[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
AMERICAN ENERGY INITIATIVE:
IDENTIFYING ROADBLOCKS TO
WIND AND SOLAR ENERGY ON
PUBLIC LANDS AND WATERS,
PART II--THE WIND AND
SOLAR INDUSTRY PERSPECTIVE
=======================================================================
OVERSIGHT HEARING
before the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
Wednesday, June 1, 2011
__________
Serial No. 112-37
__________
Printed for the use of the Committee on Natural Resources
Available via the World Wide Web: http://www.fdsys.gov
or
Committee address: http://naturalresources.house.gov
U.S. GOVERNMENT PRINTING OFFICE
66-728 WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, [email protected].
COMMITTEE ON NATURAL RESOURCES
DOC HASTINGS, WA, Chairman
EDWARD J. MARKEY, MA, Ranking Democrat Member
Don Young, AK Dale E. Kildee, MI
John J. Duncan, Jr., TN Peter A. DeFazio, OR
Louie Gohmert, TX Eni F.H. Faleomavaega, AS
Rob Bishop, UT Frank Pallone, Jr., NJ
Doug Lamborn, CO Grace F. Napolitano, CA
Robert J. Wittman, VA Rush D. Holt, NJ
Paul C. Broun, GA Raul M. Grijalva, AZ
John Fleming, LA Madeleine Z. Bordallo, GU
Mike Coffman, CO Jim Costa, CA
Tom McClintock, CA Dan Boren, OK
Glenn Thompson, PA Gregorio Kilili Camacho Sablan,
Jeff Denham, CA CNMI
Dan Benishek, MI Martin Heinrich, NM
David Rivera, FL Ben Ray Lujan, NM
Jeff Duncan, SC John P. Sarbanes, MD
Scott R. Tipton, CO Betty Sutton, OH
Paul A. Gosar, AZ Niki Tsongas, MA
Raul R. Labrador, ID Pedro R. Pierluisi, PR
Kristi L. Noem, SD John Garamendi, CA
Steve Southerland II, FL Colleen W. Hanabusa, HI
Bill Flores, TX Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
Charles J. ``Chuck'' Fleischmann,
TN
Jon Runyan, NJ
Bill Johnson, OH
Todd Young, Chief of Staff
Lisa Pittman, Chief Counsel
Jeffrey Duncan, Democrat Staff Director
David Watkins, Democrat Chief Counsel
------
CONTENTS
----------
Page
Hearing held on Wednesday, June 1, 2011.......................... 1
Statement of Members:
Gosar, Hon. Paul A., a Representative in Congress from the
State of Arizona, Prepared statement of.................... 2
Hastings, Hon. Doc, a Representative in Congress from the
State of Washington........................................ 1
Prepared statement of.................................... 4
Markey, Hon. Edward J., a Representative in Congress from the
State of Massachusetts..................................... 5
Prepared statement of.................................... 6
Statement of Witnesses:
De Rosa, Frank, Senior Vice President, Project Development,
North America, First Solar, Inc............................ 48
Prepared statement of.................................... 49
Gordon, James S., President, Cape Wind Associates, LLC....... 23
Prepared statement of.................................... 24
Response to questions submitted for the record........... 27
Lanard, Jim, President, Offshore Wind Development Coalition.. 28
Prepared statement of.................................... 29
Piszczalski, Dr. Martin, Industry Analyst, Sextant Research.. 52
Exhibits submitted for the record........................ 54
Reicher, Dan W., Executive Director, Steyer-Taylor Center for
Energy Policy and Finance, Stanford University............. 57
Prepared statement of.................................... 59
Reilly, Susan, President & CEO, Renewable Energy Systems
Americas Inc............................................... 11
Prepared statement of.................................... 13
Resch, Rhone, President and CEO, Solar Energy Industries
Association................................................ 34
Prepared statement of.................................... 36
Roberts, Roby, Vice President of Communications and
Government Affairs, Horizon Wind Energy LLC, and Chairman,
Siting Committee, American Wind Energy Association......... 7
Prepared statement of.................................... 9
Additional materials supplied:
Donavin, Chris, President, Energy Dense Power Systems,
Statement submitted for the record......................... 92
Wald, Johanna, Western Renewable Energy Project, Natural
Resources Defense Council; Pamela Pride Eaton, Deputy Vice
President, Public Lands, The Wilderness Society; and Jim
Lyons, Senior Director for Renewable Energy, Defenders of
Wildlife, Letter submitted for the record.................. 88
OVERSIGHT HEARING ON THE ``AMERICAN ENERGY INITIATIVE: IDENTIFYING
ROADBLOCKS TO WIND AND SOLAR ENERGY ON PUBLIC LANDS AND WATERS, PART
II--THE WIND AND SOLAR INDUSTRY PERSPECTIVE.''
----------
Wednesday, June 1, 2011
U.S. House of Representatives
Committee on Natural Resources
Washington, D.C.
----------
The Committee met, pursuant to call, at 11:36 a.m., in Room
1324, Longworth House Office Building, Hon. Doc Hastings
[Chairman of the Committee] presiding.
Present: Representatives Hastings, Duncan, Gosar, Labrador,
Landry, Markey, DeFazio, Napolitano, Holt, Grijalva, Garamendi
and Hanabusa.
STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WASHINGTON
The Chairman. The Committee will come to order. The
Chairman notes the presence of a quorum, which, under Committee
Rule 3(e), is two Members.
The Committee on Natural Resources is meeting today to hear
testimony on an oversight hearing on the American Energy
Initiative: Identifying Roadblocks to Wind and Solar Energy on
Public Lands and Waters, Part II--The Wind and Solar Energy
Perspective. Under Committee Rule 4(f), opening statements are
limited to the Chairman and the Ranking Member of the
Committee. And before I recognize myself for the opening
statement, I do want to just kind of make some housekeeping
observations.
We have had kind of fits and starts by getting this
together. We have had to postpone this Committee meeting from
past days, and then we had to postpone the time of this because
the Republicans were invited down to the White House to meet
with President Obama and, of course, that compresses all of the
activity we have today. So we are then doing something that is
again out of order, and that is combining the two panels into
one.
So I just wanted to say that sometimes these things happen
here. The best plans sometimes go awry. But the important part,
of course, in all of this is the substance of the testimony
that our witnesses are giving to this Committee, and that
indeed is the important part.
I will ask unanimous consent that all Members who want to
submit a statement for the record can do so. And without
objection, so ordered.
[The prepared statement of Mr. Gosar follows:]
Statement of The Honorable Paul A. Gosar, a Representative in Congress
from the State of Arizona
I would like to thank Chairman Hastings for holding today's hearing
on roadblocks to wind and solar energy development on public lands.
The United States' dependence on foreign oil is one of the gravest
national security issues facing our country. If we want to reduce its
dependence on foreign oil, we must properly utilize all our resources
right here in America. This hearing is critical to exposing federal
policies that are prohibiting the industry's job creators from
utilizing public lands and developing renewable energy infrastructure.
It is important that this Congress learns from today's hearing exactly
what agencies and policies are improperly stagnating our renewable
energy development.
The State of Arizona has some of the most promising areas for solar
and wind energy development in this country and perhaps in the world.
Many of the most suitable locations are found on the state's public
lands. Arizona's First Congressional District, which I serve, consists
of almost seventy percent in public land; that includes around 2.6
million acres of Bureau of Land Management (BLM) land and 9.2 million
acres of Forest Service land. The federal government must partner with
industry, small business, and state and local governments to ensure our
public lands continue to be utilized for diverse purposes such as
outdoor recreation, livestock grazing, mineral development, and energy
production, while still protecting natural treasures. The mixed use of
these lands is a fundamental aspect my state of and my district's
economic viability.
Arizona's First Congressional District can be a model for energy-
driven economic recovery in this country. Rural Arizona is rich with
natural resources that provide for sound extraction and contains a
diverse climate that is conducive to all forms of energy generation
including traditional fossil fuels, hydro-electric, solar, and wind
power. However, renewable energy development, like other resource use
and energy sectors, are being plagued by excessive administrative
costs, duplicative permitting, and lengthy and burdensome lawsuits
filed by any or all environmentalist groups. New generation pilot and
developmental projects are simply not getting off the ground. The
government is requiring redundant, costly and unnecessary environmental
reviews; making inconsistent permit approvals and denials; and in some
cases, even completely halting the advancement of projects already
underway.
For example, there are 32 pending applications for solar energy
projects in the State of Arizona alone. If all 32 of these projects
were processed and approved today, Solar Energy Industries Association
estimates that these projects could support nearly 100,000 new jobs
within in the next five years. These projects would amount to over
18,630 megawatts of power.
The wind energy business is experiencing very similar struggles. I
have met with a wide variety of companies doing business in my state,
whose projects are in regulatory limbo. This includes an 85 megawatt
project which would be the very first Native American majority-owned
renewable energy project in the country. The unstable regulatory
environment is simply unacceptable given the opportunities we have in
the state.
Let me be clear, environmental protections are extremely important
to me. My district is home to some of the most frequently visited
destination locations in the country, and contains an abundance of
other hidden natural treasures. But a careful balance between
environmental protection and economic activity can be achieved.
Regulations need to be developed in a transparent and streamlined
manner, and with consideration for the negative impacts they may impose
on our communities and the economy.
Currently, the federal government's policies are having a
disproportionately negative effect on rural communities like mine which
depend on public lands for their livelihood and continued economic
development. At the same time, the federal government expects our
communities to meet its obligations as stewards.
I look forward to hearing from today's witnesses, the industry
people who deal with these policies on a day-to-day basis. It is
important that this committee continues to investigate examples in
which the federal government is doing a disservice to communities like
mine so that we can move forward, implement policies that remove
unreasonable barriers to economic development and get people back to
work.
______
The Chairman. I will now recognize myself for my opening
statement.
America has been blessed with many kinds, different kinds,
of natural resources, and there is no doubt that we need to
utilize all of them to significantly reduce our reliance on
unfriendly foreign energy. The House Republicans' American
Energy Initiative is an ``all-of-the-above'' approach to
address our energy needs, working to ensure affordable prices
and creating good-paying American jobs.
Renewable and alternative energy sources, such as wind,
solar, geothermal and hydropower, are an integral part of any
long-term energy strategy, and there is tremendous potential to
use our public lands and waters to help foster and expand their
development.
Today's hearing is the second in a series to identify the
roadblocks to wind and solar energy on public lands. On May
13th, the full Committee heard from the Obama Administration
representatives when we received testimony from BLM Director
Bob Abbey and BOEMRE Director Michael Bromwich. Today we will
hear testimony from representatives of the renewable energy
industry, who are struggling to fight through the red tape that
is hindering clean energy projects and slowing job creation.
While the Obama Administration deserves credit for some
advances on facilitation of their renewable energy projects on
Federal lands, significant obstacles exist to renewable energy
development. Ironically, the bureaucratic delays, unnecessary
lawsuits and burdensome environmental regulations impede our
ability to harness wind and solar energy on public lands.
As we learned at the last hearing, only 1 percent of BLM's
solar energy zones, or SEZs, created from over 120 million
acres of BLM land is currently being offered for streamlined
solar energy production. Often, BLM's regulatory structure is
so complicated and slow that companies don't bother applying,
opting instead for private land.
Our public land has specifically been designated as
multiple use. It simply makes no sense that the ability to
access it, including for energy development, is so cumbersome
and uninviting. Even more stunning is that the perpetrators of
many of the lawsuits that are blocking solar and wind
production on Federal lands are often the exact same groups
that are supposedly the leading proponents for renewable energy
development.
Time after time, renewable energy projects that the Obama
Administration has highlighted its support for have been
canceled, held up, or defunded due to their own policies or
their inability to follow through with the licensing or
permitting. The Cape Wind project off the Massachusetts
coastline is an excellent example of an offshore wind project
that has suffered from years of setbacks. While the Cape Wind
project received construction approval in April, it was a 10-
year process that was subject to numerous bureaucratic delays
and red tape. BLM recently announced a request for interest
from the public and received 11 submissions from 10 companies
expressing commercial leasing interests. However, after
receiving the submission, BOEMRE announced that it was reducing
the leasing area by more than half.
There is tremendous wind energy potential off the coast of
Massachusetts, but this Administration's decision appears to
not have been based on any scientific studies with regard to
potential for wind development in this area. There are clearly
abundant opportunities on our public lands and waters for
homegrown American energy, but until the restrictive government
inefficiencies and politically driven lawsuits are addressed,
they may never reach their true energy-production potential.
These policies cost American jobs, block clean energy
production, and increase our dependence on foreign sources of
energy.
So I am looking forward to hearing from the witnesses today
to learn more about the challenges they are facing and what
Congress may be able to do to better facilitate the renewable
energy production on our public lands.
[The prepared statement of Mr. Hastings follows:]
Statement of The Honorable Doc Hastings, Chairman,
Committee on Natural Resources
America has been blessed with many different kinds of natural
resources and there is no doubt that we need to utilize all of them to
significantly reduce our reliance on unfriendly foreign energy. House
Republicans' American Energy Initiative is an all-of-the-above approach
to addressing our energy needs, working to ensure affordable prices and
creating good paying American energy jobs. Renewable and alternative
energy sources, such as wind, solar, geothermal, and hydropower are an
integral part of any long-term energy strategy and there is tremendous
potential to use our public lands and waters to help foster and expand
their development.
Today's hearing is the second in a series to identify roadblocks to
wind and solar energy on public lands. On May 13th, the Full Committee
heard from Obama Administration representatives when we received
testimony from BLM Director Bob Abbey and BOEM Director Michael
Bromwich. Today we will hear testimony from representatives of the
renewable energy industry who are struggling to fight through the red-
tape that is hindering clean energy projects and slowing job creation.
While the Obama Administration deserves credit for some advances on
facilitation of their renewable energy projects on federal lands,
significant obstacles exist to renewable energy development.
Ironically, bureaucratic delays, unnecessary lawsuits and burdensome
environmental regulations impede our ability to harness wind and solar
energy on public lands.
As we learned at the last hearing, only one percent of BLM's
``solar energy zones,'' created from over 120 million acres of BLM
land, is currently being offered for streamlined solar energy
production.
Often, BLM's regulatory structure is so complicated and slow that
companies don't bother applying, opting instead for private land. Our
public land has specifically been designated as multi-use. It simply
makes no sense that the ability to access it, including for energy
development, is so cumbersome and uninviting.
Even more stunning is that the perpetrators of many of the lawsuits
that are blocking solar and wind production on federal lands are often
the exact same groups who are supposedly the leading proponents for
renewable energy development.
Time after time renewable energy projects that the Obama
Administration has highlighted its support for have been canceled, held
up or defunded due to their own policies or their inability to follow
through with licensing or permitting.
The Cape Wind project off of the Massachusetts coastline is an
excellent example of an offshore wind project that has suffered from
years of setbacks. While the Cape Wind project received construction
approval in April--it was a ten year process that was subject to
numerous bureaucratic delays and red tape.
BOEM recently announced a Request for Interest from the public and
received 11 submissions from 10 companies expressing commercial leasing
interest. However, after receiving the submission, BOEMRE announced it
was reducing the leasing area by more than half. There is tremendous
wind energy potential off the coast of Massachusetts but this
Administration decision appears to not have been based upon any
scientific studies regarding the potential for wind development in this
area.
There are clearly abundant opportunities on our public lands and
waters for homegrown American energy, but until the restrictive
government inefficiencies and politically-driven lawsuits are
addressed, they may never reach their true energy production potential.
These policies cost American jobs, block clean energy production and
increase our dependence on foreign sources of energy.
I'm looking forward to hearing from the witnesses today to learn
more about the challenges they are facing and what Congress may be able
to do to better facilitate the renewable energy production on our
public lands.
______
The Chairman. With that, I now recognize the distinguished
Ranking Member for his opening statement.
STATEMENT OF THE HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MASSACHUSETTS
Mr. Markey. Thank you, Mr. Chairman, very much. And we
welcome you back. We know it has been a difficult couple of
weeks for you and your family. Our thoughts and our prayers
have been with you. We are happy to have you back.
And for part two of this hearing that we are having on
renewable energy development on public lands, I know that there
has been a lot of talk about moratoriums here in the Committee,
but the Republican majority is ignoring the real moratorium
that they protected for years, the Bush-Cheney clean energy
moratorium. During the 8 years of the Bush Administration, a
grand total of zero permits were issued for solar plants, and
only five wind projects were approved in the entire United
States. Renewable energy development was almost exclusively a
private-land endeavor, leaving untapped some of the best
renewable resources on Federal lands.
Under the Obama Administration, that has changed. The 3,800
megawatts of wind and solar projects permitted in 2010 alone
under this Administration is 13 times more than what was
permitted during the entire 8 years of the Bush Administration
at the Department of the Interior. When the Bush Administration
was blocking these permits and locking up Federal lands to
clean energy development, where were the Republicans then?
Republicans want to criticize the Obama Administration when it
was actually Republican policies for 8 years that stymied
renewable energy development on public lands. Talk about
ignoring the elephant in the room.
I am happy to see this recent progress under the Obama
Administration, but I am deeply concerned about current
Republican policies directly aimed at rolling it back. While
the Republicans fight to keep each of the oil and gas
industry's eight different tax subsidies, they stand ready to
let the highly successful 1603 renewable energy program expire
in 7 months. That financing program saved tens of thousands of
jobs during the economic downturn and helped put new renewable
energy on the grid.
