed in 2015--2630 MW--and
2025--3260 MW. These projections are derived from information on the
available wind resource, access to transmission, exclusion areas and
physical limitations such as slope, etc.
Policies such as the PEIS should further standardize the permitting
process on BLM-managed lands. One concern of the wind industry is
whether the BLM offices have the resources necessary to review the
multiple applications required for wind projects and that these
applications are given the high priority they deserve to move ahead. If
not, developers will move on to other project sites in the development
pipeline.
D o you think the current Energy Policy Act provisions will enable you
to meet your goals on public lands and nationally? If not, why
not?
Section 211 of the Energy Policy Act (EPAct) stated ``It is the
Sense of Congress that the Secretary of the Interior should, before the
end of the 10-year period beginning on the date of enactment of this
Act, seek to have approved non-hydropower renewable energy projects
located on the public lands with a generation capacity of at least
10,000 megawatts of electricity.'' As the previous discussion makes
clear, this will be a stretch goal to achieve.
The extension of the renewable energy Production Tax Credit (PTC)
in the Energy Policy Act (EPAct) was a critical component of the wind
energy industry's continued success. The PTC in 2005 was extended for
the first time before it expired, allowing for longer planning horizons
and it avoided the boom-and-bust cycle the industry has experienced due
to three expirations since it went into effect in 1994. While the two
year extension in EPAct was enough to keep the market moving forward
briskly, it has not been a long enough timeframe to facilitate strong
investment in manufacturing and the supply chain. Those investments
require a five to ten year extension of the PTC, and it is our hope
Congress will recognize and respond to that need and the enormous
economic development opportunity. As Jon Krenicki, President of GE
Energy, testified before Senate Finance Committee earlier this year,
``We believe wind and solar energy are likely to be among the largest
sources of new manufacturing jobs worldwide during the 21st Century,''
but they require stable, long-term policy if those jobs are to be
captured in the U.S. A long-term extension of the PTC and a Renewable
Portfolio Standard are vital to maximizing these economic development
benefits for the U.S.
Another aspect of EPAct was the transference of authority for
offshore renewable energy resources to the Minerals Management Service
(MMS). Although offshore wind is well-established in Europe, no
offshore wind projects are currently installed in American waters. In
some parts of the country, such as the Northeast, the load (demand for
electricity) is near the coast and the wind resource over the ocean is
excellent in some of those same areas. Offshore wind technology is
limited in where it can currently be installed, so AWEA does not
predict significant numbers of projects in the near future, but
offshore wind energy definitely has a role in achieving the wind
industry's vision in the future. MMS is now developing the regulations
to govern offshore renewable energy projects, including wind energy.
AWEA is concerned that MMS has delayed the release of final regulations
a number of times. While developing new regulations is a difficult
task, no offshore wind developments can move forward, including the
Cape Wind and Long Island Power Authority projects that are moving
separately from this environmental review process, until the
regulations are final. AWEA will request clarification from MMS on when
the regulations will be released.
The Energy Policy Act also included provisions in Section 368 and
1221 for electric transmission development which are helpful to wind
energy because transmission is needed to deliver the power from remote
areas to load centers.
W hat is the position of the American Wind Energy Association of
Section 368 of the Energy Policy Act of 2005? What
recommendations do you have regarding transmission of wind
power?
AWEA supports the energy corridors provisions in Section 368 of the
Energy Policy Act (``energy right-of-way corridors on federal land'').
Section 368 provides an opportunity for the nation to meet growing
energy demands with resources that are abundant in the West, including
wind energy. Accessing these resources will require electric
transmission facilities crossing many federally owned lands, and thus
many different siting procedures and decision makers. The coordinated
process under section 368 provides much greater likelihood of
successfully developing corridors for needed energy delivery
infrastructure including electric transmission.
AWEA supports transmission infrastructure development as a critical
piece of a national strategy to address energy security and global
warming. The existing transmission grid is congested and has suffered
from under-investment in recent decades. There are some opportunities
to increase the efficiency and usage of the existing transmission grid.
But importantly for this committee, new infrastructure will be required
to tap the hundreds of Gigawatts of low cost wind resources across much
of the interior West. The two primary barriers are cost allocation and
siting. Federal leadership in the West on siting is critical given the
amount of federal land that would need to be crossed by new
transmission lines. We encourage federal land managers to work with
regional transmission planners at the Western Electric Coordinating
Committee and other forums in the West to ensure properly sited, well
coordinated infrastructure development.
______
Mr. Costa. Thank you very much, Mr. Swisher, and we will
get back to you on that and your good testimony. Your radio-
like voice obviously makes you even more effective. We have a
vote that is being cast as we speak. So in speaking with the
Ranking Member, if you do not mind we are going to recess
briefly. The two of us will go and vote, and we will be back I
would hope in about 10 minutes or so. As long as it takes us to
walk over and walk back. So anyway you have a little break, and
we will see you in a little bit. The committee is now recessed.
[Recess.]
Mr. Costa. If we have all of our witnesses here, I would
like to reconvene the Subcommittee and move on to our next
witness. As I look at the second panel, that on my list happens
to be Mr. Robert Gough, is that correct?
Mr. Gough. That is correct, sir.
Mr. Costa. Who is the Secretary of the Intertribal Council
Utility Policy.
Mr. Gough. Yes, sir.
Mr. Costa. And so that is obviously a lot of public lands
and sovereign nations that are on those lands. Is this your
camera?
Mr. Gough. It is, sir, yes.
Mr. Costa. Good. Fine. I would like to have a camera follow
me some day. Anyway. Well maybe not. Please begin with your
testimony.
STATEMENT OF ROBERT GOUGH, SECRETARY,
INTERTRIBAL COUNCIL ON UTILITY POLICY
Mr. Gough. I appreciate that. Good afternoon. My name is
Bob Gough, and I am the Secretary of the Intertribal Counsel on
Utility Policy, Intertribal COUP. It is composed of tribes in
the northern plains. Primarily North and South Dakota, Nebraska
and Wyoming. There are 12 tribes membered there now, and the
background is spelled out in our testimony, and it is an honor
to speak to this Subcommittee and in this room.
About 15 years ago we were here on behalf of the tribes to
actually secure hydropower allocations. The tribes live along
the dams on the northern greater plains on the Missouri and
basically had been flooded. Many of the tribes had been flooded
with the building of the dams, and it was only this year 2000
tribes were able to secure hydropower allocations. So it has
been a long time, and we are glad to be back here on the next
round of energy development.
I appreciate what you had to say with regard for the
nation. There is no silver bullets but I would like to posit
that there are a lot of silver buckshot. There is a lot of
opportunities for lots of energy efficiency and the rest to
make it, and for tribes who are Federal----
Mr. Costa. I would concur.
Mr. Gough. And for tribes with Federal lands, that land is
held in trust, and it is a very special kind of land. It is not
public land in the same sense that parks are in that it is
there for the benefit just for the tribes. The tribes hold that
beneficial title but there is still Federal responsibility to
help assume economic development on the reservations.
I have had the honor of serving on the Western Governors'
Energy Advisory Committee for the last two years, three years
now--I guess it is into the third year--putting together the
recommendations and looking at the opportunities. Intertribal
COUP has posited a plan for 3,000 megawatts of tribally owned
wind in the great plains. That is only 150 megawatts on 20
reservations, and that was an audaciously large amount of
development, and a year later the Western Governors posited
30,000 megawatts of clean energy for the west. So all of a
sudden we were like 10 percent of what the Western Governors
were looking at by 2015.
I have a number of slides here that I will go through very
briefly just to put into context of why wind development for
the reservations makes a whole lot of sense, and a couple of
changes in policy that need to be considered that could really
help development happen. If we look at the drought that has
gripped the west, particularly in the northern plains, we see
that we are facing almost the same scenario climate change is
predicting for the west. We are running out of hydropower
water. Water for hydropower, and we are running into situations
where more and more even conventional power plants are having
to curtail because of water constraints, either thermal
constraints or just lack of water present, and that is what the
first slide is all about.
We are looking at new normals and new ways of working with
the resources. In the west, Western Area Power Administration
runs from Minnesota to California, and it has got 9 of the 10
windiest states in the country. The great wind resource and
they are running out of hydropower. If they just use Class 4
wind resources and above, we would have 2,000 gigawatts of wind
power potential. The whole country operates on an installed
capacity of about 800 gigawatts. So there is a tremendous
resource out there throughout the west.
On the reservations, NREL has mapped with the blue dots
here the wind potential on each of the reservations, and you
can see clustered in the northern plains the greatest wind
resource we have in the country. Many of those reservations
have that. So while it may not be a silver bullet, it could be
a golden opportunity for reservations to be able to utilize
that resource.
The red lines on this map are the WAPA grid. We need to be
able to find ways for the tribes to have access to that grid.
Rethinking how we operate the grid. Right now it is operated by
hydro, and then when there is not enough hydro they go to the
market for dispatchable coal power. What was once 100 percent
hydropower is now 15 percent hydro, 85 percent coal on those
wires, and there is no place for wind on those wires as it
currently stands.
The opportunities for treating tribes as governments in a
government-to-government relationship with the Federal
government, recognizing tribal projects as governmental
instrumentalities, and giving them a preference on the grid the
same way that the dams have a preference on the grid.
The production tax credit is one of the three major
incentives of revenue streams for wind power, and that is one
that the tribes currently do not have access to since they are
governments. They do not pay Federal income tax. Therefore
there is no place for that tax credit to hold. We would like to
tribes in joint ventures to be able to shift their credits that
they would get as an equity partner over to their private
capital partners in those tribal joint ventures.
Great benefits could come to the whole country. The wind
resource throughout the northeast, you get our air two days
after we are finished with it, and if we can build more clean
energy, you have cleaner air coming your way, and it brings
revenue and new economic and educational opportunities for the
reservations through the tribal colleges and the like. I
appreciate the time is up, and I appreciate the committee's
patience.
[The prepared statement of Mr. Gough follows:]
Statement of Robert Gough, Secretary,
Intertribal Council On Utility Policy, Rosebud, South Dakota
Good afternoon distinguished and honorable representatives. My name
is Robert Gough and I am the secretary of the Intertribal Council On
Utility Policy, and I am honored to be able to appear before this
committee to speak on behalf of the American Indian tribal
opportunities and desires to develop some of the tremendous wind, solar
and other renewable energy potentials found on Indian reservations
across the West. A letter attached below outlines the specific message
sent to this committee from the President of the Intertribal Council On
Utility Policy, Mr. Patrick Spears, who could not be here today.
Background: The Intertribal Council On Utility Policy (COUP) is
composed of twelve federally recognized Indian tribes in North and
South Dakota, Nebraska and Wyoming, with affiliates throughout the
northern Great Plains. Organized in 1994, it is chartered and
headquartered on the Rosebud Sioux Reservation to provide a tribal
forum for policy issues dealing with telecommunications and energy
utility operations and services. Low-cost federal hydroelectric power
has been generated from tribal lands and waters along the Missouri
River for decades without proper allocations provided to the tribes in
the region. Intertribal COUP grew out of the unified efforts of the
Missouri River Tribes seeking a fair share of the federal power
distributed by the Western Area Power Administration.
Mission: Intertribal COUP strongly adheres to the principles of
tribal self-determination and ecological sustainability, supporting the
development of sustainable homeland economies built upon renewable
energy resources. Intertribal COUP is a vehicle for educating Tribal
governments about economic development opportunities available through
public and private partnerships to provide reservation utility
services. Intertribal COUP seeks to assure that the benefits of tribal
partnerships with the federal government, as envisioned in our
treaties, are promoted in federal legislation and policy.
This country could harvest the vast renewable energy from renewable
such as wind power from the Great Plains and solar from the Southwest
through changes in federal priorities for renewable energy carried on
the federal grids throughout the west. American Indian tribes in the
west have tremendous wind and solar resources and are arrayed along the
federal grid system built out from the dams on the Missouri and the
Colorado river systems, for example.
American Indian tribes have a special ``government to government''
relationship with the United States, and their renewable energy
projects should be considered as ``government instrumentalities'' much
like the federal dams, often built on and flooding their homelands. It
would be a tremendous opportunity to meet this country's demand for
clean energy while honoring our trust relationship and treaty
obligations with the Tribes in their pursuit for economic development
though wind and solar energy development. Such a relationship would
allow tribal projects to stand next to federal energy projects as
governmental instrumentalities, in terms of access and priority to the
federal grids which cross and connect almost all of the Indian
reservations in the heartland of this country.
To tap this vast resource of clean power and build sustainable
tribal economies in some of the poorest communities in America, large
scale tribal renewable energy projects have requirements:
1. Assessment of the resources for feasibility and development;
2. Access to the federal grid;
3. Integration with the federal hydropower resources, and
4. Adjustment of federal renewable energy incentives, namely the
PTC, which as currently written penalize the attraction of outside
capital to help build tribal projects in which Tribes have an ongoing
equity interest.
I have included six slides which I will make reference to during
this testimony.
SLIDE 1. The current state of the Missouri River where the dams are
operated and managed by the Corps of Engineers and the Bureau of
Reclamation for navigation, flood control, endangered species, and
irrigation among other purposes. The hydrological system is under no
one's management and the system is facing dramatic reductions in water
flow, and thus diminished hydropower resources due to the extended
drought throughout the West and particularly in the Northern Great
Plains and headwaters of the Missouri River.
Western Area Power Administration, with its 20 year hydropower
allocation contacts, cannot fulfill its allocation contracts with
reduced hydropower resource currently available, and must purchase
increasingly more expensive and greater quantities of non-hydropower
electricity, most often lignite coal power, which is the most carbon
dioxide intensive power per megawatt hour in the country.
Coal power is the least expensive source of electric power, only
because most of its true life-cycle and environmental costs have been
externalized. Current federal policy utilizing such conventional fossil
fuel power creates a positive feed back loop, further reducing snow
pack and precipitation and thus requiring increasing amounts of
supplement power annually. Western's supplemental power budget has
increased from $25 million dollars to over $240 million dollars in just
this decade to date.
Investment of a portion of such staggering sums, through long-term
power purchase agreements, into Tribal wind projects could produce
clean electricity at a relatively fixed cost for over the next three
decades, without the extraordinary consumption of water currently
associated with conventional power production.
SLIDE 2. The Western Area Power Administration sits in the windiest
region of the country, with 9 of the 10 windiest states within its
service territory. Just utilizing the potential from the class 4 wind
sites and above, the WAPA service territory has a total wind power
potential over 2,000 gigawatts. The entire United States currently has
an installed electricity generation capacity of about 800 gigawatts, or
less than half the wind potential of the superior class wind sites in
the WAPA footprint. Western requires any taker of federal hydropower to
conduct IRPs or Integrated Resource Plans to optimize the use of a
variety of its conventional and renewable energy resources. As WAPA
hydropower is diminished, ways should be sought to optimize the
region's renewable sources into the federal grid administered by WAPA.
In line with the federal government's trust responsibilities, treaty
relationships and statutory requirements to assist Tribes in building
their reservation economies, Tribal wind coupled with federal
hydropower could enhance both Western's power supplies while building
sustainable tribal economies based upon renewable energy.
SLIDE 3. The blue dots on the U.S. map show the wind potential on
the Indian reservations across America, which totals to some 535
Billion kilowatt hours/year. The entire country used about 3,853
Billion kilowatt hours in 2004. The northern Plains reservations have
the greatest wind generation potential clustered along the red lines
representing the federal transmission grid administered by WAPA. In
seeking to integrate tribal projects onto the existing grid, Tribes
find themselves in the position as the ``new kid on the block''
entering into a long established set of relationships between the
federal power marketers and the existing utilities with dispatchable
resources. Western cannot control when or if the Corps of Engineers may
or can supply federal hydropower from a diminishing resource to meet
contractual obligations and expected demands. Therefore, it seeks
dispatchable supplemental generation at the times when it needs the
power, and thus dismisses the value of wind energy, which is only
available where the wind blows. The rules of the grid have been formed
about the formerly reliable hydropower resource and the dispatchable
conventional sources such as coal or natural gas. Under the current
practices, there is ``no place on the grid'' for wind if it isn't there
when the PMA needs it.
Congress should help the PMA's consider how to integrate wind, the
cleanest, most abundant but least dispatchable resource, by
arrangements which provide for the minimal flow of hydropower as the
river system may require, while making the most advantage of the wind
when it does blow (about 40% of the time), and then supplementing the
wind with what ever additional hydropower may be available, and only
then going to outside non-governmental markets for additional, more
dispatchable generation. Such a re-thinking of how the grid could
operate would optimize the two governmental resources of non-polluting
generation sources, tribal wind and federal hydropower, creating a
renewable energy dynamo along the Missouri River system, which could
then be augmented by more conventional, non-governmental sources of
power. Congress should direct the PMA's to integrate wind and other
renewable energy sources into their systems, and to give particular
preference to Tribal projects as part of their unique government to
government relationship.
SLIDE 4. This slide shows the approximate revenue streams one might
expect from a wind project. The price that a wind project might get
from the sale of the energy generated depends in part, upon the nature
of the resource, and in part upon the current market price for power in
the region. In the Northern Great Plains, new wind projects compete
against heavily subsidized federal hydropower and the low priced
lignite coal being burned in grandfathered coal plants. Wind, however,
is very competitive against NEW COAL plants, particularly if the
project can utilize the federal production tax credit (PTC).
Reservation projects, under current law, are penalized to the
extent of tribal ownership because the PTC is apportioned according the
ownership interest. To the extent private capital flows into a
reservation project where Tribes hold an equity position, the project
is penalized to the extent of that ownership because:
A) Tribes, as governments, have no federal income tax liability,
and
B) Purchasing utilities ASSUME that the project gets the full tax
credit when they set their tariffs.
So far, the federal renewable energy incentives such as the PTC,
the Renewable Energy Production Incentive (REPI), and most recently the
Clean Renewable Energy Bonds (CREBs) have been designed with other
entities in mind, such as municipal utility authorities and rural
electric cooperatives,--entities which have an obligation to serve
their rate payers, and not truly tailored to large utility scale tribal
projects, whose tribal members are often members of rural cooperatives
or area IOUs. Tribes have historically had little, if any,
representation on the elected rural cooperative boards. Thus, Tribes
cannot use their membership to rate-base project development in the
ways that munies and coops can and do.
Greater detail on the ``sharable PTC'' is attached to this
testimony.
SLIDE 5. The northern tier of the United States sits in a windshed,
with the richest wind regime sitting upwind from the largest energy
consuming region in the country. Fossil fuel power generation has
brought both economic boon and environmental degradation to this region
in the form of acid rain, NOx, Sox, particulate
and mercury pollution to the northeastern part of the country. And now
we realize that our energy system is also a major emitter of carbon
dioxide as a green house gas associated with global warming.
As a region, the upwind generation of clean energy could deliver
cleaner air today, and cleaner power tomorrow, once a smarter and more
capable transmission system, tying the Great Plains to the Northeast,
is provided. Tribal wind power on the Great Plains can bring tremendous
benefit to the nation and regions downwind, while building sustainable
economic development in the ``New American Ghetto'' as the Dec. 8, 2005
issue of ``The Economist'' called the states of Montana, Nebraska, and
North and South Dakota.
SLIDE 6. There is potential benefit to Indian reservation in terms
of the training opportunities through the network of tribal colleges
that can be achieved for the ever growing Indian populations which are
the fastest growing segment of the U.S. population, the least
electrified, in terms of rural America, and the most unemployed in the
country. The same strategic locations of the reservations, in terms of
large scale distribute wind energy generation, brings value to weather
forecasting for agriculture in general, and more importantly, wind
forecasting, in particular, which can be utilized as a new source of
employment and value-added economics to wind generation.
CONCLUSION: Wind power and solar, unlike conventional generation
from the burning of fossil fuels, provides clean electricity but do not
consume water or generate GHG emissions. Facilitating tribal renewable
energy could help meet this nation's and build sustainable tribal
economies based on renewable energy. Tribal lands on the northern
plains have some 200,000 megawatts of wind resources and could meet a
significant portion of America's rural and urban electric energy needs.
Intertribal wind energy from the reservations arrayed along the
Missouri River and the Western Area Power Administration transmission
grid could be merged with hydropower delivered by WAPA on the federal
grid system that connects us all. Native Wind energy can have a major
impact on the reduction of global warming gases and other pollutants,
and enhancing the clean energy security of the United States, and the
building of sustainable economies on America's Indian reservations. I
would be happy to answer any questions the committee may have either
now or in writing, and would request the opportunity to expand these
remarks, should that be necessary.
Thank you on behalf of the federally recognized Tribes who are
members of the Intertribal Council On Utility Policy.
______
[NOTE: Slides have been retained in the Committee's official
files.]
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.epsResponse to questions submitted for the record by Robert Gough,
Secretary, Intertribal Council On Utility Policy
Thank you for the opportunity to address your questions with regard
to my testimony of April 19th before the Energy and Minerals
Subcommittee of the House Resources Committee.
C an you quantify some of the environmental or social benefits you
foresee specifically for tribes from the wind energy
development areas you envision?
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.epsWind energy development on tribal lands can have significant
social and environmental benefits in the Northern Great Plains and
throughout the West.
The social benefits would include the ability of well over 150
reservations to be able to generate most of the energy consumed on
their reservation from clean renewable energy, with over half of those
able to provide off reservation sales of surplus energy, providing
millions of dollars of income over the life of the projects. One
important aspect of wind power as a renewable resource, tribes could
generate 35% to 40% of their electricity from a one-time, single
capital investment, to realize both power and additional revenues from
the sale of ``green tags'' (the environmental benefits associated with
non-polluting generation) also called ``renewable energy credits'' or
``carbon offsets'' for the 25 to 30 year life of the project, and after
that time period, have no open pit holes in the ground, have unpolluted
waters and still have 100% of the resource they started with.
Further, it has been estimated by the Union of Concerned Scientists
that over the life of the project there is one new job for every 10
megawatts of installed generation. With an estimate 209,639 total
tribal potential installed megawatts from wind, there could be at least
20,000 new, direct, longterm, well paying jobs created in Indian
Country to service the tribal wind energy potential. Construction could
add some 7,000 to 10,000 or so well paying, short-term reservation jobs
that would have applicability in the off reservation wind industry as
well. Additional jobs could also be assumed if manufacturing and
assembly plants for wind power technologies were located in Indian
Country. It is unlikely that the full potential wind power on tribal
lands would actually be realized, so job estimates would necessarily be
revised downwards in proportion to the actual build out, both on tribal
lands and on other federal lands where Tribes may exercise their
government to government partnerships for tribal projects may be built
on federal public lands. A further benefit would be for employment in
more energy dependent industries and activities that could use wind
energy as electricity or in other forms (such as mechanical) or stored
as ice or heat, for later use in heating or cooling (displacing need
for carbon based electricity). Such energy intensive activities might
be agriculture based, such as for water pumping, green house heating,
lighting and cooling, food processing, and in service activities such
as community or industrial laundries for hospitals and care homes.
The environmental benefits would include a major reduction in air
pollution and green house gas generation. Given that well over half of
America's electrical power comes from the burning of fossil fuels, if
tribes installed up to their potential, then nearly 25% of that fossil
generation could be displaced by tribal wind power, leaving almost
32,000 tons of coal in the ground and carbon out of the atmosphere for
each megawatt of wind generation over the life of the project.
Beyond air quality benefits, wind power does not consume any water
when compared to conventional generation, such as coal, oil, nuclear or
gas power plants, most of which boil water to spin turbines and require
make up water even for closed loop systems and require the evaporation
of thousands of gallons of water per minute to cool their steam plants
down. In the drought stricken West, the water savings alone could be
extremely significant.
Y our testimony focused on wind power, but please share any thoughts
you have on solar power generation on tribal lands as relevant
to the jurisdiction of the Subcommittee on Energy and Minerals
and the Energy Policy Act of 2005.
Tribes have already utilized both photovoltaic and active and
passive thermal technologies capturing solar power in a variety of ways
for electricity and hot water, particularly to meet residential housing
and remote, off-grid electrical needs.
A detailed report on the vast array of tribal renewable energy
opportunities has been produced by the Energy Information
Administration and is found at: http://www.eia.doe.gov/cneaf/
solar.renewables/ilands
And, specifically, at:
http://www.eia.doe.gov/cneaf/solar.renewables/ilands/chapter3.html
The following slides from that EIA report show the country's solar
photovoltaic and large scale solar power potentials.
[GRAPHIC] [TIFF OMITTED] 34825.010
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.eps[GRAPHIC] [TIFF OMITTED] 34825.013
.epsAs can been seen by the slides above, Tribes have an extremely
significant solar potential on their federal Indian reservations, with
over 17,606 billion kilowatt hours available annually. While solar
power is often more expensive on smaller scales technologies, Tribes
could, in partnership with federal projects and agencies, produce solar
power to meet local and regional needs. With regard to tribal renewable
energy development on lands subject to this subcommittee's
jurisdiction, several of the southwestern Tribes are exploring some
large, utility scale projects that would warrant significant investment
to jump start solar technology manufacturing that could be of a scale
to bring down solar costs. Again, utility scale projects installed on
tribal or federal lands can produce a significant contribution to the
country's energy mix.
Again, I thank the subcommittee for their consideration of the
renewable energy potential on tribal lands and the opportunities for
Tribes to consider projects on a variety of other federal, non-tribal
lands throughout the West. Tribal participation in industrial scale
projects will also require appropriately crafted incentives that do not
penalize tribal participation in renewable energy projects.
Congressional support and passage of such legislation as H.R. 1954,
which will allow tribal to transfer renewable energy production tax
credits in the context of tribal joint ventures with private capital
and expertise.
______
Mr. Costa. Thank you very much, Mr. Gough. I thought all
the wind that occurred here originated here but that must be a
different kind of wind I am talking about. Our next witness--
and we will come back to you with questions--is Ms. Lynn
Jungwirth, is that correct, the Executive Director for the
Watershed Research and Training Center.
STATEMENT OF LYNN JUNGWIRTH, EXECUTIVE DIRECTOR, THE WATERSHED
RESEARCH AND TRAINING CENTER
Ms. Jungwirth. Thank you.
Mr. Costa. Thank you.
Ms. Jungwirth. I am happy to be here.
Mr. Costa. We are happy to have you here.
Ms. Jungwirth. And to talk about the potential for biomass
from public lands. I understand the testimony about the
permitting processes and the difficulty with the technologies.
Biomass and public lands has other problems, as you might
imagine. Getting social agreement to do that has been a
challenge as well as making the economics work.
I work with public land communities all over the west, and
my job was to bring to you some examples of how we are
approaching that and how that seems to be working out. The
biomass issue on public lands for us is a natural resource
management issue. It is not a renewable energy issue. We have
lots of public lands that need to be restored, and the fire
suppression budget, as you probably know, is really inhibiting
the ability of the land management agency to manage their lands
and to restore them so that the fire that costs all that money
does not have to happen. Biomass we see as part of that
solution.
But there are several issues. The only place that this
works is where people work collaboratively to set a restoration
framework and to agree that they will allow the NEPA process to
move forward to make that supply available. We have seen that
happen. It works where local businesses have ownership and try
to figure out the highest and best use. Wood biomass to
electricity is only one energy use of wood. Liquid fuels is
going to happen, and then you have thermal energy from wood
pellets.
We think that this is really important. A stand alone
biomass plant that just makes electricity is 20 percent
efficient, 20 percent efficient. Wood ethanol is 50 percent
efficient. A wood pellet is 80 percent efficient. We do not
believe that subsidizing a low efficiency use of wood is in our
interest and will help us get the restoration work done. So we
would like you to consider encouraging the use of high
efficiency energy from wood.
We also would like you to consider encouraging integrated
use facilities, and let me tell you why that is important.
Right now hog fuel for a biomass plant to make electricity is
worth about $20 a ton. That is it, and if you put all of that
into that biomass market for electricity at 20 percent
efficiency on a long-term contract that will be the price you
are going to have for 10 years.
In the Apache-Sitgreaves on the White Mountain, they sold
that material to a pellet plant who then pulled out higher and
better use for post and pole and saw timber, and now they have
13 businesses instead of one business supported by that
material, and they have increased the value of that material so
the cost of doing that treatment dropped from $600 an acre to
$400 an acre, and saved the Federal government $20 million. We
have to let this integrated use happen, differentiating the
markets, letting people get access to material to create value
for that material because the Federal government cannot pay for
the restoration of Federal lands anymore.
Biomass is a good way to help us do that but only if it is
appropriately scaled, only it have the social agreement through
a restoration collaborative framework so people let the NEPA
happen, and only if we encourage integrated use. There you go.
You have time back.
[The prepared statement of Ms. Jungwirth follows:]
Statement of Lynn Jungwirth, Executive Director,
Watershed Research and Training Center, Hayfork, California
Thank you for the opportunity to address these important subjects
today. I work in a small, public land community in the middle of the
Shasta-Trinity National Forest. In 1994 our forest changed from timber
management to management for biodiversity, clean water, clean air, and
other ecosystem services. The icon of that change was the Northern
Spotted Owl. We have worked diligently since the early 1990s to find
pathways to restoring the forest, protecting the owls and the coho, and
restoring our local economic vitality. During that period I have worked
with others on the National Fire Plan, (I currently serve on the
Western Governors' Forest Health Advisory Group), stewardship
contracting, collaborative stewardship, Community Wildfire Planning,
and the nexus of forest management and community health. Through the
Rural Voices for Conservation Coalition, a group of over 60 western
community groups working with public land issues, I have developed a
unique perspective on biomass and renewable energy, which I hope to
share with you today.
My comments will deal with the role of public lands and the role of
federal investments in developing biomass energy facilities with supply
from public lands. The Community Forestry groups believe biomass
utilization is a land management issue, not a renewable energy issue.