Demonstrating that there is apparently never an
inappropriate time to give an assist to Big Oil, the Republican
leadership has scheduled a vote for later this week in which
the critically necessary emergency aid to tornado victims in
Joplin, Missouri, is dependent upon defunding a program that
helps American companies manufacture superefficient and clean-
fuel vehicles. This is not an ``all-of-the-above'' strategy,
but it is an ``oil above all'' strategy, taken straight from
the Bush-Cheney playbook that was used for 8 consecutive years.
There is much at stake here, and it goes far beyond the
environmental and public health benefits of renewable energy.
The clean energy sector represents one of the most important
opportunities to generate economic growth and new, good-paying
jobs for the next generation of Americans. These benefits will
not come from subsidizing Big Oil. Despite $485 billion in
profits over the last 5 years, ExxonMobil, BP, Shell, Chevron
reduced their U.S. workforce by more than 10,000 people. They
reduced their workforce. It is not happening with coal. Even
with U.S. coal production increasing 600 percent, since 1950
employment in coal mining has fallen from 416,000 to fewer than
88,000 coal miners. That is with a 600 percent increase in
production. And those resources are becoming more expensive and
scarcer with nearly every passing year.
The trends with renewable energy are in the opposite
direction. Costs are going down, employment is going up,
advanced technologies that utilize the free fuel of the wind,
the sun and the Earth will ultimately win out. A $12 trillion
market awaits the technology leaders that can do so most
effectively, but we have to beat the Chinese, the Germans and
the Koreans. We need a plan. Using our rich public lands as a
launching pad for the clean energy sector is about as close to
a home run as we get in public policy.
I am pleased that the Committee is taking a deeper look at
the issue here today, and I hope that we can find a bipartisan
way to circle the bases together. And I am sure that the
meeting with the Republicans in the White House this morning
has now got them on our side on renewable energy, and I am
hoping that that clarifying moment did occur. I was not allowed
in that meeting.
Anyway, I yield back the balance of my time.
[The prepared statement of Mr. Markey follows:]
Statement of The Honorable Edward J. Markey, Ranking Member,
Committee on Natural Resources
First of all, I'd like to welcome back our Chairman today. I know
it has been a difficult couple of weeks for you and your family. Our
thoughts and prayers have been with you, and we are happy to have you
back.
As we heard 2 weeks ago in Part 1 of this hearing, the Obama
Interior Department has made renewable energy development on public
lands a top priority.
I know there has been a lot of talk about moratoriums here in this
committee, but the Republican Majority is ignoring the real moratorium
they protected for years: the Bush-Cheney clean energy moratorium.
During the 8 years of the Bush administration, a grand total of
zero permits were issued for solar power plants and only 5 wind
projects were approved. Renewable energy development was almost
exclusively a private land endeavor, leaving untapped some of our best
renewable resources on federal lands. Under the Obama administration,
that has changed.
The 3,800 megawatts of wind and solar projects permitted in 2010
alone under this administration is 13 times more than what was
permitted during the entire 8 years of the Bush administration.
When the Bush administration was blocking these permits, and
locking up federal lands to clean energy development, where were the
Republicans then?
Republicans want to criticize the Obama administration, when it was
actually Republican policies that stymied renewable energy development.
Talk about ignoring the elephant in the room!
I'm happy to see this recent progress under the Obama
administration, but I am deeply concerned about current Republican
policies directly aimed at rolling it back.
While Republicans fight to keep each of the oil and gas industry's
8 different tax subsidies, they stand ready to let the highly
successful 1603 renewable energy program expire in 7 months. That
financing program saved tens of thousands of jobs during the economic
downturn, and helped put new energy on the grid.
Demonstrating that there is apparently never an inappropriate time
to give an assist to Big Oil, Republican leadership has scheduled a
vote for later this week in which the critically necessary emergency
aid to tornado victims in Joplin, Missouri is dependent upon defunding
a program that helps American companies manufacture super-efficient and
clean-fuel vehicles.
This is not an ``All of the Above Strategy'' but an ``Oil Above
All'' strategy taken straight from the Bush-Cheney playbook.
There is much at stake here, and it goes far beyond the
environmental and public health benefits of renewable energy. The clean
energy sector represents one of the most important opportunities to
generate economic growth and new good-paying jobs for the next
generation of Americans. [CHART]
Those benefits will not come with subsidizing Big Oil. Despite $485
billion in profits over the last 5 years, ExxonMobil, BP, Shell, and
Chevron reduced their U.S. workforce by more than 10,000 people.
[CHART]
It's not happening with coal. Even with U.S. coal production
increasing 600 percent since 1950, employment in coal mining has fallen
from 416,000 to fewer than 88,000. [CHART]
And those resources are becoming more expensive and scarcer with
nearly every passing year.
The trends with renewable energy are in the opposite direction.
Costs are going down and employment is going up. Advanced technologies
that utilize the free fuel of the wind, the sun, and the earth will
ultimately win out. A $12 trillion market awaits the technology leaders
that can do it most effectively. But the Republican assault on clean,
domestic energy production is making it increasingly likely that those
technology leaders will not be American, but Chinese, German, and
Korean.
Using our rich public lands as a launching pad for the clean energy
sector is about as close to a home run as we get in public policy. I am
pleased that the committee is taking a deeper look at the issue here
today, and I hope that we can find a bi-partisan way to circle the
bases together.
Thank you. I look forward to our witness's testimony.
______
The Chairman. Optimism is contagious.
I thank the gentleman for his opening statement, and I want
to welcome the witnesses, our combined panel here. We have Mr.
Roby Roberts who is the Co-Chairman, Legislative Committee of
the American Wind Energy Association; Susan Reilly, CEO of RES
Americas; Mr. James Gordon, President of the Cape Wind
Associates, LLC; Jim Lanard, President of the Offshore Wind
Development Coalition; Mr. Rhone Resch, President and CEO of
Solar Energy Industries Association; Mr. Frank DeRosa, Senior
Vice President for First Solar, Inc.; Dr. Martin Piszczalski--
is that good?
Dr. Piszczalski. Close.
The Chairman. Does anybody ever do your name precisely
right the first time?
Dr. Piszczalski. There is always a pause.
The Chairman. And I had that pause. But thank you. I know
your background anyway. At least when your name ends in S-K-I,
that is a dead giveaway.
And finally, Dan Reicher with the Center for Energy Policy
and Finance at Stanford University.
Like all of our witnesses, your written statement will
appear in total in the record. So we ask you to keep your oral
remarks to 5 minutes if you can do that. Hopefully you can.
You have to turn on the microphone that is in front of you,
and when you turn on the microphone at the start, let me
explain the timing lights. The green light goes on, and that
signifies the first 4 minutes. When the yellow light goes on,
you have 1 minute left. When the red light goes on, that is the
end of your 5 minutes, and certainly I ask you to complete your
thought.
So with that, Mr. Roberts, you may begin, and you are
recognized for 5 minutes.
STATEMENT OF ROBY ROBERTS, CO-CHAIRMAN, LEGISLATIVE COMMITTEE,
AMERICAN WIND ENERGY ASSOCIATION
Mr. Roberts. Thank you. Chairman Hastings, Ranking Member
Markey and other members of the Committee, thank you for the
opportunity to testify today. My name is Roby Roberts and I am
Vice President of Communications and Government Affairs for
Horizon Wind Energy. I am testifying on behalf of the American
Wind Energy Association, AWEA, where I currently serve as the
Chair of the AWEA Siting Committee and previously served as
Chair of AWEA's Board of Directors and Legislative Committee.
Wind energy is a clean, affordable and homegrown energy
resource. It contributes to rural development through property
taxes that support schools and communities; royalty payments
that help families stay on their farms or ranches; and good
jobs for communities that all too often lack such
opportunities.
Wind energy is also an important part of a diverse energy
portfolio. It is commercial, rapidly scalable. And taking into
account Federal incentives received by all energy technologies,
wind energy costs have fallen blow the cost of most
conventional sources and are close to cost-competitive with new
natural gas generation. Importantly, wind energy prices can be
locked in up front for 20 years, which acts as a hedge on
volatile fuel prices.
The wind energy industry currently supports 75,000 people
in the U.S. The industry has been one of the few bright spots
in an otherwise difficult economy. In 2010, the industry
installed over 5,000 megawatts, representing 11.1 billion in
investments. Total cumulative installed capacity stands at over
40,000 megawatts, enough to power 10 million homes. Since 2001,
wind energy has represented 35 percent of all new electric
capacity, second only to natural gas, and more than nuclear and
coal combined. The industry has utility scale wind projects
operating in 38 States and more than 400 manufacturing
facilities in 42 States.
The biggest roadblock facing the wind energy industry right
now is a lack of consistent and long-term Federal policy to
support renewable energy. Despite bipartisan support, tax
credits for renewable energy have been on again, off again. The
production tax credit, PTC, expires at the end of 2012. Failure
to extend this incentive will result in a large tax increase on
wind energy. We request that Congress extend the PTC for wind
energy this year. Given lead time for project development, it
is critical to act now to avoid a lull in development post-
2012. Business decisions for 2013 are already being made.
And again, despite bipartisan support, there is no long-
term demand signal, such as a renewable or clean energy
standard.
The wind industry is also facing urgent challenges as a
result of two documents released in February of 2011 by the
U.S. Fish and Wildlife Service. I will focus my testimony on
the Draft Land-Based Wind Energy Guidelines, as Susan Reilly
from RES Americas will discuss the Eagle Guidance.
In 2007, the Secretary of the Interior Kempthorne, created
a Federal Advisory Committee comprised of 22 individuals,
primarily from State agencies, industry, science and wildlife
conservation organizations, to provide recommendations on wind
turbine siting guidelines, Secretary Salazar extended the
Advisory Committee charter. The committee submitted consensus
recommendations endorsed by every single member in March 2010.
Having industry, States and NGO's unite around a single set of
recommendations was a significant achievement by agreeing to a
higher standard for wildlife study and protection than any
other industry in the country.
Unfortunately, the draft land-based guidelines issued
earlier this year by the Service differ in fundamental ways
from the Advisory Committee recommendations, and are unworkable
for the industry, and will result in substantial delays or even
abandonment of thousands of megawatts of proposed wind
projects.
Among industry key concerns are, number 1, the scope of
covered species and covered impacts; number 2, the scope and
duration of pre- and post-construction monitoring; number 3,
the role of the Service; number 4, questionable science used to
justify certain recommendations; number 5, the lack of phase-in
prior to implementation; and number 6, mitigation
recommendations are neither practical nor proven to be
effective.
I would strongly urge this Committee and the Congress to
express support of the Department of the Interior and the
Service for returning to the consensus Advisory Committee
recommendations.
Finally, in my written testimony, I detailed a handful of
policy recommendations specific to public lands. In the
interest of time, I won't repeat those here. But I do want to
emphasize that without long-term Federal policies on the tax
and demand side, as well as making the Service policies more
workable, establishing policies specifically to make developing
projects on public lands more attractive will be of marginal
benefit at best.
Thank you for the opportunity to testify. I am happy to
answer questions.
The Chairman. Thank you very much, Mr. Roberts, for your
testimony.
[The prepared statement of Mr. Roberts follows:]
Statement of Roby Roberts, on behalf of the
American Wind Energy Association (AWEA)
Chairman Hastings, Ranking Member Markey and other members of the
Committee, thank you for the opportunity to testify today. My name is
Roby Roberts, and I am Vice President of Communications and Government
Affairs for Horizon Wind Energy LLC (``Horizon''). I am testifying on
behalf of the American Wind Energy Association (AWEA), where I
currently serve as the Chair of AWEA's Siting Committee and previously
served as Chair of AWEA's Board of Directors and Legislative Committee.
AWEA is the national trade association representing a broad range
of entities with a common interest in encouraging the deployment and
expansion of wind energy resources in the United States. AWEA members
include wind turbine manufacturers, component suppliers, project
developers, project owners and operators, financiers, researchers,
renewable energy supporters, utilities, marketers, customers and their
advocates.
Horizon and its subsidiaries develop, construct, own and operate
wind farms throughout North America. Based in Houston, Texas with 27
wind farms, over 300 employees and over 15 development offices across
the United States, Horizon has developed more than 3,600 MW and
operates over 3,400 MW of wind farms. Horizon ranks third in the United
States in terms of net installed capacity. Horizon is owned by EDP
Renewables, a global leader in the renewable energy sector that
develops, constructs, owns and operates renewable generation
facilities.
Wind energy is a clean, affordable and homegrown energy resource.
It contributes to rural development through property taxes that support
schools and communities, the royalty payments that help families keep
on their farms or ranches, and through the good jobs, both long-term
and short-term, that it brings to communities with all too few such
jobs.
Wind energy is also an important part of a diverse energy
portfolio. It is commercial, rapidly scalable, and, taking into account
federal incentives received by all energy technologies, wind energy
costs have fallen below the costs of most new conventional sources, and
are close to cost-competitive with new natural gas generation. Because
the ``fuel'' for wind energy is free and inexhaustible, prices can be
locked in for 20 years, thus acting as a hedge on volatile fuel prices.
Deploying wind energy domesticates our energy supply and bolsters
energy security.
In short, it is good for our economy, our national security, public
health and the environment.
The wind energy industry currently employs 75,000 people in the
U.S. The industry has been one of the few bright spots in the otherwise
difficult economy. In 2010, the industry installed 5,116 megawatts,
representing $11.1 billion in investment. Total cumulative installed
capacity stands at 40,181 MWs, enough to power 10 million homes.
Average annual growth for the past five years was 35 percent, second
only to natural gas and more than nuclear and coal combined. The
industry has utility scale wind projects operating in 38 states and
more than 400 manufacturing facilities in 42 states.
The industry's potential as a jobs and economic engine is much
greater. The U.S. Department of Energy released a report in 2008
analyzing a scenario of 20 percent of U.S. electricity coming from wind
energy by 2030. According to that report, which was prepared by the
Bush Administration's DOE, the wind energy industry would support
500,000 jobs at that level of deployment, which is achievable with
existing technology.
The biggest roadblock facing the wind energy industry right now is
the lack of a consistent and long-term federal policy to support
renewable energy. Despite bipartisan support, tax credits for wind and
other forms of renewable energy have been on-again, off-again. The
production tax credit, which is the key existing federal tax incentive
for wind energy development, expires at the end of 2012. Failure to
extend this incentive will result in a large tax increase on wind
energy developers that will be reflected in the cost of wind power,
making it less competitive with competing sources that also receive
federal incentives. We request that Congress block this tax increase
and extend the production tax credit for wind energy this year. Given
lead times for project development, it is important to act now to avoid
a lull in development post-2012. Business decisions for 2013 are
already being made.
And, again, despite bipartisan support, there is no long-term
demand signal, such as a renewable or clean electricity standard.
Without more stable federal financial incentives and demand-side
policies, any changes to make developing wind energy projects on public
lands more attractive will be of only marginal benefit, at best.
The wind energy industry is also facing urgent challenges as a
result of two documents released in February 2011 by the U.S. Fish and
Wildlife Service (``the Service''). The first document is the Draft
Land-Based Wind Energy Guidelines and the second is the Draft Eagle
Conservation Plan Guidance. I will focus my testimony on the draft
guidelines \1\ as Susan Reilly from RES Americas will discuss the Eagle
Guidance.\2\ I would like to ask that the executive summaries of AWEA's
public comments on both of these documents be made a part of the record
for this hearing.
---------------------------------------------------------------------------
\1\ AWEA's full comments on the draft land-based wind energy
guidelines can be found here: http://www.awea.org/issues/siting/upload/
AWEA-Comments-on-USFWS-Wind-Energy-Guidelines_May-19-2011.pdf
\2\ AWEA's full comments on the draft eagle conservation plan
guidance can be found here: http://www.awea.org/issues/siting/upload/
AWEA-Comments-on-USFWS-Eagle-Guidance-May-19-2011.pdf
---------------------------------------------------------------------------
In 2007, then-Secretary of Interior Kempthorne created a federal
advisory committee (FAC)\3\ comprised of 22 individuals primarily from
state agencies, industry, academia and wildlife conservation
organizations to provide recommendations on wind turbine siting
guidelines. Secretary Salazar extended the FAC charter. The Committee
submitted consensus recommendations endorsed by every single member in
March 2010. Having industry, states, and NGOs unite around a single set
of recommendations was a significant achievement. By agreeing to these
recommendations, the wind energy industry was voluntarily agreeing to
be held to a higher standard for wildlife study and protection than any
other industry in the country.
---------------------------------------------------------------------------
\3\ Available at http://www.USFWS.gov/habitatconservation/
windpower/wind_turbine_advisory_committee.html.
---------------------------------------------------------------------------
Unfortunately, the draft land-based guidelines issued earlier this
year by the Service differ in fundamental ways from the FAC
recommendations and are unworkable for industry and will result in
substantial delays or even abandonment of thousands of MWs of proposed
wind projects.
Among industry's key concerns are:
The scope of covered species and covered impacts
We recommend the narrower scope proposed by the
FAC;
The scope and duration of pre- and post-construction
monitoring
We recommend duration be based on the risk
profile of the site rather than the three to five years
of minimum study recommended by the Service;
The role of the Service
We recommend a developer-led process as proposed
by the FAC rather than having the Service in a
decision-making role;
Questionable science used to justify certain
recommendations (for example, requiring study of noise impacts
on wildlife and studying airspace as habitat);
We recommend the use of sound science and that
topics that are less clear be researched rather than
evaluated at every project;
The lack of a phase-in prior to implementation
Requiring immediate adherence is not practical,
which is why the FAC recommended a two-year phase-in;
Mitigation recommendations that are neither practical
nor proven to be effective
Mitigation recommendations should be proven and
cost-effective, not speculative.