We see renewable energy as part of an integrated strategy to
1. Improve the resilience and health of the forest.
2. Reduce the cost of fire suppression
3. Improve the social and economic condition of public land
communities
I believe our collective jobs are to use the federal investment and
federal lands to maximum advantage in terms of forest health, energy
efficiency, and local economic returns. Luckily, we have some examples
of how that can work and what it takes to make it work. My comments are
based upon actual experiences on the ground and in your public land
communities.
Renewable Energy production is possible in an integrated-use program.
It cannot stand alone.
Rural businesses and communities are working with Forest Service
and BLM partners to develop ``integrated-use biomass facilities''.
These facilities usually include a clean chip product (for sale to a
regional paper plant), a dirty chip product (for use in a co-located
pellet plant or wood-fired boiler for steam/electricity), a post and
pole processor, and a small log processor. The key is the ability to
sort and merchandize for highest and best use, therefore creating
maximum value for the raw materials and maximum market flexibility.
These integrated-use program oftentimes include a composter, dry-
kiln, animal bedding, or landscape bark plant, moulding plants, and
wood-plastic facilities. The key is that they are developed at the
local level as appropriate. Instructive examples come from the
Collaborative Forestry Restoration Program in New Mexico, the White
Mountain Stewardship Contract on the Apache-Sitgraves National Forest,
and the Boardman Chip Plant. Other communities around the west are in
some phase of similar development.
The White Mountain Stewardship Contract on the Apache-Sitgraves
National Forest is the most mature example. It included: 1) A
collaborative process which included a very powerful environmental
activist community. 2.) Federal Investment of $1.5million in four
businesses through the Economic Action program of the Forest Service,
Forest Products Lab woody-biomass grants, and the Four Corners/
Sustainable Forests Partnership. 3.)A ten-year stewardship contract on
150,000 acres which brought a consortium of local businesses to the
table. 4.) An integrated use approach including clean chips/dirty
chips/roundwood/and sawlogs.
So far, the results have been: per acre costs of treatments fell
from over $600/acre to under $400 (that alone is a $20 million savings
to the federal treasury); 9,000 acres treated; 24,000 acres under
contract; 70,000 acres NEPA ready; businesses involved grew from five
to thirteen with expansion into molding/flooring/ and oriented strand
board in the planning stages; job count, 449 f.t.e.; and, $12 million
per year in local purchasing of goods and services. The payroll and
business taxes alone have proven this to have been a smart investment
for the federal government.
If that supply had been dedicated to a single-use stand alone
biomass to electricity plant, the employment would have been 15-24 jobs
at the plant, and the supply would have been monopolized by that plant
for 10 years. Single use is an inefficient model for public land supply
and limits innovation and adaptability.
Lessons from the field:
A. A Collaborative forest restoration program appears to be a pre-
requisite for public land supply: It provides a politically
durable agreement to maximize forest health and provide raw
material for utilization through stewardship contracts and
appropriated dollars.
Collaborative forest restoration projects require an up-front
federal investment in the collaborative process. Where restoration
frameworks have been worked out through a multi-stakeholder process
projects have social support and appeals are reduced. Examples abound
throughout the west and appear to be essential in making biomass
available from public lands. Collaboration is not in current agency
performance measures or targets and therefore, often does not get
dedicated resources.
B. Using woody bio-mass for solid pelletized fuel which maximizes the
energy efficiency in wood.
A standard wood-fired electrical generation plant recovers about
20% of the energy in the wood it burns. Converting wood to ethanol
gives you about a 50% net efficiency. Converting wood residues into
solid pelletized fuel gives you about a net 80% efficiency.
The cost of a standard wood-fired bio-mass to energy electrical
plant is about $2.5 million per megawatt. That would be about $25
million for a 10 megawatt plant. A ten megawatt plant requires 167,500
green tons of wood residue per year. A ten megawatt plant requires a
7.5cents/kilowatt hour in order to work economically and today the
biomass to electricity industry needs a subsidy to reach that 7.5cents.
If you assume thinning 25 tons/acre you would have to thin 6,700 acres
per year to feed the plant. That's roughly the equivalent of 33.5
million board feet.
A wood pellet facility for 60,000 green tons (about 35% of what a
10 megawatt plant would require) can be built for $2.5 million (about
10% of what a 10 megawatt plant would require.) That 60,000 green tons
is roughly equivalent to 12 million board feet but delivers roughly 1.5
times the renewable energy of the 10 megawatt biomass to electricity
plant.
If the federal policy is to subsidize the market for bio-mass
generated electricity, then perhaps it needs to incentivise markets for
solid pelletized fuel as well--which can directly heat schools,
hospitals, public buildings and homes, as well as co-fire coal plants
and help them burn more cleanly.
C. Build Integrated ``Use facilities: to maximize local economic
returns.
Integrated-use facilities simply mean a single campus making more
than one product out of forest biomass. Currently the historic example
is a sawmill or veneer plant with a wood-fired boiler for both steam
and electricity. These are the plants you see being proposed and built
in Oregon, where they still have private land forestry and the public
land supply is becoming more predictable because it comes from
thinnings. These plants work economically because the wood products
plant uses the heat and some of the electricity for its own processing.
That is the traditional ``sawlog'' version.
The woody bio-mass version is a small scale facility that can
produce a clean chip for the paper industry, hogged-fuel for a biomass
plant or pellet plant, a small pole, and a small log processing
facility. Oftentimes a composter is added, or a dry kiln, or a
landscape bark facility. The concept is, you go for the highest and
best use. That allows you to be flexible over time as markets change.
It also allows you to have multiple locally owned businesses
participating. These integrated use facilities work for local economies
because of appropriate scale, and appropriate ownership structure. They
also add the greatest value, eventually making the raw material more
valuable, thus reducing treatment costs on public land.
1. Ownership structure: While many reports have noted the
potential for rural development around biomass utilization, most fail
to address how a community might participate in the benefits. The
examples of bio-energy that has been most studied recently are ethanol
plants owned by farmers or co-ops of farmers. Ownership of ethanol
refineries by local farmers and community members is seen as the key
aspect to sustainable rural development. Local ownership, as opposed to
absentee-ownership, assures that the facility is based to some extent
on local resources and needs, and that much of the money generated
remains in the local economy. While ``economies of scale''
traditionally pointed to larger plants, today ``economies of scale''
point to the added benefits of smaller, locally owned plants, where
typically the spending of dividends by community investors has been
found to contribute significantly more to the local economy. An initial
plant corn-ethanol would create about 40 full-time jobs and an increase
in annual direct spending in the community of around $56 million. When
community investors re-invest dividends in their community we see an
additional 821 jobs, an increase in $37 million in household income,
and over $60 million more in Gross State Product--than what a community
gains through local siting of an absentee-owned plant. (studies by John
Urbanchuk, ``Economic Impacts on the Farm Community of Cooperative
Ownership'' (2002-2006) www.ncga.com)
2. Federal Role: If the Federal Government wants to invest in
biomass utilization through transportation subsidies, technical
assistance, and grants, it would do well to incentivise these
integrated-use facilities now emerging. For example: SBS Wood Shavings
in New Mexico is now SBS Wood Shavings and Sawmill and Dry Kiln; Dodge
Logging in Oregon is now the Boardman Chip Plant and Pellet Mill and
small log mill, Fremont Lumber is working with DG Energy on a mixed-use
facility in Lakeview, Oregon as is the Warm Springs Tribe in Central
Oregon.
D. Scale is an issue. It's a supply issue:
In the earlier discussion of a 10 megawatt power plant (considered
small scale by many in the biomass industry) the supply required is
equivalent to 33.5 million board feet. Consider, if you will, the
drastically reduced allowable sales quantities on most of your National
Forests. For instance, the entire ASQ for the Trinity Forest, where I
live is 28 million, and they rarely put out more than 8 million (the
ASQ in 1989 was around 200 million board feet). On the neighboring
Klamath Forest (which produced 440 million board feet in 1989 )the ASQ
is 44 million board feet and they average about 15 million board feet
per year.
Large scale facilities can no longer be supported on the public
land supply alone. Even where there is an inadequate mix of public/
private land, they are struggling to survive.
Small scale isn't just the best alternative for public lands. It is
often the only alternative in areas where public ownership is over 50%
of the land and volumes of material are so small compared to an
industrial scale.
Its an environmental issue: Restoration forestry is a fairly new
science. Our monitoring for learning (as opposed to compliance or
accountability) is likewise fairly new and while most of the
conservation community supports landscape level treatments there are
those who don't and who will surely oppose large scale approaches.
Collaboration helps. There are several strategies for ``scaling up''.
We believe you are seeing ``small scale on a large scale'' emerging
throughout the west and should support it. The industry that builds
renewable energy opportunities from public land supply has to remain
responsive to maintaining forest health in a dynamic system. Diversity
in the industry maintains adaptability and stops boom/bust cycles.
It's a sustainability issue: Clean chips, dirty chips, roundwood,
and sawtimber allow the businesses to change as the needs of the forest
change overtime. At biomass conferences I'm often challenged by
activists to defend the ``sustainability'' of biomass energy plants. My
response is simple: ``I hope this isn't sustainable. I hope, that in 20
years we are no longer facing 130 million acres of overstocked stands,
catastrophic wildfire, and forest conversion to brushfield. I hope we
will move on to a more resilient forest, a larger diameter size class
and a new global standard for sustaining our public lands for ecosystem
services, including biodiversity, clean water, clean air, carbon, and
forest products.'' I do not expect the public lands to be managed for
quick rotation fuel for renewable energy plants.
It's a community development issue. The west is replete with
infrastructure in the form of abandoned mill sites, commonly referred
to as ``brownfields''. They usually are 50 or so miles apart. They are
located on major transportation routes, close to transmission lines
(because most used 3 megawatts of power for their processing) and close
to water sources. These old mill sites are perfect for small scale,
integrated-use facilities are fairly low capital, reduce the energy
loss and the high costs of transportation, and are appropriate to the
landscape and the community.
Recommendations:
The Federal Investments should be in priority areas where fire
suppression costs are escalating, over 50% of the forest is in Fire
Risk Condition Class 3, and the likelihood of a catastrophic fire is
over 10 on the current assessment scale. The Forest Service has this
data available by Region. Investments should go to areas within the
highest risk quartile in each region.
The Federal Investments should be in creating the supply:
stewardship contracts, increased planning resources, and increased
resources for collaborative processes. Focused up-front investment in
collaboration paid off for the Apache-Sitgraves, the Lakeview
Stewardship Unit, the Colorado Front Range, and many other areas.
The Federal Investments should be in developing the harvesting and
processing capacity: Continue to fund The Forest Products Lab Woody-
biomass Grants and Technical Assistance; fund Section 210 of the Energy
Bill and perhaps add some pilots for these integrated-use facilities;
fund the Forest Service Economic Action Program, this program has the
flexibility to provide grants to communities for collaborative
planning, technical and market assistance, and demonstration projects.
The Farm Bill's Rural Development Title could provide substantial
funding to assist rural business start-ups and provide public land
communities and businesses with access to capital. Most Rural
Development programs are aimed at private landowners. Public land
communities do not own the land and will probably need a specific
program. The Farm Bill's energy title and the Energy Policy Act could
put greater emphasis on appropriate, community-scale development. It
may be appropriate to authorize and fund some pilot/demonstration
integrated-use facilities.
The Federal Investments should be in incentivising markets:
subsidize the burners and boilers needed to use pellets for heat,
equalize the renewable energy tax credit to the same standards as wind
and solar for wood-fired electrical generation when it is part of a
combined heat and power, integrated-use facility.
Do not subsidize transportation. That seems counter-intuitive if we
are trying to save energy. Instead, fund forest health treatments and
require the utilization of the material when appropriate. (This is an
aside: Agency targets often inadvertently double count acres when one
line item is used to pay a crew to cut and pile biomass (say at $600/
acre) and a force account crew is paid to burn the piles (say at $400/
acre). By reporting twice and counting twice, the average per acre
treatment is $500. If a biomass facility wants to cut and extract the
same material at a cost of $700, it cannot compete merely because of
the accounting system, not the outcomes. To incentivize utilization,
perhaps acres treated through extraction and therefore not requiring
pile burning should also be double counted. Considering the return to
the federal coffers through payroll and business taxes, perhaps they
should be triple counted.)
Take a business plan approach. Award these incentives to projects
where the business plan shows the reduction in cost of acres treated
over time and the reduction in the likelihood of a Type 3 fire incident
overtime as a result of these investments. Award these incentives to
integrated-use facilities in public land communities with low income
and expressed need for economic development (hub-zone designation comes
to mind). Award these incentives to communities in counties where the
federal government owns over 50% of the land (for example) and where
the fire risk condition class is very high and the risk of catastrophic
wildfire is ranked above 10 on the current scale.
The public lands are in need of restoration. Your public land
communities and businesses are taking the lead in finding solutions to
these complex challenges of developing social agreement, learning
appropriate land treatments, finding economic uses for by-products of
forest restoration/ fuels reduction and creating a fire-adapted
society. Renewable energy is an important piece of this system, but
forest health and community vitality must remain the drivers.
______
Mr. Costa. Wow. You have given us an extra minute. Well we
will reward you in some way.
Ms. Jungwirth. Thank you.
Mr. Costa. The Chair is pleased to welcome a new addition
to our Subcommittee this afternoon, Congresswoman McMorris from
eastern Washington state, and she has a constituent I believe
who will be testifying here shortly, and it is good to have you
here. Our next witness is another Californian. I understand you
are from Hayfork, California?
Ms. Jungwirth. Hayfork, California, yes.
Mr. Costa. Wally Herger country, right?
Ms. Jungwirth. Absolutely, Wally Herger country.
Mr. Costa. Another Californian, Mr. Joshua Bar-Lev who is
Vice President of Regulatory Affairs with Bright Source Energy
and a gentleman who I think I ran across in Sacramento in a
previous life. Mr. Bar-Lev.
STATEMENT OF JOSHUA BAR-LEV, VICE PRESIDENT OF REGULATORY
AFFAIRS, BRIGHTSOURCE ENERGY
Mr. Bar-Lev. Is that right?
Mr. Costa. Yes.
Mr. Bar-Lev. I would like to remember that.
Mr. Costa. You were with PG&E?
Mr. Bar-Lev. Yes, I was for almost 30 years.
Mr. Costa. Yes.
Mr. Bar-Lev. Thank you very much for having me.
Mr. Costa. We will not go all over those people that we
know together but go ahead. Please testify.
Mr. Bar-Lev. OK. I would like to talk about technology,
land and policy. You have my testimony, and I have provided a
lot of information, and I think I have also provided some maps
up there that I think are great maps that show the potential
for this technology. Let me talk a little bit about the
technology. In a former incarnation, which is when I may have
known you, I was vice president of a company called Luz
International Limited that built solar projects in the Mojave
Desert, and between 1984 and 1991, we were able to build nine
of these projects, and they are still there today operating
beautifully and reliably, and in a total of 350 megawatts,
which is enough for roughly 400,000 people.
That photograph is a picture of one of our projects. I
believe that was probably number six, probably only about 30
megawatts. Each of our projects and most of these concentrated
solar power type solar projects need about a square mile for
every 100 megawatts. The reason that this picture is so
instructive is that I was with that company 16 years ago, and
there are lessons to be learned because that company ultimately
went bankrupt.
Mr. Costa. Are those people down in between those solar
panels? It looks like four people from here.
Mr. Bar-Lev. Those are three I think human beings.
Mr. Costa. Well that give size and perspective. I was
trying to figure out if those were ants or if those----
Mr. Bar-Lev. No. And by the way what is sort of interesting
about that photograph is it was the cover photo for Audubon
magazine in 1991, and on the bottom right on the caption would
say on the magazine cover, it said, ``Renewable energy-answer
to global warming?'' And that was 1991.
So what we were able to do in the seven years of our
existence at that time, just through very simple tinkering,
economies of scale, learning, was to reduce our costs by almost
50 percent, and we were actually we felt we were within earshot
of being competitive with fossil fuel, but that was during a
period when the Federal and state governments were very
supportive of solar energy, and because of long-term policies
in place at that time we were able to actually reduce our costs
by almost 50 percent.
And that makes me confidently able to tell you that if we
had that kind of dedication from this Congress and from the
states we would be competitive with fossil fuel in the very
near term, and I am confident of that based on the experience I
had with Luz at that time and having been at PG&E for 30 years.
The second thing I want to talk about is land, and that is
our most treasured resource. If you look at the map over there
of the western United States that we got from NREL, what NREL
did that is just wonderful actually is that they eliminated all
the sloping, all the environmentally fragile high radiation
land and basically filtered it out so that what you have there
in different colors is optimal solar areas, and all these sort
of orange to gold----
Mr. Costa. You are describing the lower left-hand corner?
Mr. Bar-Lev. That is right. Well, they are spread in
Nevada, New Mexico.
Mr. Costa. No. I understand that but I mean where the inset
is where it seems to be magnified.
Mr. Bar-Lev. Yes. But what NREL also did then was that they
filtered out. What they wanted to do was show how many of those
high radiation areas were near transmission lines, gas lines,
highways and load centers, and so what you have and I think you
have the maps there, are a tremendous filtering that shows you
how valuable this land can be.
The United States has some of the best solar energy in the
entire world. Just what NREL has done there is capable of
generating 200 gigawatts, which is about three and a half times
what California's peak is, and if you wanted to put that in
square miles, 200 gigawatts would be roughly 40 miles by 50
miles. So you could put that kind of technology on 40 miles by
50 miles. That is 2,000 square miles of high desert land,
probably trying to seek the dark red areas over there, but any
of the gold, orange and red areas would be suitable, and you
could take care of the entire west's needs.
The problem that we have is we need consistent and stable
policy, and that is we need a long-term investment tax credit
which has already been submitted to this Congress. I think that
is H.R. 550, and we need the BLM to move forward, to be funded,
to identify the optimal solar areas in the west and to provide
us with programmatic environmental clearance for those areas,
and to work with the DOE to bring transmission to those areas.
I am beyond my time, and I very much appreciate the opportunity
to speak to you.
[The prepared statement of Mr. Bar-Lev follows:]
Statement of Joshua Bar-Lev, Vice President of Regulatory Affairs,
BrightSource Energy
Mr. Chairman and members of the Subcommittee, I am Joshua Bar-Lev,
Vice President for Regulatory Affairs, BrightSource Energy, a company
located in California that seeks to develop utility scale solar energy
projects. I am here to speak on behalf of the utility scale solar
member companies of Solar Energy Industries Association (SEIA). SEIA is
the national trade association of companies which supports the
development of clean renewable solar energy. Neither BrightSource nor I
are new to this subject.
BrightSource has the same management team as did a solar company
that ceased operations in 1991, Luz International Ltd. Over 16 years
ago, Luz built nine (9) utility scale solar energy plants in the
California Mohave Desert that still are operating today and together
produce 350 MW of electricity. That history informs my remarks and
recommendations to this Subcommittee on what actions Congress might
take to encourage utility scale solar energy.
First, some background. In order to use solar energy to produce
commercial levels of power, a technology called Concentrated Solar
Power (CSP) is used to reflect and focus solar energy onto an absorbing
material. This absorbing material becomes quite hot and in the case of
the use of a heat engine causes a gas to expand and drive a piston, or
in the case of a steam turbine heats water to create steam to power a
conventional steam turbine. Either CSP method creates electricity which
is then transmitted to the customer over transmission lines. See U.S.
Department of the Interior, Bureau of Land Management, Solar Energy
Development Policy (IM 2007-097), and attachment defining solar energy
systems. Ex. 1. (www.blm.gov/wo/st/en/info/newsroom/2007/april/
NR0704_1.print.html)
There are a number of CSP companies in the market--each with a
different technology. These technologies include: the use of parabolic
mirrors to focus the sunlight against tubes that run up and down the
field of mirrors; others use flat mirrors to reflect against a tower
containing heat absorbing pipes; and others may use photovoltaics to
concentrate the sun. Unlike direct use solar, each of the CSP
technologies is built to generate large amounts of electricity that can
be integrated into the utility system.
Typically, utility scale CSP systems need roughly a square mile
(800 acres) of reflective mirrors and turbines to generate about 100MW
of electricity. A 100MW facility serves a city of roughly 100,000
people. CSP plants are particularly well-suited to meet peak demand
load in the West beginning in the late morning and then throughout the
daylight hours. CSP plants typically use natural gas as back-up power
for those times when the cloud cover prevents the solar powered start-
up and shut-down of the CSP plant. CSP plants are built to last 30
years and typically use very little water.
I invite the Committee to take a field trip to see these
impressive, essentially carbon-free systems in operation. A CSP system
is being completed near Boulder City, NV, another is underway in
Arizona and a number are in operation in Spain. As I mentioned, I was
personally involved in the construction of several CSP systems between
1984 and 1991 in California's Mohave Desert that continue in operation
today--generating enough energy for 400,000 people. See http://
www.blm.gov/wo/st/en/prog/energy/solar_energy.html for links to Mohave
Desert projects.
These California projects, besides having personal meaning to me,
are an instructive example to this Subcommittee about the consequences
of failing to maintain consistent, supportive policies to encourage the
development of alternative energy sources. The momentum that was
encouraging the development, testing and increased economies of CSP
technologies in the 1980's and 1990's was lost when the government
reversed policy course for solar energy. It is my opinion that our
nation squandered an opportunity to sustain the development of a clean,
secure, and infinite source of energy.
The lessons from these early California CSP plants are several.
First, during the years we built these projects, the federal and state
governments had in place long-term tax policies that encouraged the
development of utility scale solar projects.
Second, these long-term tax policies gave the industry stability
and predictability. This allowed Luz to learn as we operated these
solar plants, to find economies of scale, and to build, finance and
sell projects at a progressively lower cost of production. By 1991, we
were able to build our projects at almost 50% of the cost per kWh
compared to our early projects in 1984. Luz believed that within a few
years we would become competitive with the cost of fossil fuel power
plants.
Third, once those supportive government policies ended, our capital
intensive projects could not be financed and we had to cease
operations. Since 1991, no utility scale solar power plant has been
built in the United States until very recently. Favorable tax and
government policies for alternative energy are once again encouraging
development of CSP.
After being in the solar business and also working as a chief
counsel at a utility, Pacific Gas and Electric Company, for many years,
I can tell you confidently that with supportive near-term federal and
state policies in place, large scale, and cost effective, competitive
solar energy is within reach. That is the conclusion of many experts,
including the Department of Energy (DOE), and is also the conclusion of
the Western Governors' Association (WGA) in their 2006 resolution
supporting the Clean and Diversified Energy Committee (CDEAC) report.
To assist the Subcommittee, I have attached the WGA recommendations of
their Policy Resolution, 06-10, ``Clean and Diversified Energy for the
West'', detailing near term renewable energy policy initiatives as well
as the executive summary of the CDEAC solar committee report. Ex. 2 See
also www.westgov.org/wga/initiatives/cdeac/index.htm for links to full
reports.
I will come back to SEIA's policy recommendations to the
Subcommittee in a moment, but let me start with an important basic
foundation for the U.S. CSP industry--our unique national resource--
plentiful, flat, non-environmentally sensitive desert land in the West
that has high solar insolation, low cloud cover and is in proximity to
gas and electric transmission lines, highways and urban load centers.
This CSP quality land is largely public land managed for multiple
uses including energy production by the Department of the Interior,
Bureau of Land Management (BLM). BLM reported that as of April 1, 2007
there are 43 solar applications pending in California, Arizona and
Nevada with 34 in California alone. As recently as the end of 2004,
there was no expressed interest in CSP development on BLM public lands.
Enactment of California's renewable portfolio standard and favorable
tax policies led to the filing of these BLM applications--most over the
last eight months.
In 2003, BLM and the Department of Energy (DOE), National Renewable
Energy Lab (NREL) issued a GIS-based report, ``Assessing the Potential
for Renewable Energy on Public Lands.'' See http://www.nrel.gov/docs/
fy03osti/33530.pdf. More recently, in support of the WGA CDEAC
initiative, NREL has mapped the best locations for solar energy on
public lands in Arizona, California, Nevada, and New Mexico. The NREL
report and GIS maps identify areas with 1 percent or less of slope with
high levels of solar insolation for utility-grade CSP plants. I have
attached the multi-state and California CSP maps prepared by NREL. Ex.
3 (http://www.nrel.gov/csp/maps.html).
The NREL study ``filtered out'' unsuitable land that had too much
slope (mountains), was too cloudy, too environmentally sensitive, in or
near Wilderness, Parks or other unsuitable areas. The result will not
surprise any of you from the West. The western United States has some
of the best solar radiation areas in the entire world. Conservatively,
there is enough land using today's utility scale technology to generate
at least 7000GW of solar energy. This 7000GW of potential solar energy
is about seven times the total United States demand capacity. To give
you a sense of scale, California's peak demand capacity is 60GW.
California alone has at least 6000 square miles of ideal desert
terrain for CSP. However, if we limit the development of CSP to high-
potential solar areas that also have proximity to gas and electric
transmission lines, we can conservatively estimate that we have ideal
desert land for at least 200GW.
How do we bridge the cost gap to get utility scale solar energy to
be competitive with conventional and other renewable fuels? Energy
experts believe that a concerted effort to develop somewhere around 4GW
(which represents about 10% of the expected growth in peak load for the
western states) of CSP in the next decade will bring the cost down to
competitive levels, through R&D, economies of scale and learning curve
benefits. The WGA study found that development of as little as 4GW will
bring the cost of solar down to fewer than 10 cents a kWh, which is
equivalent to $7 per MMBTU gas.
Production of 4GW of CSP energy will have major economic benefits--
one study by Black and Veatch estimates that 4GW will produce a $22
billion increase in gross state product, including 13,000 construction
jobs, 1,100 permanent jobs and $2 billion in state tax revenues. And
this 4GW will conservatively displace almost 8 million tons of CO2,
which is 7% of California's electric utility output of carbon.
What governmental policies will result in deployment of sufficient
utility scale solar energy in the western United States in the next
decade? I believe it's a combination of federal and state actions. I
will focus first on federal actions and conclude with a brief mention
of state initiatives.
RECOMMENDATIONS
Federal actions:
Facilitate the use of federal public lands for CSP.
Public lands are uniquely important for the development of CSP. Much of
the best CSP solar is on public lands and these lands also provide the
land area necessary for CSP facilities. First, the Secretaries of
Interior and Energy should carry out the directive of EPACT 2005,
Sec. 201 to assess and update available assessments of solar resources.
See also EPACT Sec. 1833 (directing the preparation of a National
Academy of Science (NAS) study of the renewable potential of public
resources.) The agencies should be provided the budgetary resources to
identify, in no more than six months, optimal sites for utility scale
(CSP) solar energy. By optimal, I mean sites that are in proximity to
electric and gas transmission lines, are sufficiently flat, not
environmentally sensitive, and have a radiation level of at least 7 kWh
per square meter. Although the NREL GIS report and maps mentioned above
are a good start, more assessment work can and should be done to
accelerate the development of CSP. For example, the NREL GIS maps must
be integrated with the BLM land use planning GIS, which is not now the
case.
These identified optimal sites should be set aside as
potential ``CSP solar parks'' of at least 10 square miles (enough for
at least 1GW in each solar park). This designation would allow common
infrastructure--roads and transmission lines--to be effectively
consolidated and timely and cost-efficient planning and environmental
permitting completed.
BLM must be directed to expeditiously update their land
use plans in these optimal areas to provide for the use of public lands
for CSP projects and the development of CSP solar parks. BLM has
recently identified the need to complete new or updated land use plans
to include consideration of the NREL solar assessments of CSP potential
areas. BLM has suggested that land use plan amendments can be
concurrently completed during the application process for a particular
CSP project. Ex. 1, BLM IM 2007-097 at 2.
We are concerned about BLM's suggested approach for land
use plan amendments to allow for CSP development. First, conducting
plan amendments as CSP projects are proposed would create significant
delay for the development of solar power on public lands. These BLM
plan amendments take at least 18 months and, in California, some
planning processes have stretched as long as 10 years. This should be
an unacceptable delay to those in Congress interested in accelerating
the development of CSP. Second, this proposal places the considerable
costs of preparing a plan amendment and the required National
Environmental Policy Act (NEPA) Environmental Impact Statement (EIS) on
the first CSP project proponent in the area. We do not believe this is
the most efficient way to analyze the use of public lands for CSP nor
is it appropriate to have the first applicant in line bear the cost for
all other applicants to follow. We believe the development of public
land solar is a larger public good that should be borne by the public
as a whole. Accordingly, we request that Congress consider the use of a
Programmatic Environmental Impact Study (PEIS) for CSP that would, in
one action, amend all BLM land use plans in these optimal areas to
provide for the development of CSP. We request that Congress fund the
preparation of this PEIS. A PEIS was utilized by the BLM in amending
land use plans to permit the development of wind energy on public lands
in 2005. See http://windeis.anl.gov. A PEIS is being used by BLM and
DOE to carry out the West-wide Transmission study in EPACT 2005
Sec. 368. See http://corridreis.anl.gov. A CSP PEIS would be timelier,
more cost-effective and would demonstrate the nation's support for
alternative energy sources. Preparation of such a CSP PEIS should be
given a time certain deadline of 18 months for completion.
Congress should examine what other federal procedures
could be made more efficient: including project-specific NEPA
documents; Endangered Species Act consultations; National Historic
Preservation Act cultural resource consultations; and related federal
permitting procedures including BLM's processing of right of way
permits for CSP projects. Today solar projects must go through a second
round of project specific NEPA and environmental compliance after the
NEPA conducted at the BLM plan level. This takes considerable time and
we suggest that Congress consider how to expedite the permitting
process so that CSP developers may take advantage of the tax incentives
and the current window of opportunity. One process improvement we would
suggest is that the proposed CSP PEIS for solar parks act as the
environmental clearance process for such solar parks so that projects
within the solar parks are deemed in compliance with all federal and
state environmental laws and process. Alternatively, Congress could
consider the use of a NEPA categorical exclusion for CSP projects
within identified solar parks analyzed in the suggested CSP PEIS. Or,
Congress could consider if project specific NEPA can be tiered to plan
amendment NEPA documents. State and federal agencies must be encouraged
to work together more efficiently to permit CSP projects.