I would strongly urge this Committee and this Congress to express
support to the Department of Interior and the Service for returning to
the consensus FAC recommendations.
To fully utilize the wind energy resources in our country, we also
need to expand our nation's transmission infrastructure. The BLM has an
important role to play in permitting transmission projects in the west.
But, coordination needs to be improved among the many field offices
working on major transmission projects, including the establishment of
national project teams, with an individual who has ultimate decision-
making authority.
Finally, I wanted to offer a few other suggestions for changes that
could improve the ability to pursue projects on public lands. Though,
as I noted earlier, these will be of only marginal benefit without
stable federal policy to support renewable energy and without fixing
the problematic draft guidelines and guidance proposed by the Service:
1. Establish reasonable timelines for agency responses.
2. Allow commercial negotiation of terms of cost-recovery
agreements, right-of-way agreements and memorandums of
understanding with federal agencies such as BLM and the
Service, which is a standard practice in the private sector,
particularly for agreements like those entered into with BLM
that may last 20 years.
3. Require that policy changes proposed and implemented
through instruction memorandums be subject to a public comment
process, which would allow industry to challenge
recommendations that would make wind energy projects on public
lands impractical, regardless of whether those came from BLM
itself or resulted from BLM implementing a recommendation from
another agency like the Service.
4. Allow a portion of the revenue paid by wind energy projects
on BLM lands to be recycled back into the agency for the
purpose of improving processing of future permits as is already
done for oil and gas, geothermal, film production and
communications towers.
5. Provide for categorical exclusions for putting up temporary
meteorological towers to test wind speeds on public lands. This
is already allowed under BLM's wind energy development policy,
but is not consistently used.
Thank you again for the opportunity to testify. I am happy to
answer questions.
______
The Chairman. And I will recognize Ms. Reilly for your
testimony. You are recognized for 5 minutes.
STATEMENT OF SUSAN REILLY, PRESIDENT AND CEO, RENEWABLE ENERGY
SYSTEMS AMERICAS INC.
Ms. Reilly. Chairman Hastings, Ranking Member Markey and
members of the Committee, thank you for the opportunity to
testify today. My name is Susan Reilly, and I am the President
and CEO of Renewable Energy Systems Americas. RES is
headquartered in Colorado, and we are one of the leading
renewable energy companies in the United States. We have built
more than 10 percent of the operating wind farms in the U.S.,
and we currently have approximately 10,000 megawatts of wind
and solar projects under development, which equates to the
amount of electricity used by approximately 2.5 million average
American homes.
You have asked us to provide an industry perspective
regarding roadblocks to developing wind and solar energy on
public lands. We encounter many obstacles to developing
renewable energy projects, but the number one obstacle that our
industry faces is uncertainty, both market uncertainty and
regulatory uncertainty. Like any business, what matters to us
is the markets, and markets are driven by supply and demand.
There is seemingly strong and growing demand for renewable
energy from the American people, but this is not translating
into predictable market demand. A national renewable or clean
energy standard and predictable tax policy would really help
fix this problem.
On the supply side, we face uncertainty on many fronts.
Developing projects is a complicated process, and it is much
more difficult on public lands, though the process can take
twice as long as it would on private lands. This is reflected
by the fact that under 2 percent of all wind farms in the U.S.
Are sited on public lands.
My written testimony provides additional detail regarding
the many issues we have encountered when trying to develop
projects on public lands. And in particular, I would like to
draw your attention to the increasing challenge we face in
obtaining permits for wind projects.
A recent example, a major obstacle is the regulatory
uncertainty created by the U.S. Fish and Wildlife 2011 Draft
Eagle Conservation Plan Guidance, which I will refer to as the
Eagle Guidance. The Eagle Guidance is a document intended to
provide direction on implementation of the 2009 eagle permit
final rules. When combined, the guidance and the rules create
an eagle regulatory program that is complicated and completely
unworkable for our industry.
Unfortunately, just fixing the Eagle Guidance won't solve
the problem because the real problem lies in the underlying
2009 eagle rules. All of this uncertainty will make financing
projects more difficult and cause buyers to shy away from
signing purchase contracts.
I provide more detail in my written comments as to why the
Eagle Guidance is so problematic, but I would like just to
stress the following two issues. Firstly, the Eagle Guidance
is, in fact, more stringent than the Endangered Species Act,
despite the fact that neither the bald nor the golden eagle are
currently endangered. Under the Eagle Guidance, permits for
wind projects can only be obtained for 5 years at a time. This
is a significant problem because wind and solar projects
typically have a 20- to 30-year life and often need financing
for 10 to 15 years. So having a permit that expires after 5
years will make financing difficult, if not impossible. By
comparison, it is possible to obtain a permit under the
Endangered Species Act for the life of a project, and that is
what we need, for the life of the project.
Second, the 2011 Eagle Guidance focused only on wind, yet
modern wind turbines are estimated to cause less than 1 percent
of eagle mortalities. We don't see the sense of singling wind
out when the impact of modern wind farms on eagle populations
is so small.
I would like to emphasize that these are not theoretical
problems. My company has several wind projects that are
currently being directly impacted by this issue, and we believe
that the changes to the permitting process regarding eagles
will ultimately impact the majority of our projects, creating
delays and millions of dollars of additional cost, and that
many of our developers are in a similar situation.
We further support reasonable protections for wildlife, but
there does not appear to be any scientific justification for
these onerous requirements, nor can it be demonstrated that the
requirements will help eagles. How could they when we are only
causing 1 percent of the problem?
So how can we fix the problem created by the eagle
regulatory program? We believe that the most sensible way
forward is to suspend the 2009 eagle rules and open a new
rulemaking process. But this process will likely take another 2
to 3 years, and we can't put our business on hold for that
long. Projects won't get built unless we can reduce the level
of uncertainty. We need a bridge solution for the interim
period. So our suggestion is that the Federal Advisory
Committee recommendations be used.
In closing, I would like to reiterate our strong support
for regulations to protect wildlife. RES Americas' business is
developing and constructing renewable energy projects that
benefit the environment. Renewable energy is all we do, and our
corporate ethos is grounded in sustainability. So this isn't
about cutting corners or trying to sidestep reasonable
regulations, but the key word is ``reasonable.'' Both
conservation and renewable energy are critical, but there has
to be a balance between the two agendas.
The American people want domestically produced, clean,
renewable energy, and we want to supply it to them, but our
energy faces market uncertainty at the national level, and we
are thwarted by regulatory uncertainty during the development
process. In the immediate term, Eagle Guidance combined with
the land-based guidelines are significant obstacles to the
industry. Renewable energy has the power to deliver, to drive
investment, particularly in the manufacturing sector, and to
create tens if not hundreds of thousands of jobs.
Chairman Hastings, Ranking Member Markey and the rest of
Committee, I thank you for your interest in and attention to
these issues, and I look forward to any assistance you may be
able to provide.
The Chairman. Thank you very much for your testimony.
[The prepared statement of Ms. Reilly follows:]
Statement of Susan Reilly, President and CEO,
Renewable Energy Systems Americas Inc.
Introduction
Chairman Hastings, Ranking Member Markey and members of the
Committee, thank you for the opportunity to testify before the
Committee on Natural Resources Oversight Hearing on ``American Energy
Initiative: Identifying Roadblocks to Wind and Solar Energy on Public
Lands and Waters, Part II--The Wind and Solar Industry Perspective''.
My name is Susan Reilly. I am the President and Chief Executive
Officer of Renewable Energy Systems Americas Inc. (``RES''). RES is one
of the leading renewable energy companies in the United States. For
more than a decade, RES has developed, constructed, owned, and operated
wind farms in North America. RES has constructed or is currently
constructing more than 5,200 megawatts (``MW'') of wind energy
projects, representing some 10% of the operating wind farms in the
United States, and has successfully developed more than 2,200 MW of
renewable energy projects in the United States and Canada.
RES currently holds a development portfolio of approximately 10,000
MW and maintains ownership in 226 MW of operating projects. RES is
headquartered in Broomfield, Colorado, with regional offices in Austin,
Texas; Portland, Oregon; and Minneapolis, Minnesota. Our Canadian
projects are managed from Montreal, Quebec. RES is part of the RES
Group, a leading renewable energy developer with offices and projects
all worldwide.
RES is somewhat unique in the industry due to the range of
activities in which it is involved. RES develops, designs, constructs,
and operates renewable energy projects, and focuses not only on wind,
but also on solar, biomass, and energy storage projects. This broad
scope of activities means that RES has in-house expertise dedicated to
understanding the requirements of regulatory agencies, state and local
governments, investors, landowners, and other stakeholders, throughout
project development, construction, and operation. As such, we are well-
positioned to comment on the obstacles facing the development of
renewable energy projects on public lands.
Uncertainty: The Greatest Roadblock to Renewable Energy Development on
Public Lands
The Committee seeks an industry perspective regarding roadblocks to
developing wind and solar energy on public lands. While there are many
obstacles to developing renewable energy projects, the number one
obstacle our industry faces is uncertainty, including both market
uncertainty and regulatory uncertainty.
Like any business, the renewable energy markets are driven by
supply and demand. On the demand side, the renewable energy industry
faces market uncertainty due to the lack of a consistent national
energy policy. Unlike many countries, the U.S. does not have a national
renewable or clean energy standard, feed-in tariff or other mechanism
for promoting renewable energy; and U.S. tax policy supporting
renewable energy development has been inconsistent.
On the supply side, we face both legislative and regulatory
uncertainty on many fronts. Developing renewable energy projects is a
complicated process, and obtaining permits--the gating item for so many
aspects of the development process, including financing--is now
particularly challenging. Regulatory uncertainty introduced over the
past twelve months--including uncertainty regarding required
environmental studies, the ``useful life'' of permits and regulatory
approvals, the risk of permit ``re-openers'', and potential requirement
to employ undefined adaptive management--has had a profound negative
effect on the development of renewable energy projects on public lands.
Of relevance to this hearing is the fact that the level of
regulatory uncertainty is much higher when developing projects on
public lands, where the process can take twice as long as it would on
private lands. As a result, there is a strong incentive to avoid public
lands, which is borne out by the fact that only 1.4% of wind farms are
currently located on public lands.\1\ Projects developed on public
lands are subject to many more regulations; compounding the issue,
these regulations often overlap and lack clarity as to which should
take precedence.
---------------------------------------------------------------------------
\1\ See Appendix I, ``Comparison of the Percentage of Renewable
Energy Generation Located on Public and Private Lands''.
---------------------------------------------------------------------------
In the immediate term, the biggest obstacle the renewable energy
industry is facing when it comes to developing renewable energy
projects on public (and private) lands is uncertainty relating to
permitting, and in particular, the uncertainty created by the U.S. Fish
& Wildlife Service's 2011 ``Draft Eagle Conservation Plan Guidance'',
or ``Eagle Guidance''.
In summary, the key points I wish to convey regarding the
roadblocks to developing renewable energy projects on public lands
created by regulatory uncertainty are:
1. The process for developing renewable energy projects is
complicated, and critical steps in successfully completing a
project hinge on the permitting process.
2. Adding regulatory uncertainty to the permitting process
makes project development more complicated, lengthy, and
expensive. . .and therefore more risky.
3. In the past ten months, the U.S. Fish and Wildlife Service
(USFWS) and the Bureau of Land Management (BLM) have issued
several documents that significantly increase the regulatory
uncertainty associated with permitting wind energy projects.
a. Among these documents, the Eagle Guidance is the
most immediately problematic.
b. The Eagle Guidance is unnecessarily onerous, and
unfairly penalizes wind energy.
4. The Eagle Guidance creates a significant roadblock to
developing renewable energy projects on public lands--RES has
some proposed solutions.
5. The Eagle Guidance is the most immediate issue the industry
faces, but it is not the only roadblock--there are other
reasons why developing renewable energy projects on public
lands is difficult.
6. DOI's ``Fast-Track'' process is welcome and well-intended,
but needs to focus more on successful outcomes for wind
projects.
7. This is not a theoretical issue--some of RES' projects have
already been directly impacted by the roadblocks listed above.
1. Renewable Energy Project Development is a Complex Process
To appreciate the challenges that the wind energy industry faces
for development on public lands, it may be helpful to understand the
extensive process involved in developing, financing, constructing, and
operating a wind energy facility.
In general, the early stage development process follows these
steps:
Identify areas with promising wind or solar
resources, compatible land uses, power markets and access to
transmission lines with sufficient capacity;
Conduct preliminary siting and environmental
screening, followed by initial environmental assessments and
studies;
Establish and maintain relationships with landowners,
and negotiate wind or solar measurement agreements and/or land
leases;
Establish and maintain relationships with local
stakeholders, including local government, public agencies,
environmental groups, and community groups, among others;
Commence preliminary project planning and design; and
Commence permitting discussions and planning with
regulators.
The next phase of development usually involves ensuring the project
is able to interconnect to the grid and has access to sufficient
transmission capacity, selecting turbines, and finalizing permits.
These processes often progress simultaneously, which requires complex
coordination among multiple parties.
The final, and most critical stage of development revolves around
securing a power purchase agreement (PPA), and obtaining financing. The
key point to understand is that this critical final phase hinges on the
permitting process. This testimony will focus on obstacles to
successfully completing the permitting process for renewable energy
projects on public lands.
2. How Regulatory Uncertainty Affects Project Development
Regulatory Uncertainty Further Complicates a Challenging Process
As outlined above, successful development of a commercial-scale
wind energy project requires coordination among multiple parties,
including landowners, local governments, transmission providers, power
purchasers, and investors.
Contractual arrangements among these parties may span 20-30 years,
and each of these parties seeks assurances that the project will be
constructed and operated in compliance with law during that timeframe.
As such, regulatory uncertainty makes the challenging process of
coordinating agreements among these parties even more difficult, and
may even render it infeasible.
In addition, increased uncertainty, or risk, may also increase the
cost of developing, constructing, or operating a project. In doing so,
it will almost certainly decrease the profitability of a project and in
some circumstances, it may worsen project economics to the point that a
project cannot be justifiably developed.
Regulatory Uncertainty Causes Delays, Drives Away Investment Capital
and Customers
One of the biggest factors affecting the cost of a wind project is
the time required to obtain permitting and ensure regulatory
compliance. Commercial-scale wind farms require investments of hundreds
of millions of dollars. Currently, there is significant interest in
investing in renewable energy, partly due to a belief that the sector
is poised for significant growth, and partly because investors are
concerned about sustainability.
However, wind energy projects ultimately compete with other
investment opportunities for access to development and long-term
capital. If development costs make a project uneconomic, or if
permitting delays increase the time, cost and risk of projects,
development capital will flow elsewhere--either to other projects or
sectors.
Customers--which in the case of the renewable energy industry are
often utilities--also seek projects with regulatory certainty, and will
typically not sign power purchase agreements if a project's future is
in doubt. As described in the case studies provided, RES has
experienced firsthand the loss of customer interest due to regulatory
uncertainty relating to eagles.
3. The USFWS and BLM Have Greatly Increased Regulatory Uncertainty with
Their Recent Issuance of Multiple and Conflicting Directions
A large proportion of wind energy projects on public (and private)
lands has been significantly delayed and thrown into regulatory
uncertainty due to communications and policies recently issued by the
BLM and the USFWS aimed at protecting eagles. Significantly, these
policies were created without industry or stakeholder input, and
seemingly without regard for the realities of renewable energy
development. \2\
---------------------------------------------------------------------------
\2\ This is despite the fact that the Federal Advisory Committee
(FAC) provided substantial input to the DOI on ways to balance
renewable energy development and protection for wildlife. The Federal
Advisory Committee (FAC) was created by the Department of Interior for
the specific purpose of advising the Secretary on wind energy
guidelines. The FAC included representatives from state wildlife
agencies, conservation organizations, the USFWS and the wind industry.
The FAC met regularly for more than two and a half years and produced a
set of recommendations that relied on peer-reviewed, sound science. The
FAC submitted these broadly agreed upon recommendations to Secretary
Salazar in March 2010.
---------------------------------------------------------------------------
On February 18, 2011, the USFWS announced the availability for
public comment of draft Eagle Conservation Plan Guidance (``Eagle
Guidance'').\3\,\4\ As described below, the Eagle Guidance creates
significant regulatory uncertainty for wind energy project developers.
---------------------------------------------------------------------------
\3\ 76 Fed. Reg. 9529 (Feb. 18, 2011). See also U.S. Fish and
Wildlife Service, ``Draft Eagle Conservation Plan Guidance'' (Jan.
2011), available at http://www.fws.gov/windenergy/docs/
ECP_draft_guidance_2_10_final_clean_omb.pdf
\4\ RES, the American Wind Energy Association (``AWEA'') and many
other interested parties filed detailed comments on the Eagle Guidance.
I encourage the members of this Committee to consider the detailed
comments filed by industry participants.
---------------------------------------------------------------------------
However, it is important to note that the Eagle Guidance is not the
only source of regulatory uncertainty--the USFWS has also issued draft
Land Based Wind Energy Guidelines and a White Paper on Avian and Bat
Protection Plans, and the BLM has issued an Instruction Memorandum (IM)
intended to provide direction to BLM Field Offices for complying with
the Bald and Golden Eagle Protection Act, including the implementing
regulations. These items are discussed in more detail in section 5
below.
Cumulatively, these actions by the USFWS and BLM have nearly
paralyzed what was already a lengthy and difficult process for
development on public lands. Moreover the detailed requirements within
the aforementioned regulations have substantially increased the
regulatory uncertainty of the permitting process.
a. Why the ``Eagle Guidance'' is Problematic
The Eagle Guidance introduces significant regulatory uncertainty
that RES believes will severely impair wind energy development on
public lands in the United States. The greatest source of uncertainty
is that the fact that the process for obtaining an eagle ``take''
permit is not yet known, and may not be determined for months if not
years.
Further compounding the uncertainty, the Eagle Guidance sets an
extremely low threshold for projects that will require an eagle
``take'' permit \5\. To this end, it is worth noting that the Eagle
Guidelines are more stringent that the Endangered Species Act, despite
the fact that neither bald nor golden eagles are currently considered
endangered.
---------------------------------------------------------------------------
\5\ In addition to very low thresholds for requiring a ``take''
permit, the draft Eagle Guidance defines ``take'' as including
``disturbance''--this is problematic, because a lot of things count as
``disturbance'', and if you ``take'' a golden eagle, it may trigger a
permit violation that causes the whole project to be shut down. Such an
onerous restriction makes it exceedingly difficult for the wind
industry to operate, much less continue to grow.
---------------------------------------------------------------------------
RES has no doubt that cumulatively, the new regulatory program--as
drafted--will:
(i) Provide little to no certainty that adherence to the
Eagle Guidance will enable projects to avoid regulatory
``surprises'' imposed by the USFWS later in the development and
operation of the facility;
(ii) Significantly, and unjustifiably, increase the time and
costs required to develop a wind energy facility, thereby
increasing development risk/uncertainty;
(iii) As a result of (i) and (ii) above, create significant
barriers to obtaining acceptable project financing.
For example, the Eagle Guidance:
Imposes a five-year permit term for eagle ``take''
permits, which is far too short to cover the 20-30 year life of
a typical wind energy project. As a result, an eagle take
permit for a project would need to be renewed multiple times
over the life of the project.
This is problematic because it creates regulatory and compliance
uncertainty that could make it impossible for projects to secure long-
term financing, given the risk that the project's permit might not be
renewed.
Permit renewal could also require environmental analyses under
NEPA, which would require the investment of substantial time and money
by both the USFWS and wind project operators. In fact, this could
trigger NEPA for wind projects on public and private land.
Provides that after a project is permitted, project
operators may be required to modify operations or introduce
additional mitigation measures with no certainty that any such
requirements will be reasonable, practical, economical or
technically feasible.
This is problematic because such modifications or mitigation may
abrogate existing contractual requirements, thereby putting a project
into default. As such, this has the potential to render project
financing infeasible.
Provides no ``grandfathering'' or phase-in period for
projects that are in the middle of the permitting process or
are already operational.
This is problematic because it may abrogate existing contractual
requirements and put projects into default.
Requires unjustifiably lengthy pre-construction
surveys in addition to lengthy NEPA and permitting processes,
and categorizes sites as risky before proper analysis has been
performed.
This is problematic because it causes delays, greatly increases
costs, and may drive away investors.
b. The Eagle Guidance is Unreasonably Onerous and Unfair to Wind
Importantly, the Eagle Guidance and the 2010 BLM IM appear to have
been issued without any regard for the magnitude of impact they would
have on the renewable energy industry. The negative effects of the new
regulatory program on renewable energy development are appreciably
disproportionate to any anticipated benefit on eagle populations.
As described in AWEA's filed comments on the Eagle Guidance, Tetra
Tech, Inc. (a prominent environmental and wildlife consulting company)
reviewed all known eagle mortality data sources and found that 1% or
less of all documented eagle fatalities caused by human activity are
attributable to modern wind energy facilities.\6\
---------------------------------------------------------------------------
\6\ This analysis excludes data from a few specific projects (such
as those in the Altamont region) that utilize obsolete equipment, were
constructed many years ago, and where unusual conditions exist.
---------------------------------------------------------------------------
For example, Tetra Tech, Inc. found that the leading human causes
of eagle mortality are:
electrocutions on power lines (with a significant
portion of those occurring at distribution lines)--50%
direct and indirect poisoning--13%
shooting and trapping--7%
vehicle strikes--6%
Disproportionate Burden on Wind Industry
Despite the fact that wind energy accounts for 1% or less of human-
caused eagle fatalities, the USFWS has proposed eagle-related project
criteria, permitting procedures, and mitigation measures that are
specific to the wind energy industry while failing to propose similar
regulatory measures for other industries and practices resulting in
significantly greater eagle take. Simply put, regulations comparable to
the Eagle Guidelines have not been proposed for other industries or
sources of eagle mortality.
This approach demonstrates a lack of perspective and
proportionality, and it is also inconsistent with the stated renewable
energy objectives of the Administration. Moreover, it ignores the fact
that increased deployment of renewable energy resources can help lessen
our impact on climate change, which the USFWS itself has called one of
the greatest threats to our nation's environment and wildlife.\7\
---------------------------------------------------------------------------
\7\ USFWS Strategic Plan for Responding to Accelerating Climate
Change, September, 2010.
---------------------------------------------------------------------------
4. Proposed Solutions to the Eagle Guidance Problem
RES suggests the following steps to address the significant
roadblock to renewable energy development on public lands created by
the Eagle Guidance:
Request that the DOI suspend the Eagle Guidance and
the associated regulatory program that began in 2009. RES
suggests that the USFWS open a new formal rulemaking that is
open to the public. New regulations would be developed in
cooperation with the wind and solar industries to sensibly
address permitting under the Bald and Golden Eagle Protection
Act.
Direct USFWS to work with industry to develop a
permit program that imposes regulatory requirements that are
proportional to the impact of the wind energy industry on eagle
populations. Such a program must include certain core elements
necessary for successful project development, including:
(1) Timely, clear and efficient processes for
obtaining a permit;
(2) Permits for the life of a facility;
(3) ``No surprises'' assurances for the life of the
project;
(4) Phase-in periods for projects currently under
development; and
(5) ``Grandfathering'' for operating facilities.
As explained above in 3.a., many of these permit provisions are
found in other regulatory regimes like the Endangered Species Act,
which is considered the ``gold standard'' for regulation of impacts on
protected species.
Beginning immediately and continuing throughout the
period while new industry-specific eagle regulations are being
developed, provide the renewable energy industry with written
assurances that adherence to the Federal Advisory Committee
(FAC) Recommendations is sufficient for compliance with the
Bald and Golden Eagle Protection Act.
Use of the FAC Recommendations as a ``bridge'' would provide an
urgently needed solution by removing the current significant regulatory
uncertainty and permitting delays that have impacted the development,
financing and construction of wind energy projects on public lands. The
FAC Recommendations would also seem to be a strong foundation upon
which to develop a new eagle regulatory program.
5. The Eagle Guidance isn't the Only Problem
The Eagle Guidance illustrates a major impediment to renewable
energy development on public lands, but it is just one of several
recent regulations promulgated by BLM and USFWS that contribute to the
existing level of regulatory uncertainty.
July 9, 2010--BLM's Instruction Memorandum 2010-156 and August 3,
2010--USFWS' White Paper on Avian Protection Plans (APPs)
The new approach to eagle regulation began when the BLM issued
Instructional Memorandum 2010-156 on July 9, 2010 (the ``2010 BLM
IM''). The purpose of the 2010 BLM IM was to provide direction to BLM
Field Offices for complying with the Bald and Golden Eagle Protection
Act, including the implementing regulations, for projects on public
lands.
The 2010 BLM IM primarily addressed golden eagles and requires
USFWS approval of wind and solar projects prior to BLM issuing a Record
of Decision. Specifically, the IM declared that if a proposed project
has the potential to impact golden eagles or their habitat, an APP is
required as a condition of the right-of-way grant.
The introduction of this policy created significant uncertainty for
renewable energy on public and private lands, including two RES
projects as further documented below. Projects which were on track to
begin construction in 2010 or 2011 were delayed, thereby rendering them
unable to take advantage of grant funds available under American
Reinvestment and Recovery Act (ARRA). Moreover, some USFWS field staff
began to impose the new requirements on projects on private land.
On August 3, 2010, the Service issued a white paper on the
development Avian Protection Plans for renewable energy facilities.\8\
The white paper attempts to provide considerations for APPs as required
by the BLM's July 9, 2010 Instruction Memorandum while the national APP
guidance and template are under development.
---------------------------------------------------------------------------
\8\ See Memorandum from Director, Fish and Wildlife Service, to
Service Directorate, regarding ``Service White Paper Providing Guidance
for the Development of Project-Specific Avian and Bat Protection Plans
for Renewable Energy Facilities'' (Aug. 3, 2010).
---------------------------------------------------------------------------
As wind developers began to work with USFWS and BLM staff to work
towards mutually acceptable APPs, the USFWS issued the 2011 Eagle
Guidance, which further changed the regulatory environment.
February 18, 2011--USFWS' Land Based Guidelines
Simultaneously with the USFWS' issuance of the Eagle Guidance,
USFWS announced the availability for public comment of another layer of
regulatory requirements in the form of draft Land-Based Wind Energy
Guidelines (``Land-Based Guidelines'').\9\ The Land-Based Guidelines
were intended to provide developers and agency staff with guidelines
for selecting sites to avoid and minimize negative effects to fish,
wildlife, and their habitats resulting from construction, operation,
and maintenance of land-based, wind energy facilities.
---------------------------------------------------------------------------
\9\ As with the Eagle Guidance, RES, AWEA, and many other
interested parties filed detailed comments on the Land-Based
Guidelines. I encourage the members of this Committee to consider the
detailed comments filed by industry participants.
---------------------------------------------------------------------------
The NEPA Process
On public lands, the ``gating issue'' for the development of
renewable energy is completion of the National Environmental Policy Act
(``NEPA'') process and obtaining appropriate federal rights-of-way.
While the NEPA process is not new, many BLM field offices have been
ill-prepared to manage the multitude of renewable energy right-of-way
applications submitted over the past ten years. NEPA regulations
prohibit project proponents from preparing their own environmental
analysis and project proponents are invariably subject to the cost of
paying for their internal staff, BLM staff time, and BLM's third-party
consultants.
These challenges combine to create an unbalanced risk-benefit
profile to those involved in renewable energy development on public
lands, relative to projects on private land. The Eagle Guidance--as
proposed--will only exacerbate these BLM resource issues by creating a
``federal nexus'' for all wind projects, regardless of whether they are
sited on public or private lands. Dedication of greater resources to
BLM state, district and field offices is sorely needed to address these
issues.
6. Additional Comments on ``Fast-Track'' Projects
RES supports the renewable energy goals annunciated in the Energy
Policy Act of 2005 and by Secretary Salazar. In particular, the 2009
Department of Interior Renewable Energy Fast-Track project list was a
well-founded effort by the BLM to foster the economic development goals
associated with ARRA through renewable energy development.
As BLM Director Bob Abbey testified on May 13th, the DOI Fast-Track
process completed permitting of nine solar projects, but only one wind
project in the 2010 calendar year. While we commend the DOI and BLM for
their efforts, there is substantial opportunity for improvement
particularly with regard to wind energy development.
In RES' experience, the roadblocks described in this testimony have
played a significant role in the failure of fast-tracked (and other)
wind projects to successfully complete the permitting process. RES
therefore submits that in order to reduce the roadblocks to renewable
energy development on public lands, there must be a strong federal
commitment to completing renewable energy projects on public lands.
Such a commitment would involve not only ensuring a streamlined
permitting process, but providing regulatory consistency and certainty
that is necessary for all phases of renewable energy development,
including project financing. Just as renewable energy developers
partner with local governments, land owners and other stakeholders
during the entire life of a project on private lands, renewable energy
development on public lands needs cooperation and coordination with
applicable federal agencies that will be sustained for the life of the
project.
This would include directives to all applicable federal agencies
prioritizing renewable energy development and imposing appropriate
perspective and proportionality on conflicting regulatory programs.
Further, the industry would benefit from federal leadership in
identifying and prioritizing lands for wind and solar energy generation
and transmission corridors.
RES suggests the active engagement of top leadership within the
DOI, BLM, and USFWS to seek efficient and effective approaches to
permitting that will allow projects to be developed, permitted,
financed, constructed and placed into operation on public lands.
7. Case Studies: RES Americas' Projects
The roadblocks I have described are not theoretical. RES is
developing projects on public and private lands that are grappling with
inconsistent permitting pathways and the lack of compliance certainty.
Granite Mountain Wind Project (CA)
A case in point is our 60 megawatt Granite Mountain Project located
on BLM lands in San Bernardino County, California, which has been
significantly impeded by these roadblocks. Granite Mountain was put on
the DOI 2009 Fast-Track project list, and RES was encouraged to hasten
development of the project so that it could qualify for ARRA/Treasury
Grant funding.
RES has been developing the Granite Mountain project for more than
8 years and has spent more than $6.1M in developing the project.\10\
The original right-of-way for wind testing and monitoring was executed
by RES in July 2003. RES filed a right of way application for wind
development with the BLM in December 2006. The NEPA process was started
in earnest in 2007.
---------------------------------------------------------------------------
\10\ In stark contrast to the 8 years (and counting) needed to
develop the Granite Mountain Wind Farm on public lands, consider that
RES is about to complete construction of a 227 MW project on private
land in Oklahoma that started the permitting and development process in
late 2008. That said, developing projects on private land is in no
sense ``easy'', and involves complex permitting and the involvement of
multiple governmental entities and stakeholder groups.
---------------------------------------------------------------------------
It is important to note that this project has many of the key
ingredients of a successful development, including an executed power
purchase agreement, an executed interconnection agreement, and a
completed Draft Environmental Impact Statement. The sole missing
development asset required to finance the project RES was a Record of
Decision from BLM. . .which was scheduled to be received by December
2010.
However, in late summer 2010, we were notified by the USFWS of a
concern regarding potential golden eagle issues. The notification came
as a direct result of BLM's July 9, 2010 Instructional Memorandum.
Given the new USFWS eagle regulatory program and BLM policies, this
left RES in a state of regulatory and permitting uncertainty as to how
to advance the project, comply with the new eagle regulations, and BLM
policy.
As a result, this project did not qualify for the Treasury Grant
and is clearly a missed opportunity for RES and for economic stimulus
and job creation.
While RES is working with USFWS and BLM to conduct additional eagle
surveys intended to support an ABPP and the project's Final EIS, the
construction of the project has been set back by a minimum of twelve
months and development costs have increased on the order of hundreds of
thousands of dollars. The February 2011 Eagle Guidance casts further
uncertainty on the project and will likely result in further delays and
additional costs.
Rock Creek Wind Project (OR)
The USFWS' new eagle program has impacted project development
beyond just public lands. Throughout the spring of 2010, RES negotiated
the sale of a 400 MW wind energy project with a regulated utility in
the Pacific Northwest. The project is/was sited entirely on private
lands and is adjacent to multiple operating wind projects. The
investor-owned utility had requested regulatory hearings and petitioned
its regulatory authorities to review the transaction.
Shortly after issuance of the BLM's July 2010 Instruction
Memorandum, local USFWS field offices began to provide feedback to
developers regarding their projects on public as well as private lands.
This feedback included the need for additional eagle surveys as well as
the prospect that proposed projects--if constructed--would be at risk
under the Bald and Golden Eagle Protection Act.
Given the concerns raised by USFWS as well as the uncertainty
regarding the outcome of the USFWS dialogue, the utility withdrew its
petition to acquire the project and negotiations of the transaction
were cancelled. RES continues to develop the Rock Creek site, albeit at
significantly greater risk and expense.
Both the Granite Mountain project and the Rock Creek project
demonstrate that these roadblocks to development have a profound and
demonstrable impact on renewable energy development on both public and
private lands. It is critical that the underlying causes of these
roadblocks be addressed as quickly and as efficiently as possible so as
not to result in further missed opportunities for renewable energy
development in the United States.
Conclusion
RES has been and continues to be a strong advocate for responsible
development of renewable energy projects on public and private lands.
Renewable energy development, construction and operation is our focus,
and our corporate ethos is grounded in sustainability and environmental
responsibility. We have enjoyed a cooperative relationship with the
federal agencies that administer public lands and look forward to
improving that relationship in the future.
We appreciate the tireless efforts of the BLM and USFWS field
office staff and appreciate their efforts to process the multitude of
applications for right-of-way grants for renewable energy projects on
federal land as well to comply with regulations promulgated from
Washington, DC.
But there are currently significant roadblocks to renewable energy
development on public lands that should be rectified before further
delay and uncertainty impedes the industry. In RES' experience, the
three biggest roadblocks to development of renewable energy projects on
public lands are that:
(i) There is no ``clear path'' for permitting development on
public lands;
(ii) Issues and concerns in the permitting process lack
perspective and proportionality; and
(iii) Completion of development requires dedicated BLM
resources and direction that is currently lacking.
Collectively, these three problems can be summarized as
``regulatory uncertainty'', which as explained above, is anathema to
project developers and investors. The cumulative impact of this
regulatory uncertainty on the wind industry is severe. In the case of
the Eagle Guidance and the Land Based Guidelines, AWEA estimates that
these USFWS policies jeopardize:
More than 34,000 megawatts of wind power projects;
More than 27,500 jobs;
$103 million in potential landowner revenue per
annum; and
$68 billion in investment.