Right of way fees charged by BLM for the rental of public
lands for CSP projects or for the proposed CSP solar parks should be at
the lowest cost for the use of public lands as an incentive to develop
solar energy, rather than the highest rental cost. Today, Title V of
the Federal Land Policy Management Act (43 U.S.C. Sec. 1761) and BLM
right of way regulations (43 C.F.R. Sec. 2804) require ``fair market
value'' for the rental of public land. See also Ex. 1, BLM IM 2007-096
at 2, 4-5. BLM solar policy currently directs that annual rent for CSP
be established by BLM using appraised values for ``commercial land or
industrial land, as of the date of the appraisal.'' Id. at 4. Thus the
rental for CSP is at the highest rental rate for the use of public
land--a rate charged for coal-fired power plants or other industrial
facilities. For example, in an existing Boulder City, NV example, the
fair market value for a CSP facility amounts to $25,000 per acre and
several millions of dollars per year in rent. We would ask Congress to
direct a specific per acre rental fee for CSP that would be at a dollar
amount to create an incentive for solar energy production from public
lands. We would suggest that the CSP rental for public lands be closer
to the assessed value of the land for livestock grazing rather than the
value of the land for industrial facilities.
The Departments of Energy and Interior should complete
within 6 months the directive in EPACT 2005 Sec. 368 to identify
transmission corridors in the West with particular attention to
transmission to the optimal solar areas identified by the BLM. In
addition, the EPACT 2005 Sec. 1221 study should expeditiously identify
optimal solar areas where transmission constraints or congestion exist.
The Departments of Energy and Interior should work together with state
authorities and transmission operators to develop transmission
facilities to access such solar areas. Using the authority in EPACT
2005 Sec. 1221 the Federal Energy Regulatory Commission (FERC) should
issue transmission construction permits to such areas. In the absence
of expeditious transmission permitting and construction by local
transmission authorities, the Secretary of Energy, acting through the
geographically appropriate power marketing agency, should use its
authority under EPACT Sec. 1222 to ``design, develop, construct,
operate, maintain or own'' transmission lines to such optimal solar
zones.
FERC should facilitate interconnections to utility scale
solar projects. Right now the FERC and state processes of queuing up
and getting interconnections to the transmission grid is time-consuming
and beset with bureaucratic delays. It now takes a solar project longer
to connect to the transmission grid than it does to permit and
construct the solar project. FERC should encourage transmission
operators to determine if there is a batch of renewable projects in a
given area and then support efforts to permit utilities to add the cost
of such interconnection to rates.
The federal Investment Tax Credit (ITC) for solar
currently expires at the end of 2008. Congressmen Michael McNulty (D-
NY) and David Camp (R-MI) have introduced the Securing America's Energy
Independence Act (HR 550) an eight year extension of the ITC and,
currently, the bill has over 50 cosponsors. It is imperative that,
despite the challenge of the federal budget process, the ITC for CSP
receives a long-term extension. This is the strong recommendation of
WGA and recognizes the importance of the ITC to the development of a
CSP industry. I have already provided an example of what can happen
when the tax policies of the federal government change--the CSP
industry stalled. CSP projects are capital intensive projects and take
4-6 years to negotiate, permit, finance and construct. If CSP
developers and their suppliers are to have a predictable, stable
climate for planning and financing, for building manufacturing plants
for mirrors and other parts, and for negotiating multi-year development
contracts to bring down the cost of CSP energy, the industry must have
a ten year tax credit.
State actions:
States must also do their part to facilitate the
development of a utility scale solar energy industry in their
economies. States should work together with federal agencies to
expedite transmission planning and permitting to solar zones. States
should make their property and sales tax policies fairer to capital
intensive solar equipment. States should encourage longer power
purchase agreements with solar developers, reflecting the length of
time these projects normally last, and states should enact legislation
or promote policies that encourage the construction of transmission to
identified solar areas, including the ability to recover the cost of
such transmission in rates. Finally, State and Federal agencies must be
encouraged to work together more efficiently to permit CSP projects.
Conclusion: On behalf of the CSP member companies of SEIA and
BrightSource, I want to thank the Subcommittee for the opportunity to
testify about recommendations for change in federal policies to support
the development of utility scale solar energy. We have a window of
opportunity now, when this Congress and the nation are focused on
diversifying our energy supply with clean, low-carbon domestic sources
of energy. We urge the Committee to act expeditiously.
Thank you, Mr. Chairman and members of the Subcommittee. I will be
happy to answer any questions you may have.
NOTE: Exhibits have been retained in the Committee's official
files.
______
Mr. Costa. Well thank you very much, Mr. Bar-Lev. We
appreciate your testimony, and we will have some questions when
we come to that point of the hearing. Our last witness, but
certainly not least, and I stand corrected, it is Congresswoman
McMorris-Rodgers, and I am pleased to have you here. I answer
to a lot of things but that is not here nor there. But a person
I believe who is from your part of the country, Mr. Will
Lutgen, Executive Director of Northwest Public Power
Association and how hydropower has an important part in this
effort, and I think you have some suggestions you want to leave
with us. Mr. Lutgen.
STATEMENT OF WILL LUTGEN, JR., EXECUTIVE DIRECTOR, NORTHWESTERN
PUBLIC POWER ASSOCIATION
Mr. Lutgen. Thank you, Mr. Chairman, Ranking Member Pearce
and certainly to Representative McMorris-Rodgers. Thank you for
being here today. I am with the Northwest Public Power
Association. We are a nonprofit organization serving 148
electric municipal utilities, cooperatives and public utility
districts throughout the western United States.
Our members serve approximately 15 million customers. To
give you an idea of our footprint, our most northerly member is
the city of Barrow, Alaska, our most southerly member is the
Imperial Irrigation District on the Mexican border, and our
most easterly member is Tongue River Electric in Ashland,
Montana. So we have quite a footprint of utilities that know
about public lands.
I am pleased to be here today to share my thoughts about
actions that Congress might take to pursue renewable
opportunities on public lands. My written testimony covers four
things: One, a request that Congress reconsider hydro as a
renewable resource; two, NWPPA's support for fully funding
renewable energy production incentives or REPI; clean renewable
energy bonds so that public power utilities have comparable
incentives to investor owned utilities in building renewable
energy projects.
My written testimony also covers a request to consider
renewable portfolio standards that do not conflict with state
standards and recognize that a one-size-fits-all will not work.
Finally, my written testimony requests that Congress be very
deliberate in how it approaches regulating greenhouse gas
emissions and allocation of emission allowances.
Since five minutes does not permit covering everything in
my written comments, I would like to spend my time discussing
why I think hydro should be a renewable resource. Webster's
dictionary defines a renewable resource as, ``Capable of being
replaced by natural ecological cycles.'' Under this definition,
hydropower is a renewable resource. However, for a variety of
reasons over the last number of years hydropower has fallen out
of favor, and in many instances is not treated as renewable.
I think it is time for Congress to reconsider this policy
because hydro has several very important attributes that make
it a valuable addition to the U.S. energy portfolio. First,
hydropower is a flexible resource that can be used to produce
both base load and peaking energy. Second, hydropower serves a
very valuable function in assuring electric reliability. The
committee might be aware that during the 1996 west coast
blackout that Hoover Dam was used and was resynchronized and
brought the west back online. Similarly, Glenn Canyon Dam on
the Colorado River is designated as the primary black start
unit in the event of a shortage in the southwest.
Third, hydropower works extremely well to integrate wind
resources into the existing power system because it can be
brought online when the wind is not blowing to backup wind
projects. For this reason, the Bonneville Power Administration
and the Northwest Power and Conservation Council recently
announced a plan to integrate nearly 6,000 megawatts of
proposed wind generation into the northwest power system, again
using hydropower as the critical backup resource.
Fourth, hydropower is a clean resource that is relatively
emissions free and can play a positive role in controlling
greenhouse gases. The National Hydropower Association estimates
that more than 160 million tons of CO2 emissions were avoided
in the U.S. in 2004 when 268 million megawatt hours of
hydropower were generated.
Finally, hydropower, unlike other renewable resources such
as solar and geothermal, is located in most regions of the
country, and therefore would be a benefit to consumers
throughout the United States. During the rest of the 21st
century, we will face increasingly difficult challenges in
order to meet anticipated increases and demand for electricity,
reduce emissions of greenhouse gases, and reduce dependence on
foreign sources of fuel.
It is my understanding that no single generation resource
can meet those challenges alone and that each resource has both
positive and negative aspects. I believe we must use all arrows
in our energy resource quiver in a balanced way.
In conclusion, I would like to thank the committee for this
opportunity to provide some input on why hydropower should be
considered as the quintessential renewable resource. I hope you
will take the time to read my written testimony regarding the
need to fully fund incentives to develop renewables, the need
to carefully consider a national renewable portfolio standard,
and the need to treat all forms of generation and regions of
the country equally when it comes to policies on emissions of
greenhouses gases. Thank you.
[The prepared statement of Mr. Lutgen follows:]
Statement of Will Lutgen, Northwest Public Power Association
Thank you, Chairman Costa, Ranking Member Pearce and other members
of the Subcommittee for inviting me to be here today. My name is Will
Lutgen, Jr. I'm the Executive Director of the Northwest Public Power
Association, an organization of 148 not-for-profit public or people's
utility districts, electric cooperatives and municipalities providing
cost-based electric services to approximately 15 million customers in
the Western U.S. NWPPA also serves over 230 Associate Members and is a
member of the National Rural Electric Cooperative Association and the
American Public Power Association.
I am pleased to be here today to speak about renewable resource
opportunities on public lands. Throughout the West and Northwest, NWPPA
members and the consumers they serve have benefited for decades from
hydropower generated at federal dams and marketed by the Bonneville
Power Administration and the Western Area Power Administration. They
have also benefited from hydropower generated at numerous FERC-licensed
projects on navigable rivers and streams throughout those regions.
I am here today to share my thoughts about actions Congress can
take to:
(1) Recognize that hydropower is a renewable resource;
(2) Fully fund incentives to encourage all sectors of the utility
industry to develop renewable resources;
(3) Consider carefully a national renewable portfolio standard;
and
(4) Not disadvantage certain regions of the country and certain
forms of electric generation as it works to develop policies to address
limiting emissions of greenhouse gases.
Hydropower is a Renewable Resource
Merriam Webster's dictionary defines a ``renewable'' resource as
``capable of being replaced by natural ecological cycles...'' Under
this definition, hydropower is a renewable resource. However, for
various reasons, over the last several years hydropower has fallen into
disfavor and, in many instances, is not treated as a renewable
resource. I think it is time for Congress to re-consider that policy,
because hydro has several significant attributes that make it a
valuable addition to the U.S. energy portfolio.
First, hydropower is a flexible resource that can be used as a
baseload or peaking resource. The Federal Columbia River Power System
uses its dams as both a baseload and a peaking resource. Hydropower is
relatively affordable and, when used as a ``peaking'' resource during
the hours when electric demand is highest, it avoids the use of much
higher cost alternatives.
Second, hydropower serves a very valuable function in assuring
electric reliability and restoring power after an outage, because it
can be brought on line almost instantaneously. This ``cold start''
capability can be used to re-start fossil generators, which need a much
longer time to come on line.
Third, hydropower works extremely well to integrate wind resources
into a power system because it can be brought on line when the wind is
not blowing, to backup the wind projects. For this reason, the
Bonneville Power Administration and the NW Power and Conservation
Council recently announced a plan to integrate nearly 6000 MW of
proposed wind generation into the Northwest Power System, using
hydropower as the critical backup resource.
Fourth, hydropower is a clean resource that is relatively
emissions-free and, thus, can play a positive role in controlling
emissions of greenhouse gases. The National Hydropower Association
estimates that more than 160 million tons of CO2 emissions were avoided
in the U.S. in 2004, when 268 million megawatt hours of hydropower were
generated.
Finally, hydropower, unlike some other renewable resources, such as
solar or geothermal, is located in most regions of the country and,
therefore, would benefit consumers throughout the United States.
In the rest of the 21st century, we will face increasingly
difficult challenges in order to meet anticipated increases in demand
for electricity, reduce emissions of greenhouse gases and reduce
dependence on foreign sources of fuel. No single generation resource
can meet those challenges alone and each available resource has
positive and negative aspects. I believe that we must use all available
domestic resources to meet these goals in a balanced way.
Need to Fully Fund Renewable Incentives
NWPPA fully supports the tax incentives for renewable resources
that Congress authorized (or extended) in the Energy Policy Act of
2005. The two federal incentives that are of particular benefit to
NWPPA members, as not-for-profit utilities, are the Renewable Energy
Production Incentive (REPI) and the Clean Renewable Energy Bond (CREB)
program.
REPI is funded through appropriations and, because it must compete
for dollars against a large number of worthy water and power programs,
it has been funded, historically, at only about $5 million per year.
The Department of Energy estimates it would take more than $50 million
per year to pay the full incentive to projects that have already met
the criteria to receive funds. In Fiscal Year 2008 and beyond, we hope
Congress will remedy this situation and provide adequate funding for
REPI.
The CREB program, essentially, provided interest free bonding
authority to consumer-owned utilities and other public entities to
develop renewable projects. NWPPA supports H.R. 1821, introduced by
Rep. Jim McDermott and Jim Ramstad, to extend and expand the CREB
program. We urge your support for that bill.
Renewable Portfolio Standard
We understand that Congress will soon debate whether to enact a
federal renewable portfolio standard (RPS). To date, 23 states and the
District of Columbia have enacted an RPS. When the debate begins, we
urge you to consider these factors:
If there is a ``one-size-fits-all'' RPS, states that are
not lucky enough to have native wind, solar, geothermal or other
renewable resources may find themselves at a competitive disadvantage,
compared to those states that have plentiful renewable resources. As a
partial remedy for this problem, and for the reasons stated above,
NWPPA believes that hydropower must be considered a renewable resource;
A single federal RPS will likely increase the cost of
renewable resources by creating a surge of demand for those resources.
In addition, in the so-called ``organized markets'', operated by
Regional Transmission Organizations or Independent System Operators,
renewable resources sold on the spot market will be priced at the
highest bid, which would also likely increase the cost to consumers.
The debate on a federal RPS should recognize that
numerous jurisdictions have already adopted policies on renewables.
Care must be taken to ``grandfather'' those prior state laws or to
ensure that a federal RPS does not require utilities to comply with two
sets of mandates or impose inconsistent or conflicting requirements on
utilities; and
If Congress enacts a federal RPS, it must ensure that the
level of incentives available to not-for-profit, consumer-owned
utilities matches the level of incentives provided to investor-owned
utilities under the Production Tax Credit and the Investment Tax
Credit.