On behalf of RES, I would like to thank Chairman Hastings, Ranking
Member Markey and members of the Committee for the opportunity to
testify in the Committee on Natural Resources Oversight Hearing on
``American Energy Initiative: Identifying Roadblocks to Wind and Solar
Energy on Public Lands and Waters, Part II--The Wind and Solar Industry
Perspective''.
Appendix I: Comparison of the Percentage of Renewable Energy Generation
Located on Public and Private Lands
RES is currently pursuing rights-of-way for the development of
renewable energy projects on public lands, but such projects are a
small portion of our entire development portfolio. In fact, other than
a re-powering project over a decade ago, RES has never completed the
development and construction of a renewable energy project on public
lands. Only 9% of RES' current development portfolio is on public
lands. I submit that RES' experience is not unique.
As the tables below demonstrate, only 1.4% of all installed wind
capacity and 2.1% of all wind capacity under construction in the United
States from any renewable energy developer is on public lands. These
numbers dramatically illustrate that public lands is clearly a less
attractive option for renewable energy developers.
[GRAPHIC] [TIFF OMITTED] T6728.001
National Figures for all developers \11\
---------------------------------------------------------------------------
\11\ Source: AWEA's 2010 U.S. Wind Industry Market Report.
[GRAPHIC] [TIFF OMITTED] T6728.002
[GRAPHIC] [TIFF OMITTED] T6728.003
[GRAPHIC] [TIFF OMITTED] T6728.004
__
The Chairman. I now recognize Mr. Gordon for your
testimony. You are recognized for 5 minutes.
STATEMENT OF JAMES S. GORDON, PRESIDENT,
CAPE WIND ASSOCIATES, LLC
Mr. Gordon. Thank you, Chairman Hastings and Congressman
Markey. My name is Jim Gordon. I am President of Cape Wind
Associates and Energy Management, Inc., which is the developer
of Cape Wind. I understand how a diversified energy portfolio
can increase our Nation's energy security and independence,
create new jobs, and improve our environment, because for the
last 35 years, our company has successfully developed a number
of energy projects that have contributed to those important
objectives.
Eleven years ago, our company embarked on developing
America's first offshore wind farm. Coming from the New England
area, it was always a truism that New England has no indigenous
energy resources; we have no coal, oil or natural gas. But I am
here today to tell you that we have an abundant offshore wind
resource right off our coast that we can harness to create new
jobs, increase energy independence and create a healthier
environment.
Over the last 11 years, our company worked with 17 Federal
and State agencies to permit the Cape Wind project. We are
proud of the fact that we helped to evolve the regulatory
framework for offshore wind in the United States. And just a
month ago, Secretary Salazar at the Charlestown Navy Yard,
against the backdrop of the USS Constitution, announced that
Cape Wind was fully permitted and gave the green light for
construction. That was a very proud moment for our company. We
have invested over $50 million to develop this project to date,
and every penny of that money has come from the senior managers
of our company.
Unfortunately, because of the ability of a small group of
project opponents that file suit after suit in either
regulatory forums or judicial forums, the project has been
delayed. We have won 15 of those decisions. Every single
regulatory or judicial system we have won. We were working very
closely with the Department of Energy, and for over a year we
have been working to try to obtain a loan guarantee. And a
government help through the Department of Energy loan guarantee
is going to be critically important for commercializing the
first of a kind of this innovative project.
I can tell you that these incentives are very important
because currently our company is building two of the largest
biomass projects in the United States. Each one of those
companies has over 400 construction workers on the site,
working over a 33-month period, and will create over 500
permanent jobs in the forestry industry. Those projects relied
on the crucial investment tax credit and 30 percent cash grant
that was rolled out through the Obama Administration.
Right now I would ask your panel to consider a couple of
important policy recommendations to help expedite the
development of renewable energy, which all of us in this room
and on this panel would like. Number one, there needs to be a
statutory timeframe for permitting these projects. It can't be
endless and open-ended where sophisticated parties can
manipulate and abuse the process.
Number two, it is critically important that we have a
consolidated and expedited judicial process.
And number three, the incentives that are being developed
to incentivize renewable energy projects need to be consistent
and coincide with the development cycles and the construction
period cycles of these projects. For instance, in 2012, the
wind incentives end, but the first offshore wind project was
only permitted, finally permitted, about a month ago.
With these programs in place, I think we will be able to
increase the penetration of renewable energy in this country.
Thank you.
The Chairman. Thank you very much, Mr. Gordon.
[The prepared statement of Mr. Gordon follows:]
Statement of James S. Gordon, President, Cape Wind Associates, LLC
Introduction
I appreciate this opportunity to address the Committee. My name is
James S. Gordon, President of Cape Wind Associates, LLC (``Cape
Wind''). For the last eleven years, Cape Wind has been developing the
Nation's first offshore wind generation project. The project's nearest
point of land will be approximately 5 miles off the coast of
Massachusetts. Most of the turbines will be 6--10 miles from the
nearest shore. It would generate 468 MW of clean and renewable energy,
with no fuel requirements and no air emissions. This amount would
represent approximately 75% of the annual electricity needs of Cape Cod
and the Islands of Martha's Vineyard and Nantucket. The Cape Wind
project would be located on a shoal that is outside of the shipping
lanes and would impose no restrictions on current uses of the area.
Cape Wind enjoys strong support of environmental, consumer advocacy and
labor groups and the overwhelming majority of Massachusetts voters, and
has a grass-roots support organization with over 4,000 members.
However, it has drawn the opposition of a few wealthy landowners who
will be able to see it in the distance.
The principals of our company have been in the energy business for
more than thirty years. We have developed and operated some of the most
efficient gas-fired plants operating in the United States and we are
intimately familiar with federal and state licensing processes for
electric power plants. In direct response to mandates of the New
England States for renewable energy, we are now focusing upon offshore
wind energy development, which is uniquely well-situated to serve the
population centers of the East coast. Offshore wind energy technology
has now advanced to the point where it is both proven and reliable and
can play a much more meaningful role in our National supply mix. A
study commissioned by the Department of Energy entitled ``A National
Offshore Wind Strategy'' estimates that America's offshore wind could
generate 4,150 GW, approximately four times the current generating
capacity of the Nation. However, if we are to realize the potential of
offshore wind energy, we need to ensure that our National energy and
environmental policies are implemented in a consistent and timely
manner. We know that this technology works. Although Cape Wind will be
the first offshore wind farm proposed in the United States, many
projects are operating successfully in Europe, and the Chinese, after
starting much later than us, have already now deployed their first
offshore project.
1. Federal Regulatory Process
The Federal and state regulatory process for offshore renewable
energy is thorough and comprehensive, but often not coordinated. One
fundamental defect is that it lacks any legal requirements that would
limit the duration of the review period. As a result, with no required
end point, opponents can use regulatory stalling and delay tactics to
try to financially cripple even a project that meets all statutory
standards and serves Federal and State policy objectives.
Cape Wind submitted its Federal permit application to the U.S. Army
Corps of Engineers (``USACE'') in November of 2001, pursuant to section
10 of the Rivers and Harbors Act, which governs the placement of
structures in Federal waters. The Corps considered the project for
several years and issued a Draft EIS in November, 2004. However,
pursuant to the Energy Policy Act of 2005, The Department of the
Interior, (MMS now BOEMRE) became the lead federal agency and
essentially the process had to begin anew. BOEMRE conducted its own
multi-year extensive review processes and issued a highly positive
Environmental Impact Statement in January of 2009. The Record of
Decision was not issued by DOI for another 15 months, in April 2010.
Secretary Salazar then issued the first lease for OCS renewable energy
to Cape Wind in October of 2010 and BOEMRE approved our Construction
and Operation Plan (the ``COP'') in April 2011. The project thus has
been undergoing extensive regulatory and public scrutiny for 10 years,
and has now received all major permits and approvals.
The review of Cape Wind's application was a process that has
included the active participation of 17 Federal and State participating
agencies and afforded exceptional opportunities for public involvement.
During this process, an exhaustive analysis of all potential impacts of
the project was conducted, including studies of issues including
potential impacts upon existing uses, environmental issues, including
potential impacts to fish, birds threatened species and marine mammals,
protection of Native American rights, project aesthetics, cost
implications and the energy needs of the public. State Regulatory
Process
In addition, there have been extensive state regulatory
proceedings. In September of 2002, Cape Wind petitioned the
Massachusetts Energy Facilities Siting Board (``MEFSB'') for
authorization of its facilities located within Massachusetts. After an
exhaustive review, including 20 days of expert testimony, on May 10,
2005, the MEFSB approved Cape Wind's petition based upon its findings
that Cape Wind's energy is needed (i) to reliably meet the growing need
for power in the region; (ii) to stabilize prices to electric rate
payers; and (iii) to offset air emissions from fossil generators.
Moreover, in 2009 the MEFSB issued a Certificate of Environmental
Impact and Public Interest to Cape Wind and such grant has been upheld
on appeal by the Massachusetts Supreme Judicial Court. Most recently,
in November of 2010, the Massachusetts Department of Public Utilities
approved Cape Wind's long-term power sales agreement with National
Grid, finding that ``it is abundantly clear that the Cape Wind facility
offers significant benefits that are not currently available from any
other renewable resource'' and that the ``benefits outweigh the costs
of the project.'' D.P.U. 10-54.
2. Judicial Appeals.
Along the way, opponents sought to appeal regulatory decisions to
the federal or state courts more than ten times, and Cape Wind has won
every case to date. Notwithstanding this extensive review and analysis
and the appeals we have already won, the project now faces multiple
appeals of its federal approvals brought by the same small, but well-
funded, special interest group that has sought to delay the review
process at every turn. In light of the past and continuing delays that
we have experienced, we offer the following three policy suggestions
for your consideration.
3. Policy Recommendations
A. Limit Time Periods of Agency Review.
First, national policy objectives would be far better served if the
environmental review of proposed renewable energy facilities were
conducted in a more timely manner, perhaps pursuant to specific
statutory timeframes that prevent delay tactics from financially
crippling important and worthy projects. We recognize and applaud the
progress that has been made by BOEMRE (including its ``Smart from the
state'' initiative), but firm deadlines applicable to all federal
agencies would provide certainty to the review schedule. We reference
for example the energy facility siting acts that have been enacted by
many of the New England states, which provide that that a thorough
environmental review of proposed energy facilities is to be conducted
within a statutorily limited time frame, which is limited to 12 months
by Massachusetts law.
B. Consolidate and Expedite Judicial Review.
Second, renewable energy projects often require multiple federal
approvals, each of which is subject to judicial review, processes which
can consume additional years and substantial funds. Renewable energy
projects that require federal approvals would be expedited
significantly if all such reviews were consolidated in a single
appellate proceeding in which the court is encouraged to expedite its
decision.
There is ample precedent for such a provision in recent energy
legislation. The Alaska Natural Gas Pipeline Act of 2003 at section
720e provides for expedited consideration and exclusive review in the
D.C. Circuit of any order or action of any federal agency or any
challenge under NEPA related to the authorities in the Act. Similarly,
the Energy Policy Act of 2005, section 313, provides for development of
a single consolidated record and for exclusive jurisdiction and
expedited consideration by the D.C. Circuit Court of Appeals to review
any Federal agency or state agency actions pursuant to Federal law
relating to construction of certain natural gas facilities.
If Congress is serious about encouraging the development of
renewable energy resources, streamlining the judicial review process
would be a most effective mechanism for getting such facilities on
line, and would do so without modifying any substantive rights of
review by any aggrieved party.
C. Coordinate Duration of Investment Incentives with Permit Review
Timelines.
Third, Congress should address the fact that federal investment
incentives for long lead time renewable energy projects (such as
offshore wind, geothermal and biomass projects) are typically put in
place for time periods far shorter than the time required for
permitting, environmental review and construction. For example, current
provisions for the Investment tax Credit (``ITC''), the Production Tax
Credit (``PTC'') and the Section 1705 Federal loan guarantee program
are set to expire in 2012 and 2011, respectively. These time frames are
just too short to develop and construct an offshore wind, geothermal or
biomass project.
The result is an untenable situation where investors in proposed
projects must proceed without knowing whether crucial incentives will
still be in effect when such projects are placed in service. These
incentive durations may be workable for projects that take only one or
two years to develop, but they are not workable for types of projects
that take much longer (which, by their nature, provide greater economic
stimulus and longer-term employment). To be effective, tax and other
incentives for long lead time projects must be in place for at least 5
years. We thus suggest a long-term extension for offshore wind and
other long-lead renewable projects, for both the ITC (to at least 2016)
and the DOE loan guarantee program, in order to provide a more certain
and dependable signal to the investment community.
With these changes, I am certain that America can catch and pass
the current world leaders in offshore wind development, with massive
reductions in oil imports and emissions.
Thank you for your consideration.
______
[The response to questions submitted for the record by Mr.
Gordon follows:]
[GRAPHIC] [TIFF OMITTED] T6728.013
[GRAPHIC] [TIFF OMITTED] T6728.014
The Chairman. Next, Mr. Jim Lanard, President of the
Offshore Wind Development Coalition.
STATEMENT OF JIM LANARD, PRESIDENT,
OFFSHORE WIND DEVELOPMENT COALITION
Mr. Lanard. Thank you, Mr. Chairman, Ranking Member Markey.
My name is Jim Lanard, and I am President of the Offshore Wind
Development Coalition. We represent offshore wind developers
and the entire supply chain that will be involved in creating
jobs and manufacturing opportunities here in the United States
in the offshore wind industry.
The technology for offshore wind is not new. In fact,
offshore wind has been operating successfully in Europe since
1991. And the European Wind Energy Association projects that by
the year 2030, there will be 215,000 people working in the
offshore wind industry, more than those workers that are
working on the land-based side in Europe.
Now China is in the mix. They are operating 102 megawatts
of offshore wind energy right now, with more than 2,300
megawatts under construction.
To put it very bluntly, the United States is losing the
intellectual property race for creating a new industry for the
offshore wind industry here in the United States. And I will
give you just one very blatant example of that. We have a U.S.-
owned company based in Seattle, Washington, that is developing
plans for a floating turbine, offshore turbine, foundation.
They had no place to go in the United States for funding to
prepare this demonstration project, but the country of Portugal
offered them their shipyard and their financial support, and
right now they are building a floating foundation in Portugal
shipyard and will be beta testing that off the Portuguese coast
this summer. The United States is losing the intellectual
property rights. We need to catch up.
Now, other than Cape Wind, the offshore wind industry
started really in 2005 when President Bush passed after you
guys enacted the Energy Policy Act of 2005. That was a very
important piece of legislation that gave the Department of the
Interior the jurisdiction to oversee the Outer Continental
Shelf for renewable energy. The Obama Administration is really
picking up the pace, devoting very significant resources and
making great progress with offshore wind.
We look at this industry as a job creator and manufacturing
sector, and that is how we approach all of our policy and
advocacy perspective. We will need accelerated domestic
production of offshore wind equipment if this industry is to
succeed. And the reason for that is the high cost of installing
offshore wind must be offset by the benefits that our
developers can bring by attracting manufacturing to the United
States.
If I may, I would like to just quote Governor Christie from
New Jersey just last Thursday when he said, quote, We are going
to make New Jersey number one in offshore wind production. Last
year I signed the Offshore Wind Economic Development Act to
provide financial assistance and tax credits to businesses that
construct, manufacture, and assemble facilities that support
offshore wind projects. And we have accelerated the development
of offshore wind projects by working closely with the U.S.
Department of the Interior and the Bureau of Ocean Energy
Management Regulation and Enforcement to speed the
implementation of 1,100 megawatts of power.
There are three policy issues primarily that we would like
to address before the Committee for your consideration and for
Congress'. On the Federal legislative front, as Jim said from
Cape Wind, we need the investment tax credit. It is probably
the most fundamental tax incentive that can support this
industry. We think it is fair because it helps to level the
playing field with all of the benefits that the Ranking Member
talked about in his opening statement that the fossil fuel
industries are enjoying and have been enjoying for over a
century.
We need to extend the placed-in-service date for offshore
wind, and all of this is because of long lead times that it
takes to permit and develop these projects. We would like to be
treated similar to solar, to our colleagues in solar, where
they have an ITC that runs to 2016, and we hope that the
Congress will consider such an extension.
We also very strongly support loan guarantee extensions. We
are disappointed that the DOE was forced to defund some of the
loan guarantee programs for offshore wind developers. It is
essential to create jobs. And we also support a credit subsidy
for those loans.
We congratulate the Department of the Interior for its
Smart from the Start programs. It has reduced the permitting
timeline by 2 years, but still at 5 to 7 years it is too long.
Even Director Bromwich at your testimony at the hearing on May
13th commented that he is still working to reduce that
timeline.
We also need to overcome market barriers. We need a market
for our product, and the Federal Government can help looking at
Federal procurement by the Department of Defense, by the
Department of Energy, and we are having those conversations
with those Departments. We would love for you to help us with
that.
And on the State level--of course, we also support research
and development initiatives. On the State level, we want the
States to continue to collaborate and coordinate with the
Federal Government. Market creation is essential. New Jersey
has done this by creating a revenue stream for up to 1,100
megawatts of power if the benefits will exceed the costs.
And we also need to incentivize manufacturers. When we do
this, we will have the energy security and the energy
independence and the national security that this Congress and
this Nation needs as we progress.
Thank you very much.
The Chairman. Thank you very much for your testimony.
[The prepared statement of Mr. Lanard follows:]
Statement of Jim Lanard, President, Offshore Wind Development Coalition
Introduction
Mr. Chairman and Members of the Committee,
Thank you for the opportunity to present testimony to you today on
the topic: ``American Energy Initiative: Identifying Roadblocks to Wind
and Solar Energy on Public Lands and Waters, Part II--The Wind and
Solar Industry Perspective''. My name is Jim Lanard, President of the
Offshore Wind Development Coalition. The Offshore Wind Development
Coalition represents offshore wind developers, service providers to the
industry including turbine manufacturers, cable manufacturers,
submarine cable installers, other supply chain businesses, offshore
submarine transmission providers, environmental consulting firms, and
law firms. Our founders include seven offshore wind developers and the
American Wind Energy Association (AWEA) has a seat on our Board of
Directors.
Technology to generate electricity from offshore wind farms is not
new and has a proven track record. In fact, the first modern day
offshore wind farm became operational in 1991 off the coast of Denmark.
There are now more than 40 offshore wind farms operating in European
waters for a total of 2,396 MWs of power generation. There are sixteen
more projects under construction, for an additional 3,972 MWs of
installed capacity.
And let's not forget China, which is currently the world's largest
generator of wind energy and is quickly becoming a world leader in
offshore wind, too. China has clearly demonstrated that it values wind
energy. For the year 2010, 46% of the world's newly installed wind
energy capacity was in China, while the US accounted for 14.3% of the
world's new wind energy facilities. Regarding offshore wind, China now
has 102 MWs of offshore wind operating and 2.300 MWs of offshore wind
is under construction. China's wind energy programs are supporting that
country's efforts to achieve energy security, economic development and
emission reductions.
Yet in the United States, no offshore wind farms have been built.
But this will soon change. Change, in fact, began here in the US in
2005, when Congress passed and President George W. Bush signed into law
the Energy Policy Act of 2005 (EPAct 2005). EPAct 2005 gave the
Secretary of the US Department of the Interior leasing and permitting
jurisdiction for renewable energy projects proposed for the Outer
Continental Shelf (OCS).
Background
While the efficacy of offshore wind energy technology has been
demonstrated in Europe, this technology and regulation of it is new to
the United States. Federal and state regulators have had to draft
regulations and learn about all aspects of developing, constructing,
operating and decommissioning offshore wind farms. And they have had to
consider more than 20 federal laws and Executive Orders that apply to
offshore wind farms. This has been a steep learning curve for all
parties, admirably begun under the prior administration and continuing
at an even faster pace now. It is hard to imagine that anyone
associated with offshore wind doubts the commitment and efforts that
federal and state officials are continuing to make to establish this
industry and its potential to employ tens of thousands of people in
good paying jobs. We applaud President Obama, US DOI Secretary Ken
Salazar, US DOE Secretary Steven Chu, and their staffs for their
leadership on the continuing development of the offshore wind industry.
Momentum in the development of offshore wind is evidenced by the
surge of interest demonstrated by developers. What began with Cape
Wind's leading role a decade ago, when it first proposed an offshore
wind farm for Massachusetts, has now turned into a very robust offshore
wind industry. For example, state initiatives in Delaware, New Jersey
and Rhode Island provided offshore wind developers opportunities to
propose projects in the Atlantic Ocean. In 2006, Delaware held a
competitive process to select a generation source to be located in-
state. One offshore wind developer competed against two other power
sources--one a gas-fired power plant and one a coal gasification plant.
The offshore wind developer won that competition. Then, in 2007 and
2008, two states, New Jersey and Rhode Island, held competitions just
for offshore wind developers. Five offshore wind developers bid in the
New Jersey competition and then seven competed in Rhode Island.
And, with the advent of the federal government's OCS leasing
program, we have seen even more interest in developing offshore wind.
In 2010, eight offshore wind developers bid to lease land on the OCS
off the coast of Maryland. Earlier this year, ten offshore wind
developers bid in the leasing process for federal waters off of
Massachusetts and, just next month in June 2011, it is expected that 20
or more offshore wind developers will respond to the federal
government's Call for Nominations on the OCS off of New Jersey's coast.
This rapidly increasing level of interest is a significant signal
that the offshore wind industry and the great benefits it can offer to
our country is about to become a reality. Offshore wind provides clean,
renewable energy that will support US efforts to reduce reliance on
foreign energy sources and increase our country's quest for energy
independence. In a sentence: Offshore wind can--and will--play a
significant role to help the United States meet our national and energy
security goals.
Job Creation and Manufacturing
Moreover, offshore wind has the potential to become one of our
nation's newest manufacturing sectors and could employ tens of
thousands of workers in good paying, clean tech jobs. In Europe, the
European Wind Energy Association projects that ``by 2030, more than
375,000 people should be employed directly in the sector--160,000
onshore and 215,000 offshore.'' (Emphasis added.) And President Obama,
in an Earth Day speech on April 22, 2009 said,
``It's estimated that if we fully pursue our potential for wind
energy on land and offshore, wind can generate as much as 20% of our
electricity by 2030 and create a quarter-million jobs in the process--
250,000 jobs in the process, jobs that pay well and provide good
benefits. It's a win-win: It's good for the environment; it's great for
the economy.''
Some commentators have compared the jobs and manufacturing history
of the development of the land-based wind industry with what we can
expect from the offshore sector. We think US-based jobs and
manufacturing for offshore wind farms will develop quicker than what
has occurred in the land-based wind industry.
As background, it should be noted that domestic content of turbine-
related materials for land-based wind farms, in their early years, was
low. Prior to 2005, less than 25% of land-based turbines (based on
cost) were manufactured in the U.S. Five years later that percentage
has doubled so that in 2010, domestic content of U.S.-deployed turbines
has reached 50%. According to the AWEA, more than 75,000 people work in
the land-based wind industry and there are over 400 wind-related
manufacturing plants in 43 states that support the manufacture of the
8,000 components of a typical wind turbine.
Offshore wind developers and state economic development officials
expect--and the latter likely will demand--higher domestic content much
earlier in the development cycle for the offshore wind industry. One
driving force for domestic content of offshore wind equipment is that
the cost of installing offshore wind farms is considerably higher than
for land-based wind farms. Hence, there are sound public policy
arguments for the case that offshore wind developers and their state
counterparts should be able to demonstrate economic benefits--job
creation and establishment of manufacturing centers--early in the
development stage of this new industry. These economic benefits can
thus offset the higher costs for installation of offshore wind farms.
And those benefits must be enjoyed by residents in states where
offshore wind power is being sold.
The question we are often asked is whether offshore wind can
achieve the economies of scale necessary to support state and federal
policies that promote the establishment of this multi-billion dollar
industry. The answer is yes, economies of scale can be achieved for
offshore wind farms. First, the use of larger turbines will result in a
reduction of the number of foundations that need to be installed in the
ocean while at the same time increasing per unit energy output. Second,
developers have begun to propose larger wind farms; i.e., more turbines
per wind farm. Several offshore wind developers planning to compete for
the right to sell power in New Jersey have reported that they plan to
propose wind farms scaled at 1,100 MWs each--and that 5- and 6-MW
turbines are being considered. These wind farms are likely to cost more
than three billion dollars ($3,000,000,000) each, which represents
significant manufacturing and job creation potential for New Jersey and
other states that embrace this new-to-the-US economic engine.
Offshore wind is a bipartisan issue. In addition to the Energy
Policy Act of 2005 that President Bush signed, New Jersey Governor
Chris Christie is a leader at the state level. Just this last Thursday,
May 26, Governor Christie said:
We're going to work to make New Jersey number one in offshore
wind production. Last year I signed the Offshore Wind Economic
Development Act to provide financial assistance and tax credits
to businesses that construct, manufacture, and assemble water
access facilities that support offshore wind products. The DEP
has completed the first of its kind, two-year baseline study
that identifies optimal sites for offshore wind turbines. This
study combined with the strong policies I've spoken about is
going to be instrumental and has been instrumental at the
Department of the Interior recognizing New Jersey in its Smart
from the Start program as a wind energy area. That provides us
the opportunity for expedited federal permitting in this area,
and we're going to try to take advantage of it. We've joined
with the federal government and other East Coast states to
establish the Atlantic Offshore Wind Energy Consortium to
promote commercial wind development on the outer continental
shelf. And we've accelerated the development of offshore wind
projects by working closely with Interior and the Bureau of
Energy Management Regulation and Enforcement to speed the
implementation of 1100 MW of wind turbines. Since the call for
interest last month we will be receiving applications for more
than 3,000 MW of projects within the next two weeks.
So the interest in New Jersey in wind power is significant,
because of the laws that this administration has helped to put
into place and we are going to continue to pursue that.
With these introductory and background comments, I will now address
the Federal and State roles that are necessary to make the offshore
wind industry and its manufacturing and job creation potential a
reality.
The Federal Role in Offshore Wind
Legislative Priorities
The Offshore Wind Development Coalition has two major federal
legislative priorities. The first is a long-term extension of the
Investment Tax Credit. The second is restoration of the US DOE Loan
Guarantee program.
1. Long-term extension of the Investment Tax Credit (ITC)
Extension of the ``placed-in-service'' date applicable to
the investment tax credit for offshore wind energy facilities
is a very high priority for offshore wind developers. The ITC
is the most fundamental federal tax incentive for renewable
energy. The ITC imposes a strict deadline of December 31, 2012
for wind farms to qualify, whether onshore or offshore. This is
in sharp contrast to the placed-in-service dates for all other
renewable energy projects, which range from 2013 for marine and
hydrokinetic facilities, biomass, geothermal, municipal solid
waste and qualified hydropower to 2016 for solar energy
projects. Although the 2012 deadline may create some
difficulties for onshore wind, it imposes a near impossible
barrier for offshore wind due to the long lead time required
for development. In its current form, the ITC may not be
available to any of the projects being developed and permitted
off the Atlantic Coast or in the Great Lakes.
The unavailability of the ITC will make it hard to finance
offshore wind projects and will thwart development of an
enormous indigenous offshore wind resource, one that the DOE
estimates could reach 54 GW by 2030. Equally troublesome, if
the ITC is renewed only for short periods just before it
expires, as is often the case with other ``extenders'', it may
never be usable for offshore wind.
A long-term extension of the ITC is consistent with US
policies that applied for coal, oil and gas powered generation
when those facilities were first coming on line. Offshore wind
developers hope to be given the same consideration. With a
level playing field, and achieving the economies of scale
discussed above, offshore wind will be a competitive power
generation source. According to AWEA (www.PowerofWind.com):
The Congressional Research Service notes that
for more than 90 years fossil fuel industries have
taken subsidies via tax breaks.
The Government Accountability Office, during
President Bush's administration, concluded that fossil
fuels continue to receive nearly five times the tax
incentives as renewable energy. (Federal Electricity
Subsidies, Government Accountability Office, October
2007)
The Offshore Wind Development Coalition strongly supports
an ITC extension to at least 2016, the date that currently
applies to solar facilities. Such an extension will signal the
markets that projects can be developed and financed.
2. Restoration of the DOE Loan Guarantee Program
The US DOE Loan Guarantee program for renewable energy
projects was established when the Energy Policy Act of 2005 was
enacted into law. The loan program exists to support debt
financing for innovative energy projects, including first-mover
offshore wind farms. Recent Congressional action on a
Continuing Resolution (CR) for Fiscal Year 2011 has essentially
eliminated funding for these loan guarantees for our members'
projects. Several offshore wind farm developers were recently
informed by the US DOE that their applications for loan
guarantees were put on hold until additional resources are made
available to the program. These loans, which would have reduced
the cost of electricity to consumers, are essential to support
job creation and economic development opportunities in many
states. The loans would also begin to balance the substantial
subsidies other sources of electricity generation receive from
various federal tax incentive provisions. The elimination of
federal loan guarantees presents a significant problem for
offshore wind developers, since these guarantees significantly
lower the cost of borrowing funds for an offshore wind farm.
The cost to the US government is not high: The availability of
eight billion dollars of federal loan guarantees, which could
support several first-mover projects, would require an
appropriation of just $80 million.
An additional aspect of the loan guarantee program,
provided for in the 2009 Recovery Act, had been its funding of
a credit subsidy fee, which would otherwise have to be paid by
an offshore wind developer at the loan closing. This credit
subsidy payment provided for by the Recovery Act would have
required offshore wind developers to reach loan closing by
September 2011, an unrealistic date, considering the current
federal permitting process timeline.
The Offshore Wind Development Coalition respectfully asks
Congress to restore and fully fund the US DOE Loan Guarantee
program as quickly as possible.
Regulatory Priorities
1. The US DOI's Smart from Start Initiative
The Offshore Wind Development Coalition and our member
companies worked hard to make the case that the seven-to-nine
year permitting timeline for offshore wind, as originally
contemplated by the DOI's Bureau of Ocean Energy Management,
Regulation and Enforcement (BOEMRE, previously the Minerals
Management Service--MMS), was too long to support the
establishment of this new industry. Secretary Salazar's Smart
from the Start initiative has begun to address this long lead
time for permitting and has already reduced the timeline by up
to two years. This is a significant accomplishment and sends
the right signals to offshore wind developers and their
investors.
2. Continued Refinement of the BOEMRE Permitting Process for
Offshore Wind Farms
In his May 13, 2011 remarks to this Committee on Part I of
this hearing, BOEMRE Director Bromwich said that his agency
continues to work with other federal and state agencies to
improve the permitting process for offshore wind. We think this
coordination and collaboration is essential. The Offshore Wind
Development Coalition and our member companies have had
opportunities to discuss the offshore wind permitting process
with federal officials and we appreciate the efforts they have
made to reduce the permitting timeline. While the timeline
still needs to be reduced some more, we believe BOEMRE is
heading in the right direction. We will continue to work with
BOEMRE and federal officials in other agencies to find
additional reductions in the time it takes to permit an
offshore wind farm.
Overcoming Market Barriers
State-driven policies, discussed in the last section of this
testimony, will play a significant role to identify opportunities for
offshore wind developers to sell their power into the grid. There is a
federal role, too, and that includes federal procurement of power
produced by offshore wind farms. To that end, the Offshore Wind
Development Coalition has begun conversations with the US Department of
Defense and the US Department of Energy to assess whether--and how--the
federal government can help meet renewable energy goals set for the
government's electricity use by purchasing energy produced from
offshore wind farms.
Research and Development
The US DOE has taken a leading role to identify research and
development programs that can support fast-track improvements for
offshore wind technology, ranging from more efficient turbines to
removal of market barriers to new offshore wind turbine designs. The
Offshore Wind Development Coalition and our member companies have an
excellent working relationship with DOE officials and its Office of
Energy Efficiency and Renewable Energy (EERE). We will continue to work
with DOE and EERE on these and other research and development
initiatives.
State Role in Offshore Wind
State Support for Federal Government Programs
The US DOI has made cooperation and collaboration with state
officials a cornerstone of its approach to offshore wind. We support
these initiatives. Two programs stand out: the Federal--State Task
Forces that have been formed in most states along the Atlantic and the
establishment of the Atlantic Offshore Wind Energy Consortium. As New
Jersey's Governor Christie said, his state will continue to work
closely with the US DOI and BOEMRE to ``speed the implementation'' of
offshore wind development in his state. To support the Governors'
efforts to develop offshore wind off of their coasts, the Offshore Wind
Development Coalition works closely with state officials affiliated
with the Atlantic Offshore Wind Energy Consortium and we have plans to
reach out to Governor's offices in the Great Lakes states and Gulf of
Mexico (primarily Texas) so that we can serve as a resource for all
coastal states interested in offshore wind.
Market Creation
An important challenge that the offshore wind industry is
continuing to address is the need for there to be markets for the power
generated by our wind farms. State policies will play a significant
role in the creation of these markets. A cost-benefit analysis
associated with proposals to locate offshore wind farms in New Jersey
is now required by law; this analysis will be carefully reviewed by
that state's utility commission (the NJ Board of Public Utilities) and
if the benefits of a specific project justify the costs, that project
will be approved. Maryland Governor Martin O'Malley has proposed
legislation expected to be considered in the next session of his
state's General Assembly that would require a similar cost-benefit
analysis. These analyses will look to the job creation and economic
development commitments offshore wind developers can make to the states
in which they hope to sell their power.
Economic Incentives for Manufacturers of Offshore Wind Equipment
States along the Atlantic Coast, the Great Lakes and Texas would
all welcome the establishment of manufacturing facilities and the jobs
associated with the soon-to-be-created offshore wind industry.
Manufacturers of offshore wind equipment are being actively courted by
the economic development agencies in many of these states. While there
clearly will not be a ``winner takes all'' outcome in regard to which
states are able to attract new manufacturers of offshore wind
equipment, first mover states will reap the early--and likely more
valuable--benefits.
Conclusion
The Offshore Wind Development Coalition appreciates the opportunity
to present this written testimony for the Committee's consideration and
for the opportunity to make an oral presentation of a summary of our
written comments. We look forward to working with all Members and Staff
of the Committee. And we hope that you will consider us as a resource
as you deliberate on the value of offshore wind and the job creation
and manufacturing opportunities that it offers our nation.
______
The Chairman. Next we will go to what was the other panel,
the solar panel, and we will recognize Mr. Rhone Resch,
President and CEO of Solar Energy. You are recognized for 5
minutes.
STATEMENT OF RHONE RESCH, PRESIDENT AND CEO,
SOLAR ENERGY INDUSTRIES ASSOCIATION
Mr. Resch. Thank you. I have a PowerPoint presentation
which should come up. OK. Great.
Mr. Chairman, it is great to have you back. I am glad you
are feeling better.