Climate Change Legislation
We know some in Congress want to move quickly on climate change
legislation, but it is a very complex task and the devil is always in
the details. We ask that Congress be very deliberate in how it
approaches regulating greenhouse gas emissions and the allocation of
emissions allowances. For example, we hope that the Northwest, which is
heavily hydropower dependent, will not be penalized for having an
abundance of this clean, renewable resource. In the future, utilities
in the Northwest will have to develop new generation to meet electric
demand, and if our utilities are not given a fair share of allowances,
they may be competitively disadvantaged.
In conclusion, I would like to thank the committee for this
opportunity to provide some input on why hydropower should be
considered the quintessential renewable resource; the need to fully
fund incentives to develop renewables; the need to carefully consider a
national renewable portfolio standard; and the need to treat all forms
of generation and regions of the country equally when it come to
policies on emissions of greenhouse gases.
Thank you.
______
Mr. Costa. Thank you very much, Mr. Lutgen, for your
focused testimony. I concur with you. I do believe that
hydroelectric power should be treated as a renewable source,
and trying to provide equitable treatment with all the
renewable sources of energy is a goal certainly I think we
should aspire for. I know some of the challenges that we faced.
Having said that, we are now at the question stage. So let us
begin.
Mr. Swisher, I am interested in a couple of areas that you
addressed in your testimony. One, you talked about the
transmission challenges that affect when we look at the maps
and we see where our wind power generation that you and Mr.
Gough both indicated, and unfortunately where a lot of that
resource is although there are some transmission access. I want
to get a sense from you whether or not BLM and the efforts on
those public lands are doing all that they possibly could to
provide the access for the transmission of that power that is
generated.
Mr. Swisher. I am sure they could always do more. In
general though, our experience with BLM is that they have been
paying attention and responsive on these issues.
Mr. Costa. You indicated that the goal is to establish I
believe 100,000 megawatts in the U.S. by the year 2020 or 6
percent of the nation's electricity, is that correct?
Mr. Swisher. That is correct.
Mr. Costa. But your testimony says that you conservatively
expect 10,000 megawatts to be developed on BLM lands over the
next decade. Did I get that number right, 2000 megawatts?
Mr. Swisher. Two thousand, correct.
Mr. Costa. Yes. On BLM land?
Mr. Swisher. Correct.
Mr. Costa. That is a big gap between 2,000 on public lands
and the 100,000 megawatts. So you believe then most of the wind
generation is going to be developed on private lands?
Mr. Swisher. That is correct.
Mr. Costa. OK. This is the last question and when I was
touring Minnesota and some of the other areas where there is
active generation and, of course, in California there is as
well down in as was indicated the Palm Desert area and as well
as up near the east bay of San Francisco. The technology as I
understand was initially developed by General Electric and by
others, but now most of the technology that we are purchasing
to establish wind power is now from Europe. We have sold it. We
have exported it.
Mr. Swisher. Actually most. Only one of the top 10
manufacturers in the world is a U.S. based company, GE, and I
think that that is attributable to the on again, off again
nature of Federal policy support. It has had a very detrimental
impact on manufacturing. You know the market is growing very
strongly for wind in the U.S. but manufacturers require more
than just a year or two extension of the production tax credit
to feel secure about making multi billion dollar investments in
the U.S.
Mr. Costa. Mr. Gough, quickly before my time expires,
having some experience with tribal sovereignty issues in
California, you are required under the testimony that you gave
to fulfill the requirements of the New Energy Act. You do not
have to deal with the Bureau of Indian Affairs on these lands,
do you?
Mr. Gough. Absolutely.
Mr. Costa. For these energy projects?
Mr. Gough. Yes. You have to deal currently with many of the
Federal regulations. NEPA is still required. There is an option
for tribes to bring in their own permitting system and work
with the Secretary to do that. No tribe to my knowledge has yet
done that in the energy scope. Tribes could do it just for
renewables if they liked but currently we are on Federal trust
lands, have to abide by NEPA, Fish and Wildlife. We go through
all of the Federal permitting process as well on tribal lands
plus whatever tribal permitting may be required.
Mr. Costa. OK. Mr. Bar-Lev, you spoke of the challenges
when this project or the consortium with these projects went
bankrupt, was that correct?
Mr. Bar-Lev. Yes.
Mr. Costa. And you attributed that to inconsistent
policies?
Mr. Bar-Lev. Well the cessation of policies. There was a
property tax exemption at the state level that Governor
Deukmejian at that time vetoed. These projects were all
operating on the basis of being permitted by March by the
California Energy Commission and having to be built in nine
months, and we did it every time but all we needed to have was
one sort of thing go wrong and that would sort of be the end of
it. So when state and Federal policy sort of changed direction,
we became much less credible in the market and it was difficult
to hang on.
Mr. Costa. My time has expired but I want to come back to
that. Are these facilities currently operating now?
Mr. Bar-Lev. Absolutely and very well, and it has been over
20 years.
Mr. Costa. They have been bought by another company?
Mr. Bar-Lev. Yes, they did. Yes, they were.
Mr. Costa. OK. The gentleman from New Mexico.
Mr. Pearce. Ms. Jungwirth, with respect to biomass what is
happening in the area around the biomass plant needs to be
dedicated to the harvesting for it to be economic. Do you have
that number?
Ms. Jungwirth. Well it really depends on the size of the
biomass plant of course, and that is one of the issues is
scale.
Mr. Pearce. What about 30 KW say?
Ms. Jungwirth. Thirty KW will take the equivalent of 100
million board feet, which is the size that we used to have to
run our sawmills. So depending, of course, upon the forest type
and trying to manage it sustainably, you are going to have to
have a pretty big land base of probably----
Mr. Pearce. Any estimate of how big?
Ms. Jungwirth. Half a million acres.
Mr. Pearce. So how many square miles would that be?
Ms. Jungwirth. It is about 800 square miles.
Mr. Pearce. Eight hundred square miles. So about 40 miles
square?
Ms. Jungwirth. Yes.
Mr. Pearce. OK. And the reason I ask that is because we had
a couple of biomass plants that wanted to come into southern
New Mexico. Typically our arid climate would only support about
50 trees per acre, and we are up to about 2,500 trees per acre
is one reason that our forests are burning.
Ms. Jungwirth. Correct.
Mr. Pearce. So there is the environmental need to go in and
thin the trees back down to where nature would have normally
put them but the Forest Service is just resistant to give that
protection, that access to the timber, and so we cannot get
these biomass plants because they do not have any certainty of
supply, and it is a $20 million project to build a 30 KW plant.
So do you find that to be a problem elsewhere? Is that just
probably in our district or do you think----
Ms. Jungwirth. No. That is the problem elsewhere but there
are places where they have solved that, and when they do a
collaborative process like they did with the White Mountain
stewardship project that you are probably aware of, 150,000
acres, they built a restoration framework that everyone agreed
upon including the environmental community. The Forest Service
then tiered their NEPA to that, and they scaled their project
to that.
This will happen if this material is made available as a
byproduct of forest restoration. It will not happen if we want
to lease public land to grow fuel for a renewable energy plant.
That is not going to happen. We are not going to move the short
rotation forestry for energy on public lands. So yes, there are
ways to make that happen.
Mr. Pearce. It is not like we are going to lease it to grow
it. It is like we need to get rid of the junk anyway, and we
literally are burning the forests down in New Mexico.
Ms. Jungwirth. Absolutely, and the environmental community
understands that, and has helped through these collaborative
processes create the agreements to move forward.
Mr. Pearce. Actually they are the ones that are blocking
the process in New Mexico, and so it is very difficult.
Ms. Jungwirth. It depends on if they get to come into the
process up front and early they work it out. If you wait until
the end, they stop them, and I am not part of the environmental
community just let me tell you. I am a local person but we have
found ways to broker the politics to make a durable, political
solution to restore the land, reduce the cost of the wildfire
suppression and help these local communities build jobs.
Mr. Costa. Will the gentleman yield, please?
Mr. Pearce. Sure.
Mr. Costa. We have stopped the clock so no one's time is
being taken. I have to step out for a brief moment but we are
going to continue the hearing, and as his time expires he will
then take my time and continue the questioning, and then when I
come back we will follow up on a couple of the questions that I
did not get to ask. So the gentleman from New Mexico.
Mr. Pearce. Thank you, Mr. Chairman. Mr. Bar-Lev, I was
interested, you said that back in some period of time--I would
guess it to be the late 1980s, maybe in the 1990s--that you
felt like you were just almost within the grasp of
competitiveness with the oil and gas, with the fossil fuel
generation. Can you give me an idea how close you were?
Mr. Bar-Lev. It has been 15 years, but we were around 15
cents a kilowatt hour at that point, and we had come down from
about 28 cents a kilowatt hour.
Mr. Pearce. See the thing that I find curious is I know the
economics of the oil and gas is that back at that period oil
and gas was selling for somewhere between $10 to $20 per
barrel, and natural gas was about a dollar a quarter per MCF,
and now then the price of oil is about $70, and the price of
natural gas is about $7. So maybe a five-fold increase in
natural gas and at least a three, maybe three and a half time
increase in the price of oil, and with those dramatic increases
I would believe that you would be at this point competitive,
and that would be my hope because the economics of one industry
then begin to affect the economics of another industry. So can
you comment on that?
Mr. Bar-Lev. I did not hear the last part. Did you think
that we would be competitive at this point?
Mr. Pearce. Yes. It seems like if you take a resource that
you just were within a hair of competing with and you drive it
up by a factor of three to five times which is happening, I
mean the oil is three and a half times, gas is five to maybe 10
times higher.
Mr. Bar-Lev. Yes.
Mr. Pearce. It seems like at this point you all would be
competitive.
Mr. Bar-Lev. Well, I do not think I used the phrase within
a hair. I think that there were certain technology fixes that
we were working on, and one of the major things that we were
working on at that time was trying to get a change in the
limitation and size of our projects because we were not allowed
to build more than an 80 megawatt project. So we felt as though
if we could really build a 200 megawatt project or a 300
megawatt project we were thinking about that in Nevada at that
time, and we were working on the technology of the mirrors so
that they could follow the winter sun as well as just going
east and west so that they would be essentially dual axis.
We felt that that was going to get us very, very close. It
is true the prices today are not that far but I think that in
order to get the technology say within the next 10 years to in
fact a competitive level, the industry needs a push, and that
push needs to come from a consistent policy that would
encourage as the Western Governors have encouraged. A sort of a
push of at least four gigawatts of this kind of technology
which would provide thousands of jobs, millions of voided
carbon emissions.
Mr. Pearce. Let me if I could.
Mr. Bar-Lev. Sorry.
Mr. Pearce. We are all kind of limited on time. Mr.
Swisher, when you quote that Denmark has 20 percent of their
power is presented by wind, is that a net 20 percent? In other
words, because do they not have a problem? I think I have read
where they have a problem because they have to generate the
base load. What kind of a net power production are they having?
Mr. Swisher. I think there is a misunderstanding about the
impact that wind's variability has on the system. Any power
plant is going to go offline in an unplanned way, and the value
of the grid is providing backup for the entire system, and
every power plant on it. So 20 percent of Denmark's electricity
coming from wind does not mean that you have to have 20 percent
backup generation to be ready all the time.
Mr. Pearce. Let us say they are at 100 percent capacity.
Mr. Swisher. Yes.
Mr. Pearce. Say that you barely have enough. You just
barely have enough energy. Twenty percent is wind, 80 percent
is something else.
Mr. Swisher. Correct.
Mr. Pearce. You are telling me that you do not have to have
a 20 percent backup?
Mr. Swisher. I am saying the way the system works----
Mr. Pearce. No. I just want to stay on that one question.
Mr. Swisher. Yes. That is correct.
Mr. Pearce. You do not have to?
Mr. Swisher. Well any electric system has a reserve of I
think 18 percent. It used to be what the standard reserve was.
Mr. Pearce. Yes. All I know is that if you turn on a gas
generator or a coal fired generator, they do not have the
variability. In other words----
Mr. Swisher. That is correct.
Mr. Pearce.--you just keep feeding the fuel but now as a
pilot of an airplane I can tell you that I am very conscious of
wind blowing and cross winds especially, and the wind can go
from 50 knot cross wind down to 2 knots in a matter of an hour.
I can be headed somewhere thinking how in the world am I going
to get this thing on the ground, and by the time I get there,
there is no wind.
And so if you are at 100 percent capacity, you do not have
any excess generation, you tell me that that 20 percent
reduction does not present some requirement for a greater
backup than if I just have a standard 100 percent gas or 100
percent coal fired plants?
Mr. Swisher. One of the things that we have noticed is that
the geographic distribution of wind plants across a service
territory has a moderating influence on the variability, and so
if you have a large utility like Xcel with a large service
territory, the variability of the wind is not nearly as big a
deal as when you have a single wind turbine in a single
location.
Mr. Pearce. New Mexico, I suspect, probably has as many
wind generators as anywhere, and I am very supportive of it.
However, when I asked can we put in more because New Mexico has
tremendous capabilities, P and M, a public service company of
New Mexico, told me No. They cannot do any more because they
have to have a backup for every single kilowatt, and they have
to have a backup capability to generate. Otherwise they cannot
sell into California because it is not predictable.
And so to them they have reached their threshold. They
cannot invest any more, and this is them, and when I look at
the facts what I am told is that and Denmark instead of
producing 20 percent of the power that when you deduct out the
backup power we are actually closer to 8.3 percent, and I do
not mind the fact that we have to do it but those factors have
to be included.
Mr. Lutgen, at some point hydroelectric has been a very big
component of our energy production yet I think two years ago we
began to have discussions about not renewing any of the
hydroelectric in the country. What sort of discussions are
going on right now about habitat? What sort of discussions are
going on about just shutting down the hydroelectric energy, and
how much percentage of the national energy does that produce?
Mr. Lutgen. In the northwest on the west coast, there is
certainly some discussion about possibly breaching the Snake
River Dam.
Mr. Pearce. Can you pull your mic a little bit closer?
Mr. Lutgen. Sure.
Mr. Pearce. And maybe turn it on if you have not.
Mr. Lutgen. Yes, it is on.
Mr. Pearce. OK. Yes.
Mr. Lutgen. And the Northwest Power Planning Council and an
independent commission has taken a look at that possibility,
and both of those organizations have reported back that there
would be no advantage to the region in breaching those dams.
Certainly there is other discussion about climate change as it
impacts the hydroelectric system. The Bonneville Power
Administration and our members served by the Bonneville Power
Administration are cognizant of this and are certainly taking a
look at the impact that that change might have on the system
are discussing plans like pump storage and other kinds of
things to accommodate that.
Mr. Pearce. OK. Mr. Gough, you seem to be kind of chomping
at the bit to get in on that discussion about the backup. In
your projects for the tribal lands, do you all have a backup
source of energy or do you just depend? In other words, if the
wind generation drops down, do you go out and then you can
address anything that you would like about the whole discussion
I was having with Mr. Swisher there? In other words, trying to
figure out as best we can how this stuff all interrelates.