Ranking Member Markey, great to see you and the rest of the
members of the Committee. I want to thank you for the
opportunity to submit testimony on roadblocks to solar energy
development on public lands.
I am Rhone Resch, the President and CEO of the Solar Energy
Industries Association, and I am testifying on behalf of our
1,000 member companies and 100,000 Americans employed by the
solar industry. SEIA, my organization, represents the entire
solar industry, encompassing all major solar technologies,
including photovoltaics, which you see up on the screen now,
concentrating solar power, and solar heating and cooling.
Let me first thank Chairman Hastings and Ranking Member
Markey for their leadership and support of solar energy. We are
grateful that the Committee recognizes the important role that
our public lands play in the development of solar. Even in the
struggling economy, the solar industry has become an energy and
jobs powerhouse. The solar industry grew by 67 percent last
year. Let me repeat that. The industry grew by 67 percent last
year, and employs Americans in all 50 States, and is now one of
the fastest-growing industries in the Nation.
Solar is an energy source available in every U.S.
congressional district. Given our vast solar resources, we
could easily lead the world in solar development. Solar also
enjoys overwhelming public approval; 94 percent of Americans
support solar overall, and 75 percent are in favor of building
solar power plants on public lands.
Last year, 956 megawatts of solar electric capacity was
installed, enough to power 200,000 homes. This phenomenal
growth is a result of private investment, technological
innovation, a maturing industry, and smart Federal and State
policies. The Federal Government has received a strong return
on its investment of public dollars with benefits to our
economy that far exceed the costs.
Like most products, the costs of solar energy decreases as
more solar is installed. The policies and incentives in place
yield dividends now and also act as a catalyst for driving down
future costs. Just to give you a sense, last year the cost of
solar install costs decreased by 20 percent across the country.
With increased deployment of solar energy, solar manufacturing
and supply chain productions have followed.
This slide here shows the location of solar companies
across the United States, with some examples like REC Silicon,
which produces solar-grade polysilicon in Moses Lake,
Washington. They expanded production last year to meet growing
domestic demand, and the facility now employs 550 people in
your district.
Abengoa Solar is constructing a 280-megawatt concentrating
solar power plant in Gila Bend, Arizona, employing up to 2,000
people in Representative Grijalva's district. It looks like he
just left. Through supply chain purchases from other companies,
the plant supports hundreds of jobs throughout the entire
country.
In early 2011, a 19-megawatt PV plant, the largest solar
plant in Colorado, came on line in Representative Tipton's
district. That plant now powers nearly 4,000 homes, and a
larger 30-megawatt plant is under construction nearby and will
be operational later this year.
Last year was also a noteworthy year as the Bureau of Land
Management issued the first-ever permits for construction of
utility-scaled solar power projects on public lands. And by the
end of last year, nine permits had been approved by BLM. Today
work is under way at three of these sites, and several other
solar power plants are under construction on private land in
the Southwest, employing hundreds of workers from the region.
Here you can see a worker building the frame for a power
block at BrightSource Energy's Ivanpah project. And the next
slide, here you can see a worker that is working through the
night to construct a molten salt storage plant at Abengoa
Solar's Solana Power Plant in Arizona.
Still, there is room for improvement. Developers face many
hurdles in bringing a solar project to fruition, whether on
public or private lands. Our industry needs stable, predictable
policies for continued growth. Today we propose several steps
that will keep solar growing and surmount some of the hurdles
that make it harder to locate utility-scale solar on public
lands.
Specifically we are seeking, as you heard from the wind
industry, a multi-year extension of the 1603 Treasury program.
Plain and simple, this program is the most effective mechanism
available for deploying renewable energy while providing a
strong economic return for the taxpayer.
Second, we need maximum flexibility for solar developers to
site projects on public lands without being restricted to
zones.
Third, the section 10 consultation process performed by the
Fish and Wildlife Service must include a cost-recovery
mechanism and consistent timeframes to speed up the processing.
Fourth, BLM must employ a solar rent policy that is
comparable to private-land prices.
And finally, continued support for the DOE loan guarantee
program is critical, as is the creation of the new Clean Energy
Bank to provide long-term, low-cost financing for solar.
Again, thank you for inviting SEIA to submit this
testimony. We look forward to working with the Committee to
remove roadblocks to the development of solar energy on public
lands. And I am happy to answer your questions at the
appropriate time. Thank you.
The Chairman. Thank you very much, Mr. Resch.
[The prepared statement of Mr. Resch follows:]
Statement of Rhone Resch, President & CEO,
Solar Energy Industries Association
Mr. Chairman and Members of the Committee,
Thank you for the opportunity to submit testimony on roadblocks to
solar energy development on public lands. I am Rhone Resch, the
President and CEO of the Solar Energy Industries Association (SEIA). I
am testifying on behalf of our 1,000 member companies and 100,000
American citizens employed by the solar industry. SEIA represents the
entire solar industry, encompassing all major solar technologies
(photovoltaics, concentrating solar power and solar water heating \1\)
and all points in the value chain, including financiers, project
developers, component manufacturers and solar installers. Before I
begin my testimony, let me thank Chairman Hastings and Ranking Member
Markey for their leadership and support of solar energy. We are
grateful that the Committee recognizes the important role that our
public lands play in the deployment of solar energy.
---------------------------------------------------------------------------
\1\ For more information on each of these solar technologies, see
http://seia.org/cs/solar_technology_and_products.
---------------------------------------------------------------------------
I. Introduction
Established in 1974, the Solar Energy Industries Association is the
national trade association of the U.S. solar energy industry. Through
advocacy and education, SEIA and its 1,000 member companies are
building a strong solar industry to power America. As the voice of the
industry, SEIA works to make solar a mainstream and significant energy
source by expanding markets, removing market barriers, strengthening
the industry and educating the public on the benefits of solar energy.
We have an opportunity--and perhaps an obligation--to craft
policies today that will guarantee a clean energy future for tomorrow,
one in which our energy comes from renewable, domestic sources. Today's
hearing is an important step in securing that future. Developers face
many hurdles in bringing a solar project to fruition, whether on public
or private lands. Below we make recommendations for ensuring the long-
term policy certainty needed to make solar energy a substantial part of
our energy supply in the United States:
Retain maximum flexibility for solar developers to
site projects on public lands without being restricted to
zones.
Establish a cost recovery mechanism and consistent
timeframes to expedite the Section 10 consultation process
performed by the U.S. Fish and Wildlife Service.
Extend the 1603 Treasury Program, which allows solar
and other renewable energy developers to receive a direct
federal grant in lieu of taking the investment tax credit,
which is already in place.
Continue support for the DOE Loan Guarantee Program
and/or establish a Clean Energy Bank to provide long-term, low-
cost financing to those deploying solar.
Grant long-term clean energy contracting authority
for federal agencies to reap the benefits of solar energy.
II. Overview and Recent Highlights of the U.S. Solar Industry
At a time of high unemployment and difficult economic conditions,
the solar industry has become the fastest growing U.S. energy sector
and one of the fastest growing industries across the entire economy. In
2010, the solar industry grew at a rate of 67 percent and now employs
Americans in all 50 states. Last year, 956 megawatts (MW) of
photovoltaics (PV) and concentrating solar power (CSP) technologies
were installed, as well as 2.4 million square feet of solar water
heating collectors. This phenomenal growth is the result of private
investment, technological innovation, a maturing industry and smart
federal and state policies. The federal government has received a
strong return on its investment of public dollars, with benefits to our
economy that far exceed their costs.
Solar is an energy source available in every U.S. Congressional
district.\2\ At this time, Germany leads the world in solar
installations with a solar resource equivalent to that of the state of
Alaska. Given our vast solar resources, we could easily lead the world
in solar deployment. The vast majority of Americans would no doubt
support such a goal: 94% of Americans think it is important for the
nation to develop and use solar energy.\3\
---------------------------------------------------------------------------
\2\ See PV Resources chart at Attachment 1, comparing the United
States to Germany and Spain.
\3\ 2010 SCHOTT Solar BarometerTM. See details at http:/
/seia.org/cs/news_detail?
pressrelease.id=1061.
---------------------------------------------------------------------------
Solar energy has many benefits, including the ability to be tapped
in a variety of circumstances--in power plants, in residential and
commercial applications, and even off-grid in remote areas where no
other electric infrastructure exists. Solar also generates electricity
during peak demand, when we need it most and electricity is most
expensive.
The solar industry is maturing rapidly. Major companies like GE,
Dupont and Applied Materials have solar divisions. Utilities from
Florida Power & Light to PSEG and Arizona Public Service Company own
solar assets in their generation fleet. Other energy players are
increasingly investing in solar, such as NRG Energy, AREVA and
Westinghouse. Even Google is making a major play, putting a 1.6 MW
distributed solar generation system on its Mountain View, California
campus and investing $168 million in the Ivanpah Solar Electric
Generating System, a solar power plant which uses BrightSource Energy's
proprietary power tower technology.
Like most products, solar energy's costs decrease as more and more
solar is installed. The policies in place today to incentivize solar
deployment not only yield dividends now, they act as a catalyst,
driving down future costs. The right policy underpinnings can shave
years off of the organic price drops analysts expect.
With increased deployment of solar energy, solar manufacturing and
supply chain production have followed. For example:
In 2010, REC Silicon, which produces solar-grade
polysilicon in Moses Lake, Washington, expanded capacity and
production to meet growing domestic demand. The facility
produces 27% of all solar-grade polysilicon in the U.S. and
employs 550 people in Chairman Hastings's district.
A 280 MW concentrating solar power plant is under
construction in Gila Bend, Arizona, employing up to 2,000
people in Representative Grijalva's district during
construction of the facility. Through supply chain purchases
from companies around the country, the plant supports hundreds
of jobs in every region.
Early in 2011, a 19 MW PV plant, the largest solar
plant in Colorado and one of the largest in the country, came
online in Representative Tipton's district. The plant produces
enough clean solar energy to power nearly 4,000 homes, and this
is just the beginning. A larger 30 MW plant is under
construction nearby, and is expected to become operational
later this year.
More solar energy highlights by Congressional district can be found
at Attachment 2.
Last year was also a noteworthy year for the Bureau of Land
Management's (BLM) solar efforts: it issued the first nine permits for
construction of utility-scale solar power projects on public lands in
the entire history of the agency. Today, work is underway at three of
the sites and several other utility-scale solar power plants are under
construction in the Southwest, employing hundreds of workers from the
region. In addition, the supply chains behind each of those facilities
are turning out highly reflective mirrors, precision-crafted receiver
tubes, steel posts and thousands of other components in Alabama,
Michigan, New Mexico, Pennsylvania, Tennessee and Virginia.
As you can see, 2010 was an exciting year for the U.S. solar
industry. But we're not stopping there: the SEIA Board of Directors set
out a goal for the industry to install 10 gigawatts--10,000 MW--
annually by 2015.
III. Solar Power Plant Developers Face Persistent Challenges
Solar power plant developers face persistent hurdles in bringing a
project to completion, whether the solar plant is sited on public or
private lands. In the public lands arena, the Department of the
Interior (DOI), thanks to the leadership of Secretary Salazar,
prioritized the permitting of renewable energy projects, and SEIA
commends DOI, BLM and the U.S. Fish and Wildlife Service (USFWS) for
their efforts.
The overarching challenge for any industry is policy certainty.
When companies are deciding where to build their next manufacturing
facility, when and where to spend $1 billion constructing a new power
plant or how many employees to add this year, they need a high degree
of confidence in the future. This is true for public lands policy as
well as tax, finance and energy policies.
A. Public Lands Policy: The Programmatic Environmental Impact Statement
for Solar Energy
In 2008, BLM initiated a major undertaking studying and preparing a
programmatic environmental impact statement (PEIS) for solar
development in six Southwest states.\4\ When final, the PEIS will
establish policy for solar development on public lands for the next two
decades. As part of the study process, BLM proposed and analyzed 24
``solar energy study areas'' on existing public lands which could be
codified as ``solar energy zones'' and which would encourage solar
energy development within their boundaries. BLM released the Draft PEIS
in December 2010 and the public comment period recently closed.\5\
---------------------------------------------------------------------------
\4\ While the PEIS is intended to set policy for all lands managed
by BLM, the six states studied were Arizona, California, Colorado,
Nevada, New Mexico and Utah.
\5\ SEIA's full comments on the Draft PEIS are available at http://
www.seia.org/galleries/pdf/Final_PEIS_Comments_5.2.11.pdf.
---------------------------------------------------------------------------
A fundamental policy decision to be made in the final PEIS is
whether solar energy development will be allowed across 22 million
acres of public lands in the Southwest, with benefits accruing to those
projects located within the solar energy zones, or if solar development
will be restricted to only lands within the identified zones.
Recognizing that not every acre of BLM-managed land is appropriate for
solar development,\6\ the solar industry is nevertheless concerned that
permitting development exclusively within the solar energy zones is
overly restrictive, would thwart development and would undermine the
renewable energy goals Congress set out for BLM in the Energy Policy
Act of 2005.\7\
---------------------------------------------------------------------------
\6\ Indeed, BLM's Preferred Alternative in the Draft PEIS takes
approximately 77 million acres off the table for solar energy
development and puts forth rules for the remaining lands.
\7\ Section 211 of the Energy Policy Act of 2005 (P.L. 109-58)
establishes a goal for DOI of approving 10,000 MW of non-hydropower
renewable energy projects on public lands by 2015.
---------------------------------------------------------------------------
Our public lands have been used for a wide variety of economic and
recreational activities over the last century, and solar must be one of
those acceptable uses. In fact, three out of four Americans approve of
solar energy development on public lands.\8\ BLM should not adopt the
solar energy zone-only alternative presented in the Draft PEIS.
Instead, BLM should adopt the Preferred Alternative identified in the
Draft PEIS and work to make the solar energy zones themselves more
attractive to project developers.
---------------------------------------------------------------------------
\8\ View poll details at http://seia.org/cs/
news_detail?pressrelease.id=769.
---------------------------------------------------------------------------
Much more needs to be known about the solar energy zones to make
them a useful option for solar energy developers. Only a cursory review
of the zones has been conducted, and neither BLM nor a developer can
affirmatively state that a solar power plant belongs within any of the
zones. Not enough is known regarding the biological and cultural
resources within these zones. As a result, a developer that seeks to
site a power plant within such a zone will still expend a great deal of
effort and money studying the site in order to receive a permit for
development. The solar energy zones were intended to ease the way for
development, providing a sort of ``pre-approval'' that such acres are
suitable for solar power plants. But in their current state, the solar
energy zones do not provide real incentives for solar development
within their boundaries.
B. Public Lands Policy: Early Stakeholder Input is Preferable when
Crafting New Policies
In 2010, the Department of the Interior faced the daunting task of
permitting solar energy projects at a pace the department had never
before attempted, while simultaneously crafting the policies necessary
to carry out such permitting. Even now there are many new policies
coming out of BLM and USFWS in Instruction Memorandum (IM) format. The
pace of these releases is challenging for both developers and field
office staff to react to and the regulatory continuity between the
field offices is not consistent. In many cases, guidance has been
crafted based on policies from other industries that BLM oversees, with
limited applicability to solar energy.
As a recent example, the U.S. Fish and Wildlife Service issued
draft Eagle Conservation Plan Guidance for wind developers. Just after
this document's release, some regional USFWS staff began requiring
solar developers to comply with the guidelines contained therein. Such
a standard is wholly inappropriate, given that the guidance was written
for another industry and is only in draft form. A solar developer
cannot reasonably be expected to comply with guidance for wind
development.\9\ USFWS should ensure that no regional or field offices
are applying any aspect of this guidance to solar power projects. In
addition, USFWS should have to make a threshold determination of a
project's adverse impact on eagles prior to applying any Eagle Guidance
to a renewable energy project. Without a threshold finding, USFWS has
no way of knowing whether the proposed Guidance is applicable or
appropriate for a given project. Moreover, without an initial
understanding of a project's impact, USFWS cannot determine whether the
Guidance will even be effective at monitoring and protecting eagles and
their environment.
---------------------------------------------------------------------------
\9\ SEIA's full comments to USFWS regarding the Eagle Conservation
Plan Guidance are enclosed here as Attachment 3.
---------------------------------------------------------------------------
Similarly, BLM's Instruction Memorandum establishing performance
and reclamation bond requirements for solar energy projects \10\ relies
heavily on the requirements for the mining industry. A solar power
plant's footprint and potential impact on public lands are far
different than mining and other extraction activities, and that should
be recognized by the agency and reflected in policy decisions.
---------------------------------------------------------------------------
\10\ See IM 2011-003, available at http://www.blm.gov/wo/st/en/
info/regulations/Instruction_Memos_and_Bulletins/national_instruction/
2011/IM_2011-003.html.
---------------------------------------------------------------------------
Finally, the rent policy BLM established for solar energy produces
excessive charges to developers. In some instances, the BLM rent is
double what a developer would pay for nearby private land. Developing
on public lands also comes with other costs to the developer not seen
for private lands: increased processing time, mitigation fees,
restoration and revegetation bonding. Each of these extra costs will
deter solar development on public lands, contrary to the goals of the
Administration and Congress. In addition, charging high rents by BLM
will lead to higher rents in the private sector, which will further
damage the economics of future solar projects.
C. Private Lands Policy: Section 10 Consultations from USFWS Are Not
Timely
A perennial challenge faced by solar developers (and many others)
is that of securing a timely Section 10 consultation \11\ from USFWS.