Mr. Gough. Well the interrelation for tribes; within their
boundaries, tribes have great geothermal resources. Rosebud
does. It was one of the tribes on the map we saw in the earlier
panel. We have a tremendous wind resource. Within Todd County,
one of the counties on the reservation, 30 by 90 miles we have
estimates of up to 50 gigawatts of wind power potential just
within that one county.
Mr. Pearce. Do you have backup?
Mr. Gough. We have hydropower in the Missouri River, and
that is why working with wind and hydro together the
opportunity for regionally the northern plains looking at
coupling wind and hydro together as a dynamo where each one
complements the other is a model that could work in many places
throughout the west, and we are seeing that the competition
that we have in that price point was the other concern I had.
The competition for wind for reservations we have the same
problems.
We do not have the production tax credit coming for the
tribes, and when that market we are selling into, we are
selling into a market that is 1.4 cents avoided cost. So with
the cost of wind power being about 4 cents, 5 cents and having
the utilities assume that you get the production tax credit
when it is available and we do not get it, we are going in with
a penalty basically.
So looking at backup, looking at how to rethink the system
in a larger sense, the backup that we have depended upon has
been coal but we are seeing now that the coal plants are being
curtailed from Wyoming to St. Louis because of the lack of
water availability in the Missouri River. So we have to look at
all of these clusters. So we are looking at solar. We are
looking at biodiesel on the reservation. To have biodiesel
generators there as backup to complement the wind we have.
Mr. Pearce. Mr. Bar-Lev, I am looking at figures that the
DOE provides, and if you are going to make a construction of
different types of facility, the cost per kilowatt hours is
sort of significant, and I just wanted to see if this sounds
like what you find or if these numbers are not quite accurate
but to build a coal generating plant about $1,290 per kilowatt
hour, and that would compare at about $4,751 per KW produced
out of solar. Is that something that----
Mr. Bar-Lev. I am sorry. What was the amount for the solar?
Mr. Pearce. Yes. About $4,751, and we could throw wind in
at about $1,200. Geothermal about $1,880. Hydro at $1,500.
Anyway, it is very helpful considering large-scale projects.
Can you address that pretty large, about four times the entry
costs it looks like? Does that fit with your experiences I
guess? This is DOE numbers. So I am always suspect when----
Mr. Bar-Lev. Well, we are more expensive than coal. There
is no question about that but I cannot vouch for the accuracy
of those numbers, and I would like to supplement the record.
Mr. Pearce. Sure. Think about it and take another look.
Mr. Bar-Lev. That is about four times as much as coal. That
may not be that far off.
Mr. Pearce. OK.
Mr. Bar-Lev. But I will have to supplement the record.
Mr. Pearce. You bet. If it changes the conclusion, because
those are sort of significant numbers when we as policymakers
begin to think about it. When I look at these large arrays of
solar, in New Mexico we have a fairly brisk dispute between the
public agencies and the ranchers, is it possible to continue
growing grass underneath there and continue grazing or is that
an improbability?
Mr. Bar-Lev. Well what is interesting about those maps is
that they have chosen areas----
Mr. Pearce. No, not the maps. I am looking at the picture.
I am sorry.
Mr. Bar-Lev. I am sorry.
Mr. Pearce. I am visualizing these out through New Mexico,
and frankly we have some really neat big projects on different
things. However, I am wondering is this compatible with the
ranchers because ranchers have a significant conflict in
grazing applications on public lands. I am wondering if we
could be producing solar energy and still do the grazing
underneath. It looks like those are fairly tall.
Mr. Bar-Lev. Yes. But I think that the cattle would
generate dust. Dust and mirrors do not mix. We would have to be
washing these things very often.
Mr. Pearce. New Mexico generates dust I tell you. A
baseball game when I was growing up if you could see the second
baseman something was wrong.
Mr. Bar-Lev. But there is so much excellent solar radiation
in New Mexico. There is so much.
Mr. Pearce. Yes.
Mr. Bar-Lev. That NREL says that there is room for both.
Mr. Pearce. OK. Real fine. I see the Chairman coming back
in. I am going to yield back to him, and we do appreciate you
all's indulgence. Great discussions with everyone here.
Mr. Costa. I thought you were doing well. I did not want to
stop you when you were on a roll. All right. We try to run an
amicable committee here. I wanted to get back to the biomass
efforts because since we are both Californians, we have had
some similar experiences over the last 15, 20 years. It is
really very similar to some of the comments that I see as a
common weave in your testimony, and that is that inconsistent
policy, government policy over the last 20 years, both at the
state and the Federal level, has made a lot of these efforts
difficult. When you are trying to attract venture capital and
you are trying to get things going--and then the rules change
and the process changes--then people say well gee, maybe they
are not really serious about this.
And in the case of biomass, we had as you may know, Ms.
Jungwirth, a number of facilities that were primarily ag
related in my portion of the San Joaquin Valley in a number of
communities that used as the bio waste stream much of the ag
products from permanent crops, both vineyards, orchards and the
like and, of course, there was a favorable credit with the
California Energy Commission that provided the incentive, and
then there was an agreement with the utility companies that my
friend from PG&E may remember, and we were able to use that
byproduct.
Now, of course, in the valley we have now issues of CO2 and
other air quality related matters that make that more
difficult. We have one of those plants left. I think at one
time down at Delano Way at one time I think we had nine, if my
memory serves me correctly. And there is this facility that has
continued to operate as new ownership. They want me to come
down and view it. I have not done so but they believe they have
a technology that allows them to deal with the air quality
issues.
We are moving from potentially severe to an extreme status
as it relates to the EPA in the valley, as you may know, on air
quality which is a real problem. How do you see biomass being
able to deal with those challenges as it relates to that
element of the waste stream?
Ms. Jungwirth. Well just burning green wood and turning a
turbine with steam to make electricity is a pretty inefficient
thing to do, and you have to put an electrostatic precipitator
and clean the air if you are going to do that. As a replacement
for coal fired plants, of course, it is a good idea because it
does not put out the sulfur that the coal plants put out.
California Air Quality expects that in the cement plants
which put out a lot of the carbon. They are the second largest
contributor of carbon because when they crack limestone to make
cement, it releases carbon. They also put out carbon and affect
air quality because they burn coal to heat the stuff to make
cement from. California Air Quality is recommending that they
co-fire those with wood pellets for the thermal energy to
reduce those emissions. Biomass has a potential to reduce
emissions, and to help clean up the air if it is used properly
with proper policy.
Mr. Costa. Well it continues to be a challenge, and
obviously we thought there were a combination of benefits that
were taking place. Not only the benefit of the energy but also
that waste product is something that we have to deal with
regardless, and hopefully with the new technologies we will be
able--notwithstanding the air quality challenges we have--to be
able to continue to in some fashion use that biomass material
in a way that is cost effective of course.
Ms. Jungwirth. I think it is the dirty air from the forest
fires that you are going to find the biggest advantage.
Mr. Costa. And you support cap and trade in that instance?
Ms. Jungwirth. As long as we can get God to sign off on
that.
Mr. Costa. I do not know how you do that. Anyway Mr. Bar-
Lev, I do not know if you are in a position with your
experience, obviously it is significant, but compare the state
of the United States solar power industry with incentives for
solar in the U.S. with other countries, and I mean I assume you
have a sense of what is going on in other parts of the world to
incentify solar power, and what recommendations would you
advise this Subcommittee as we try to add value to an energy
package that we may consider later this year?
Mr. Bar-Lev. Well Spain is the most interesting country
because in fact they do not have anywhere near the excellent
radiation or the space that we have here in the western states,
and yet Spain has encouraged with a rather high what is called
feed-in tariff, it is sort of a price that would have to be
paid for solar energy, very high, and for a limited size
projects. And so a lot of companies came in with different
technologies which was good because then they would compete and
everyone would learn from everybody else, and so there are a
lot of different technologies that are competing in Spain,
getting the benefits of this feed-in tariff.
You see some that look good, that might be applicable here.
Others maybe not. And the other thing that has been very
interesting about Spain is transmission. Here it takes probably
two times, three times longer to connect up to the transmission
grid because of all the strange rules.
Mr. Costa. Our strange rules?
Mr. Bar-Lev. Yes. The strange, large generator
interconnection procedures.
Mr. Costa. That is an interesting description. I am going
to add that to the legislative generic of terminology we have.
Strange rules we are dealing with.
Mr. Bar-Lev. Strange rules and strange cost allocations but
in Spain again they cut through that. They built----
Mr. Costa. In Spain they are not strange?
Mr. Bar-Lev. In certain ways they might be but not on
transmission or on solar energy. So that is the best example
but I think the real lesson to be learned from Spain is that if
we were to set aside some Federal land, identify the optimal
solar zones, and set aside a bunch of BLM land, say enough for
four gigawatts which is what the Western Governors are
recommending, you would bring the cost down of solar
dramatically.
You would have competition among the different
technologies, and if you build transmission out to those, that
would benefit everybody. That would be a great win-win, and
that is what we are recommending. We are recommending a program
that is not that different from what Spain did.
Mr. Costa. Well I am intrigued by that idea, which is where
I wanted to end with in my questions to you, because it seems
to me that if you want to set up--for lack of a better term--a
pilot project of significance where you could really make a
mark and do it in a way that would be environmentally
acceptable, the map that you have up there surely clearly
indicates that there has got to be in all of that area and I
have traveled through a lot of it over the years, and knowing
how some of that area exists, I would think this would be a
wonderful use.
I do not think it would adversely impact to a large degree
the sort of wildlife corridors and other kinds of things that
often are raised as issues. I am sure that to the degree it was
even within an area that someone thought would impact their
aesthetics as it relates to site of line and those kinds of
things, they would raise issues, of course, because you are
always going to have that. I mean people do that about wind
power in a couple of areas in California that I am very
familiar with.
Describe the footprint again of this significant pilot
project that we are discussing that would provide the four did
you say----
Mr. Bar-Lev. Four gigawatts.
Mr. Costa. Four gigawatts.
Mr. Bar-Lev. Which is 4,000 megawatts, which is roughly say
about 8 percent, maybe 7 percent of California's peak load.
Mr. Costa. Right.
Mr. Bar-Lev. Would cover an area of perhaps 40 square
miles. So that is five miles by eight miles, and there are many
areas right within California or near Las Vegas or near Phoenix
that are ideal for that.
Mr. Costa. Absolutely. I concur.
Mr. Bar-Lev. And it is not us but really the Western
Governors has estimated that the employment benefits alone for
four gigawatts----
Mr. Costa. How quickly could something like that be
installed?
Mr. Bar-Lev. Well that is a really good question because--
--
Mr. Costa. That is not a fair question. Let me add a little
more information. If we made this of the significance of a
pilot project, and therefore we cleared a lot of the process or
expedited the process because I know time is money and when I
asked you the question you are not just thinking about the
construction, you are thinking about how do we get through the
maze of the process.
Mr. Bar-Lev. That is right.
Mr. Costa. But if we could somehow expedite in some sort of
a fast tracked way that would be within a 12-month time period,
and I am just picking a number, how long would it take to
construct such a pilot project?
Mr. Bar-Lev. Well the contracts we are negotiating right
now are going to require us to produce about 100 megawatts
about every nine months to a year. Now what I assume is it in
such a solar park that we are talking about here different
companies would be invited to bid.
Mr. Costa. So you would want that. You would actually want
a multiple.
Mr. Bar-Lev. Absolutely.
Mr. Costa. Right.
Mr. Bar-Lev. That is the idea.
Mr. Costa. And if you cleared that part of the process,
then you think this is kind of like Field of Dreams?
Mr. Bar-Lev. It is exactly Field of Dreams. If you build
it, they will come. They will arrive, and there are probably
six or eight companies in the United States right now, maybe a
little bit more, that are very actively looking at these
technologies. Say if each one of them said I will take a square
mile, I will take a square mile, then these could be built very
quickly.
Mr. Costa. As an aside, Apollo Alliance in the U.S. used to
be the leading producer of photovoltaics. I mean a lot of the
stuff has gone to Japan and elsewhere, right?
Mr. Bar-Lev. That is right.
Mr. Costa. Do we have much of an industry left here in the
United States?
Mr. Bar-Lev. There is one project that is being actively
built and almost finished near Boulder City new Las Vegas.
There are not any others. We were the last one, and we went out
of business in 1991. So the answer is we do not really have the
parts right now.
Mr. Costa. If we required buy American and that it be
manufactured here in the United States, would that create a few
jobs?
Mr. Bar-Lev. It would create a lot of jobs. Four gigawatts
would create--as I was saying before--12,000, 13,000
construction jobs, 1,100 permanent operations jobs, tremendous
increase in gross state output because of all the dollars that
are being generated, and an industry would be built. I always
use sort of Detroit or Silicon Valley as an example. We have
the resources in this country and the brain power to create
literally a whole new industry in the west.
Mr. Costa. Well I want to try to be a partner on a
bipartisan basis with whoever would like to join in this
effort, because I think it has a lot of potential. Last
question and then unless my friend the gentleman from New
Mexico wants to add any further, we will close the hearing. You
mentioned, our friend from Washington, that hydropower ought to
be treated as renewable, and if this question has been asked
while I was out I will get the answers from those who you
answered. What is the single largest or single biggest
impediment in your opinion from hydropower being considered
among other renewable sources?
Mr. Lutgen. By impediment, I am not sure what you mean.
Mr. Costa. Well you laid out a list of why it should be
included as a renewable resource but you said under the Energy
Act it is not treated as one, and I am asking you what you
think is the largest impediment from treating it as such.
Mr. Lutgen. I think the largest impediment is the view that
hydropower is an existing resource and that what renewables are
all about is developing new kinds of resources and new kinds of
technologies, and I am not sure if I am answering your
question.
Mr. Costa. No, no. I think you are going along those lines.
I mean there is also a conflict clearly. I mean hydropower is
everything you said it was. I mean at least I believe it is.
That does not make it so but it means that you and I agree.
Mr. Lutgen. Sure.
Mr. Costa. But there are some folks who really have an
aversion to how hydropower is developed and would prefer not to
see those dams that allow that hydropower to take place. So
therein lies a conundrum. I do not know if you see it that way.
Mr. Lutgen. Frankly, I am having a hard time understanding.
Mr. Costa. Are we building any new hydropower? Let us put
it that way.
Mr. Lutgen. I do not know. I would have to----
Mr. Costa. That is very limited.
Mr. Lutgen. Yes.
Mr. Costa. I mean we have some facilities that we have
refitted that did not have hydro.
Mr. Lutgen. Sure.
Mr. Costa. Now that electricity rates have gone up, we have
put hydroelectric plants, turbines in them but the notion that
we are going to putting any more facilities in the near term of
significance is I would submit to you less likely. I say that
as a westerner and a person who deals with water policy all the
time in California.
Mr. Lutgen. Sure. I think that what the industry is looking
for is incremental improvements in existing hydro facilities.
Mr. Costa. OK. The way the process works here we ask the
questions and you answer them but I will allow my friend to
make a point.
Mr. Gough. I appreciate that.
Mr. Costa. And we are going to close.
Mr. Gough. There is a possible answer actually. The Federal
government is in a unique position with the Western Area Power
Administration in Bonneville and TVA in its control over
hydropower to really optimize the hydropower we do have,
working it in combinations and a demonstration wind project,
wind-hydro has been authorized but never funded for the
northern plains to see how the Missouri working with our
largest storage capacity of the dams in the country up on the
Missouri River with the greatest wind resource. Finding ways to
direct WAPA to couple those resources and optimize the
resources we have could make a tremendous difference in making
some of the points that you have been seeking to get from the
other renewable resources.
A demonstration project could be up and running in 12
months and really demonstrate the compatibilities of renewables
working together.
Mr. Costa. Well I think that is a good point, and we should
look into that. I am going to close here but the gentleman from
New Mexico, ask one quick question.
Mr. Pearce. You bet, and we are going to walk our way down
through it now. I have to question if you think short term. We
will call short term 0 to 5 years, medium term 5 to 20, long
term 20 to beyond or never, and all I want to know is let us
say that we have the capacity to stop coal production or stop
energy from coal as we get the replacement energy. Fifty
percent of our power comes from coal today.
Can we do it in short term, middle term, long term or
never? And we will just go down. Mr. Lutgen. Yes. Give me your
view. This is not very scientific, and the Chairman is waiting
to adjourn. So do not think very long.
Mr. Lutgen. Short term.
Mr. Pearce. Short term. We could reduce 50 percent of the
power with the short term from wind, solar or geothermal? Those
three. All of them together or just the three?
Mr. Lutgen. I would say all of them together.
Mr. Pearce. All put together, short term. Yes, sir. Mr.
Bar-Lev?
Mr. Bar-Lev. Medium term.
Mr. Pearce. OK. Ms. Jungwirth?
Ms. Jungwirth. I have no idea.
Mr. Pearce. Thanks.
Mr. Gough. Short term with wind I think you can get 20
percent. Short term.
Mr. Pearce. OK. Mr. Swisher?
Mr. Swisher. I would say 20 to 30 timeframe.
Mr. Pearce. OK. Yes. I tend to think Mr. Swisher is right
but it is good information. Thank you, Mr. Chairman.
Mr. Costa. Thank you, gentleman from New Mexico. Thank the
witnesses for your interesting and I believe encouraging
testimony, and we will look forward to continuing to work with
you as we continue this process. This Subcommittee is now
adjourned.
[Whereupon, at 5:15 p.m., the Subcommittee was adjourned.]
[Additional material submitted for the record follows:]
[A statement submitted for the record by UTC Power
follows:]
Statement submitted for the record by UTC POWER
UTC Power appreciates the opportunity to submit a statement for the
hearing record on issues related to renewable energy opportunities on
federal lands.
Company Background
UTC Power, a business unit of United Technologies Corporation (UTC)
is a world leader in commercial stationary fuel cell development and
deployment. UTC Power also develops innovative combined cooling,
heating and power applications for the distributed energy market. UTC
Power is developing organic Rankine cycle technology known as the
PureCycle system for geothermal and other energy resources. This
technology is in the development stage. We are partners with Chena Hot
Springs Resort outside of Fairbanks Alaska, the Department of Energy
and Alaskan authorities in validating this exciting new geothermal
technology. Operating with geothermal hot water at 165+ F, this project
has featured the use of the lowest temperature geothermal energy
resource in the world. On April 12, 2007 UTC Power announced a series
of agreements with Raser Technologies of Provo, Utah to provide up to
135 PureCycle systems for three Raser power plants. In total, these
systems will generate approximately 30 megawatts of renewable
electrical power.
Summary
Geothermal energy addresses many of our national concerns, but its
potential is largely untapped. UTC Power's PureCycle system represents
an innovative advancement in geothermal energy production and is
operating successfully today in Alaska as part of a demonstration
effort. This geothermal energy breakthrough offers the possibility of
tapping significant U.S. geothermal reserves including oil and gas
resources for a domestic, renewable, continuously available source of
power to meet our growing energy demands. Congressional action is
needed, however, to continue research and development funding;
characterize our national geothermal resources, including low and
moderate temperature sources; and extend the production tax credit.
While not all of these issues fall under the jurisdiction of the House
Natural Resources Committee, the Committee can play a key role in
helping to develop and ensure implementation of a comprehensive
geothermal energy strategy to ensure we take maximum advantage of these
important resources to address energy security and environmental
concerns.
Geothermal Energy Addresses Many National Concerns, but Huge Potential
is Largely Untapped
Our nation is faced with air quality and global climate change
challenges, ever-increasing fuel costs and a desire to be less
dependent on energy sources from politically unstable areas of the
world. The United States is blessed with an abundance of geothermal
energy resources that offer a renewable, continuously available,
largely untapped domestic resource. The country generates approximately
2,800 MWe of geothermal energy for power production in California,
Nevada, Utah and Hawaii (and now Alaska) and another 2,400 MWe is under
development.
While estimates vary, the Geothermal Energy Association indicates
that with effective federal and state support, as much as 20 percent of
U.S. power needs could be met by geothermal energy sources by 2030. The
National Renewable Energy Laboratory's report ``Geothermal: The Energy
Under Our Feet'' concludes: ``Domestic resources are equivalent to a
30,000-year energy supply at our current rate for the United States.''
The study also notes: ``New low-temperature electric generation
technology (referencing UTC Power's PureCycle system) may greatly
expand the geothermal resources that can be developed economically
today.'' In addition, the Massachusetts Institute of Technology
recently released its report ``The Future for Geothermal Energy'' and
concluded that enhanced geothermal system technology could provide
100,000 megawatts of base-load power, without any greenhouse gas
emissions, by 2050 if the federal government increases its research
commitment to resource characterization and assessment.
Description of PureCvcle Technology
The PureCycle system is based on organic Rankine cycle (ORC)
technology--a closed loop process that in this case uses geothermal
water to generate 225 kW of electrical power. Think of an air
conditioner that uses electricity to generate cooling. The PureCycle
system reverses this process and uses heat to produce electricity. The
system is driven by a simple evaporation process and is entirely
enclosed, which means it produces no emissions. The only byproduct is
electricity, and the fuel--hot water--is a free renewable resource. In
fact, after the heat is extracted for power, the water is returned to
the earth for reheating, resulting in the ultimate recycling loop.
What is the Significance of Low Temperature Geothermal Energy?
In the past, geothermal energy for power production was
concentrated in only four Western U.S. states where the highest
temperature geothermal resources are located. The need for high
temperature steam previously limited the use of geothermal resources
and increased the life cycle cost.
The ability to use small power units at lower temperature
geothermal resources will make distributed generation much more viable
in many different regions of the country. Simply put, PureCycle
technology could result in significant new domestic, continuously
available renewable energy resources--not just in Alaska, but across
the country. The capability to operate with a low temperature resource
allows the UTC Power PureCycle System to utilize existing lower
temperature wells and to ``bottom'' higher temperature geothermal steam
and flash plants as well as many existing ORC binary power plants. A
``bottoming'' application with the PureCycle product would utilize hot
water exiting from existing geothermal plants to produce additional
power. This water would normally be re-injected to the earth or
otherwise discarded since use of this water was previously not
practical for power production with conventional recovery systems.
Oil and Gas Geothermal and Other Applications
There are more than 500,000 oil and gas wells in the United States,
many of which are unprofitable. The use of geothermal hot water, which
is abundant at many oil and gas well sites, to produce a renewable
source of electrical power could extend the life of many of these
assets. This would result in significant environmental, energy
efficiency, climate change, economic and other benefits associated with
the development of geothermal oil and gas electrical power.
We appreciate efforts by this Committee last year to pursue the oil
and gas geothermal energy production application. The Deep Ocean Energy
Resources Act of 2006 (HR 4761) included a provision that would create
a Department of Interior demonstration program to assess the use of
innovative geothermal technologies, such as our PureCycle system, at
new and existing oil and gas wells. This initiative would validate
technology that would enable the United States to capture the heat in
oil and gas wastewater to produce electricity and allow fields to
produce longer while co-producing electrical power with no emissions.
As Congress proceeds with its deliberations on measures to enhance our
nation's energy independence and security, we urge the inclusion of a
geothermal demonstration provision based on last year's language and
would be happy to work with the Committee in this regard.
In addition, PureCycle technology has other potential applications
including the use of industrial or other electrical generating
technologies that produce waste heat in the form of hot water at
greater than 165s F and with sufficient volume can generate electricity
as well. Examples include: waste heat recovery from the water used to
provide cooling for industrial reciprocating engines as well as exhaust
from these engines; production plant and landfill flares used to burn
off waste or exhaust gases; and heat generation from biomass burners.
Need for Resource Characterization
One of the key barriers to full utilization of our nation's
geothermal resources is the lack of up-to-date survey information. The
most recent U.S. Geological Survey for geothermal energy was conducted
in 1979. This survey used techniques that are outdated and was based on
technology available 30 years ago. It did not consider low to moderate
temperature resources since there was no technology available at the
time that could utilize these resources in a cost-effective manner. The
exploration and drilling phase of any geothermal project generates
considerable risk and expense. An up to date survey is essential to
identify potential resources with more precision thus helping to
minimize risk and expense. The 2005 Energy Policy Act (EPAct)
authorized such surveys and an update was underway, but funding
shortfalls at both the Department of Interior (DOI) and Department of
Energy (DOE) and uncertainty regarding the future of DOE's geothermal
program have stalled the effort. We urge Congress to direct the
Departments of Interior and Energy to expedite this initiative and to
ensure that low and moderate temperature resources are addressed.
Recommended Actions
It is unfortunate that at this moment in time when there are
exciting innovative developments in the world of geothermal technology,
the federal government is cutting off research and development funding
and stalling resource characterization efforts. The rationale given is
that the technology is mature and represents a resource with limited
value since it is confined to only a few Western states.
We have only scratched the surface regarding our nation's
geothermal energy potential. We have not exhausted the R&D
possibilities and this is not a resource that is limited to only a few
Western states. There are advances in low-temperature geothermal energy
alone that prove otherwise.
The National Research Council report ``Renewable Power Pathways''
recognized the importance of geothermal energy and stated: ``In light
of the significant advantages of geothermal energy as a resource for
power generation, it may be undervalued in the DOE's renewable energy
portfolio.''
UTC Power recommends that Congress pass legislation requiring DOE
and DOI to enter into cost-shared partnerships to enhance the
performance of existing successful systems, increase the size of the
low temperature units to one megawatt, boost system efficiency to
extract as much energy as possible from the source water, improve
working fluid characterization, evaluate different feed stocks as fuel
and demonstrate benefits for the oil and gas market. We also recommend
continued federal funding for resource assessment and identification,
exploration, and drilling and incentives for the exploration, drilling
and deployment activities.
As our Chena project and recent Raser Technologies arrangement
demonstrate, far from being a mature technology with limited geographic
reach, geothermal energy has the potential to satisfy a significant
portion of our growing energy needs with a renewable, continuously
available domestic resource. But appropriate government policies must
be adopted and implemented to make this a reality. Congress can help to
ensure we realize the full potential of geothermal energy. Attached is
a position paper by the Geothermal Energy Association that outlines key
industry recommendations and action items including:
Extension of the geothermal production tax credit and
revised ``placed in service'' rules;
Robust funding for DOE's Geothermal Research Program;
Incentives for geothermal exploration; and
Comprehensive nationwide geothermal resources assessment.
We also recommend that Congress enact legislation creating a
demonstration program to assess the use of innovative geothermal
technology, including organic Rankine cycle systems, at new and
existing oil and gas wells, such as the provision in the Deep Ocean
Energy Resources (DOER) Act approved by the Committee on June 21, 2006.
This initiative presents a significant opportunity for clean, renewable
energy at more than 500,000 oil and gas wells in the United States.
We thank you for the past support Congress and this Committee have
provided for geothermal energy and look forward to working with you to
translate the exciting promise of geothermal technology into reality.
______
Achieving a 20% National Geothermal Goal
The United States, as the world's largest producer of geothermal
electricity, generates an average of 16 billion kilowatt hours of
energy per year. While substantial, U.S. geothermal power is still only
a fraction of the known potential. Today, roughly sixty new geothermal
energy projects are under development in over a dozen states that will
double current geothermal power production. With effective federal and
state support, recent reports indicate that as much as 20% of U.S.
power needs could be met by geothermal energy sources by 2030.
To achieve this, the Administration and Congress should adopt the
following National Geothermal Goals for federal agencies: Characterize
the entire hydrothermal resource base by 2010; sustain double digit
annual growth in geothermal power, direct use and heat pump
applications; demonstrate state-of-the-art energy production from the
full range of geothermal resources; achieve new power or commercial
heat production in at least 25 states; and, develop the tools and
techniques to build an engineered geothermal system (EGS) power plant
by 2015.
To support these goals and accelerate the production and
development of energy from our geothermal resources, the following
priority actions are needed:
Revise the Section 45 Production Tax Credit (PTC) to support
sustained geothermal power development. The PTC timeframe is too short
for most geothermal projects to be completed by the current placed in
service deadline. To achieve sustained geothermal development, Congress
should immediately amend the law to allow facilities under construction
by the placed in service date of the law to qualify, and extend the
placed in service deadline by at least 5 years, to January 1, 2014,
before its expiration.
Fund a strong and effective DOE Geothermal Research Program that
prioritizes the discovery and definition of geothermal resources;
expands GRED funding; develops new exploration technologies; supports
state-based programs to expand knowledge of the resource base and its
potential applications; improves drilling technology; demonstrates
geothermal applications in presently non-commercial settings; and
develops and demonstrates of Enhanced Geothermal Systems techniques.
DOE's geothermal program should be expanded to meet today's challenges
and funded at $75 million annually.
Provide incentives for geothermal exploration through renewed DOE
cost-shared funding and other measures. Ninety percent of geothermal
resources are hidden, having no surface manifestations. Exploration is
therefore essential to expand production, but exploration is expensive
and risky. Cost-shared support for exploration drilling has been
provided through DOE's Geothermal Resource Exploration and Definition
(GRED) program. GRED should be continued and expanded, with at least
one-half of DOE's effort supporting exploration, and an exploration tax
credit should be established.
Expand and accelerate geothermal initiatives on the public lands.
USGS should conduct a comprehensive nationwide geothermal resource
assessment that examines the full range of geothermal resources and
technologies; USGS should collect and make available to the public
geologic and geophysical data to support exploration activities; BLM's
Programmatic Environmental Impact Statement (PEIS) should be completed
as a top priority; planning, leasing and permitting activities on BLM
and National Forest lands should be adequately funded and conducted
promptly. Appropriations (and dedicated funding) of $25 million
annually should be provided for these agency efforts.
_______________________________________________________________________
Geothermal Energy Association
209 Pennsylvania Ave SE, Washington, D.C. 20003
Phone 202-454-5261, fax 202-454-5265; email research@geo-energy.org