Many in the solar industry are developing projects on private lands
and, due to biological considerations, need permits to be issued by the
U.S. Fish and Wildlife Service to proceed with their project.\12\
Projects without a federal nexus (i.e., projects that are not funded,
authorized, or carried out by a federal agency) may linger for years at
the back of the queue while USFWS staff provides Biological Opinions
and incidental take statements (if needed) to other applicants whose
projects are on public lands or otherwise have a federal nexus (e.g., a
recipient of a Department of Energy loan guarantee).
---------------------------------------------------------------------------
\11\ The Endangered Species Act (ESA) prohibits anyone from
committing a ``take'' (kill, injure, harass, etc.) of any listed
species without appropriate authorizations from the USFWS. 16 U.S.C.
Sec. 1531 et seq. However, Section 10 of the ESA provides exceptions to
this rule, such as permits, when a ``take'' is likely to occur during a
proposed activity. Id. at Sec. 1539(a)(1)(B). Obtaining a permit can be
a long and arduous process for projects without a federal nexus as it
requires the permit applicant (and not USFWS) to determine the effects
of the project on endangered species and their habit, design a Habitat
Conservation Plan (HCP), provide a long-term commitment to species
conservation, and request a consultation with the USFWS. During
consultation, the Service and the applicant discuss the proposed
project and the species likely to be affected as well as mitigation and
conservation measures for habitat maintenance, enhancement, and
protection, coincident with development. There is no formal timeline
associated with Section 10 consultation. However, preparation of and
agreement by all parties involved in the HCP can take several years. In
addition, it can take months to years for the USFWS to review and
approve the HCP and issue an incidental take permit.
\12\ Section 10(a) of the ESA requires preparation and approval (by
USFWS/NMFS) of a Habitat Conservation Plan before USFWS can authorize
the project or issue an Incidental Take Permit.
---------------------------------------------------------------------------
This is not a matter of undue preferential treatment, but of
insufficient staff resources. Indeed, in Fiscal Year 2010 alone, USFWS
performed over 30,000 consultations with federal agencies under Section
7 of the Endangered Species Act, leaving little time for staff to
provide Section 10 consultations.\13\ To address this staffing
challenge, SEIA recommends establishing a cost recovery mechanism
through which applicants could reimburse USFWS for contracting
independent, non-biased scientists and permit experts to expedite the
consultation and review and process. This process is used today by BLM
in processing right-of-way applications.\14\ In addition, we recommend
that USFWS establish a consistent timeframe for Section 10
consultations, enabling solar projects on private lands to move forward
in a timely fashion.
---------------------------------------------------------------------------
\13\ http://www.fws.gov/endangered/esa-library/pdf/
consultations.pdf
\14\ See 43 U.S.C. Sec. 1764 (``The Secretary concerned may. .
.require an applicant for or holder of a right-of-way to reimburse the
United States for all reasonable administrative and other costs
incurred in processing an application for such right-of-way. . .'') and
43 CFR Sec. 2804.14, which dictates that an applicant pay ``full
reasonable costs'' for certain applications.
---------------------------------------------------------------------------
D. Tax Policy: Recent Success Demonstrates the Value of Certainty
The Energy Policy Act of 2005 created tax incentives for solar
energy. Specifically, the measure provided a 30% investment tax credit
(ITC) for commercial and residential solar energy systems. Congress
subsequently improved and extended the ITC through 2016. The multiple-
year extension of the residential and commercial solar ITC gave
entrepreneurs the policy certainty needed to invest in solar energy
projects. As a result, the industry has grown by 800% since the ITC was
implemented in 2006. Cumulative solar capacity in the U.S. now exceeds
2,600 MW, enough to power more than a half million homes.
The 2008 economic crisis rendered solar and other renewable energy
tax incentives of little immediate value. Prior to the financial
crisis, many large renewable energy projects relied upon third-party
tax equity investors to monetize the value of federal renewable energy
incentives. The economic downturn drastically reduced the availability
of tax equity, severely limiting the financing available for renewable
energy projects.
In response to the dramatic decline in available capital, Congress
enacted the Section 1603 Treasury Program. This program allows solar
and other renewable energy developers to receive a direct federal grant
in lieu of taking the ITC that is already in place. This simplifies
financing for renewable energy projects and provides access to capital
at a time when project developers' tax burdens are inadequate to
capitalize on tax incentives and tax equity financing is both scarce
and expensive.
By any objective measure, the Section 1603 Treasury Program has
been a resounding success. Due in large part to the liquidity provided
by this important incentive, the solar industry grew 67% in 2010,
making it one of the fastest growing industry sectors in the U.S.
economy. Due in large part to reliable, consistent federal policy,
solar costs continue to decline. Last year, installed costs fell by
20%, and from the year 2000 to the present, the per-watt price of
photovoltaics has declined by 40%. Solar is a diverse technology, and
costs will continue to drop as the industry achieves greater
efficiencies and economies of scale.
E. Energy Policy: Long-Term Commitments to Renewable Energy Are Vital
Solar power plants are sizable assets that have a useful life of 30
or more years. In order for a proposed solar project to be built, it
needs a long-term buyer of its electricity (typically through a
bilateral contract with a utility called a power purchase agreement or
PPA) and a long-term loan from a bank, financing the project at a
reasonable interest rate. Federal policies are needed to provide
certainty regarding the financial underpinnings of projects. Such
policies include the Department of Energy (DOE) Loan Guarantee Program
or a Clean Energy Bank. State-level renewable portfolio standards have
incentivized utilities to sign long-term contracts with solar
providers. Federal agencies face similar RPS goals for the energy they
use, but lack the authority to similarly enter into long-term contracts
with solar providers. Long-term clean energy contracting authority
should be granted so the federal government can enjoy the same benefits
of solar energy that utilities and homeowners do.
DOE's loan guarantee program was initially created by the Energy
Policy Act of 2005 in recognition of the great challenges that large
nuclear, renewable and other low-carbon energy projects face obtaining
affordable long-term financing in the commercial marketplace. In
today's economic climate, these programs are critical to attract
investment in nuclear, clean coal and renewable energy projects. Until
the financial community witnesses the successful completion of several
of these projects, it will continue to charge substantial premiums or
not lend to those projects at all. In addition to reducing component
costs, access to long-term debt at a low interest rate is key to
ensuring that solar power plants are cost-competitive with other
electricity sources. We urge Congress to provide sufficient funding to
the Section 1703 DOE Loan Guarantee Program in Fiscal Year 2012 to
continue the timely processing and reward of loan guarantees to all of
the projects deserving of DOE support.
Another way to accomplish this goal would be to establish a Clean
Energy Bank or Clean Energy Deployment Administration (CEDA). As
envisioned in H.R. 2454 (2009), CEDA could directly provide loans to an
applicant that deploys a clean energy technology. CEDA would also
continue to provide loan guarantees, similar to the current DOE Loan
Guarantee Program.
On the purchasing side of the ledger, only the Department of
Defense currently has the authority to enter into contracts of longer
than 10 years with energy providers.\15\ However, most solar energy
projects require a 20- to 30-year contract in order to be financially
viable and provide electricity at a rate at or below the retail price.
Unlike other sources of electric generation, solar power plants mainly
consist of the up-front cost of installing the infrastructure and solar
equipment. Ongoing operations and maintenance costs are quite low, and
the fuel is free. Therefore, the longer the term of the contract, the
cheaper the electricity is on a per-unit basis. If a buyer wants a 10-
year contract, the entire cost of the power plant must be amortized and
recovered over only 10 years. If the buyer can sign a 30-year contract,
however, the equipment costs are spread over 30 years instead.
---------------------------------------------------------------------------
\15\ See 10 U.S.C. Sec. 2922a.
---------------------------------------------------------------------------
Nellis Air Force Base, outside of Las Vegas, Nevada, illustrates
the potential of long-term clean energy contracting. There, the U.S.
Air Force contracted for electricity via a 14 megawatt solar PV
installation. In addition to providing 25% of the electricity needed
annually for base operations, the solar project is saving the base over
$1 million each year in lower electricity costs.\16\ Solar projects can
similarly save other federal agencies millions on their utility bills
over the next several decades, but these solar projects cannot move
forward until civilian agencies have the authority to sign a long-term
contract. Extending the contracting authority to match the life of the
solar project would benefit solar companies and the public by securing
long-term sources of clean energy.
---------------------------------------------------------------------------
\16\ Department of Defense Strategic Sustainability Performance
Plan FY2010, page I-5.
---------------------------------------------------------------------------
IV. Conclusion
Again, thank you for inviting SEIA to submit this testimony. We
look forward to working with the Committee to establish long-term,
stable policies which remove roadblocks, promote job creation and
ensure the deployment of solar energy technologies on public lands.
______
[GRAPHIC] [TIFF OMITTED] T6728.005
ATTACHMENT 2
SOLAR INDUSTRY HIGHLIGHTS BY CONGRESSIONAL DISTRICT
Alaska, At-Large--Rep. Don Young
There are 15 companies providing solar jobs in Alaska
Alaskan owned and operated Polar Wire Products
manufactures ``arctic grade'' wire and electrical equipment
used extensively in alternative energy systems
Arizona, 1st District--Rep. Paul Gosar
Solargenix's Saguaro Solar Power Plant, a 1-MW CSP
Trough Plant in Red Rock is online
Arizona Public Service built the Prescott Solar Power
Plant, a 3-MW PV Plant in Prescott
Global Solar Energy built the Springerville
Generation Station Solar System, a 5-MW Thin-Film PV Plant in
Springerville
Arizona, 7th District--Raul Grijalva
Abengoa is constructing its Solana Project, a 280-MW
trough CSP plant, in Gila Bend
First Solar is constructing the 17-MW Paloma Solar
thin-film PV plant in Gila Bend
Solon is constructing the Cotton Center, a 17-MW PV
plant in Gila Bend
California, 4th District--Rep. Tom McClintock
SunEdison, a global solar developer, has an office in
McClellan
SolarRoofs.com, a solar water heating and cooling
manufacturing company, is headquartered in Carmichael
United Natural Foods is installing a 1.19 MW solar PV
array on its roof in Rocklin
California, 10th District--Rep. John Garamendi
SolarBOS, a designer and manufacturer of electrical
``Balance of System'' products for the solar industry is based
in Livermore
Amerimade, also based in Livermore, manufactures a
variety of PV systems and parts
California, 19th District--Rep. Jeff Denham
10 companies in California's 19th Congressional
district are creating solar jobs
MRL Industries, Inc. manufactures solar industry-
related heating products and services in its Sonora factory
California, 20th District--Rep. Jim Costa
Cleantech America Inc.'s CalRENEW-1 5-MW Thin-Film PV
Project in Mendota is online
There are 1,053 companies creating solar jobs in
California
California, 38th District--Rep. Grace Napolitano
The Los Angeles Unified School District is partnering
with SunPower Corporation to install a 1 MW solar panel array
on top of its General Stores Warehouse in Pico Rivera
Colorado, 3rd District--Rep. Scott Tipton
SunPower's Greater Sandhill Solar Plant, a 19-MW PV
plant is online in Alamosa County
SunEdison's Alamosa PV Solar Plant, an 8-MW PV plant
is operational
SunPower and Iberdola are constructing the 30-MW PV
San Luis Valley Solar Ranch in Alamosa County
Colorado, 5th District--Rep. Doug Lamborn
Three Phases/Green Rock Capital built a 2-MV PV plant
on Fort Collins Army Base
Diamond Wire Material Technologies, a diamond wire
cutting technology manufacturer serving the global solar
industry, is headquartered in Colorado Springs
Colorado, 6th District--Rep. Mike Coffman
Douglas County School System began construction this
year on a 3.1-MW solar system
ProtoFlex Corporation, a thin film coating
manufacturer is headquartered in Centennial
Florida, 2nd District--Rep. Steve Southerland II
There are 8 companies creating solar jobs in
Florida's second Congressional district
There are four utility-scale solar power projects
online in Florida, two projects under construction, and 6
projects under development
Florida, 25th District--Rep. David Rivera
There are 236 companies creating solar jobs in
Florida
Cuantum Solar America, LLC, a PV module manufacturer,
is headquartered in Miami
Georgia, 10th District--Rep. Paul Broun
US Battery, a solar battery manufacturing company,
has a branch in Augusta
The ROOKER company, an industrial real estate firm,
is constructing a 115-kW PV system
Hawaii, 1st District--Rep. Colleen Hanabusa
Sopogy's 5-MW concentrating solar power project in
Oahu is under construction
Hoku Corporation, headquartered in Honolulu,
manufactures solar grade polysilicon
Idaho, 1st District--Rep. Raul Labrador
Voodoo Solar, a residential solar installer, is
headquartered in Cocolalla
Louisiana, 3rd District--Rep. Jeff Landry
An AGC Flat Glass Inc commercial glass fabrication
facility is in nearby Baton Rouge
Louisiana, 4th District--Rep. John Fleming
Another of AGC Flat Glass Inc's commercial glass
fabrication facilities is in Opelousas
Maryland, 1st District--Rep. Andy Harris
PowerUp Corporation, a solar PV project distributor,
has an office in nearby Chase, Maryland
Maryland, 3rd District--Rep. John Sarbanes
Constellation Energy installed a 750-kW PV system on
a Millersville government building
Constellation Energy installed a 500-kW PV system on
Coppin State University's rooftop
Massachusetts, 5th District--Rep. Niki Tsongas
Rivermoor Energy is constructing a 1-MW PV plant in
Haverhill
Massachusetts, 7th District--Rep. Edward Markey
1366 Technologies in North Lexington is
commercializing a new manufacturing process for PV wafers
Practical Solar, based in nearby Boston, manufactures
and supplies solar heliostats
Michigan, 1st District--Rep. Dan Benishek
Phoenix Navigation and Guidance Inc. in Munising is
building solar turbogenerators
SES Flexcharge USA, based in Charlevoix, manufactures
custom PV systems
The world's largest manufacturer of polycsrystalline
silicon used in solar panels is Hemlock Semiconductor located
in the district next door
Michigan, 5th District--Rep. Dale E. Kildee
79 Michigan companies are creating solar jobs, six
are in the fifth Congressional district
Mersen USA Ultra Carbon Division, a manufacturer of
advanced materials and solutions for high temperatures, is
based in Bay City
New Jersey, 3rd District--Rep. Jon Runyan
The east coast regional office of SunPower
Corporation, a large designer, manufacturer and distributor of
solar PV panels, is located in nearby Trenton
There is one utility-scale solar power plant
operating in New Jersey, four plants under construction, and
seven plants under development
New Jersey, 6th District--Rep. Frank Pallone, Jr.
America Capital Energy is constructing 5-MW PV
Yardville Solar Farm in Hamilton
Aston Solar, headquartered in Piscataway, is a solar
energy product manufacturer, distributor, system integrator,
and services provider
New Jersey, 12th District--Rep. Rush Holt
American Capital Energy and SunEdison are
constructing the Trenton Solar Farm, a 1 MW ground-mounted PV
system in nearby Trenton
201 companies are creating solar jobs in New Jersey;
28 are in the 12th district
New Mexico, 1st District--Rep. Martin Heinrich
First Solar's 2-MW thin film PV facility in
Albuquerque is online
60 companies are creating solar jobs in Arizona; 23
are in the first Congressional district
Schott Solar, Inc., a global PV receiver tech
manufacturer, is headquartered in Albuquerque
New Mexico, 3rd District--Rep. Ben Ray Lujan
Chevron's 1-MW concentrating PV plant is operating in
Questa
First Solar's 30-MW thin film PV facility is online
in Cimarron
Ohio, 6th District--Rep. Bill Johnson
New Harvest Ventures/Agile Energy are developing the
50-MW PV Turning Point Solar Project in Cumberland
There are 65 companies creating solar jobs in Ohio,
and 3 are in the sixth district of Ohio
Ohio, 13th District--Rep. Betty Sutton
Akron Metro Regional Transit Authority's 480-kW
rooftop PV project in Akron is online
Westlake Metals Company, in North Ridgeville,
manufactures metal for solar projects
Oklahoma, 2nd District--Dan Boren
19 companies are creating solar jobs in Oklahoma
Oregon, 4th District--Rep. Peter DeFazio
94 companies are creating solar jobs in Oregon.
Pacific Metal Fabricators, LLC, a sheet metal manufacturer for
solar power projects, is headquartered in Eugene
Industrial Finishes and the Pepsi Cola Bottling
Company have each installed two of the largest PV projects in
the Northwest on their Eugene facilities' rooftops
Pennsylvania, 5th District--Rep. Glenn Thompson
288 companies are creating solar jobs in
Pennsylvania, and five are in the fifth district
There is one utility-scale solar power project online
in Pennsylvania, three projects under construction and three
projects under development
South Carolina, 3rd District--Rep. Jeff Duncan
Ulbrich, in Westminster, supplies copper wire used in
solar panels.
South Dakota, At-Large--Rep. Kristi Noem
Ellsworth Air Force Base is installing PV systems
through its $7.2 million energy initiative
Tennessee, 2nd District--Rep. John Duncan, Jr.
Efficient Energy of Tennessee built a 1-MW PV Plant
in Knox County
ATAS, a roof and PV system installer, has an office
in Maryville
Tennessee, 3rd District--Rep. Chuck Fleischmann
Wacker Chemical is investing 1.5 billion in a
polysilicon manufacturing plant near Cleveland. The plant will
create 650 jobs.
39 other companies are creating solar jobs in
Tennessee
Texas, 1st District--Rep. Louie Gohmert
PowerUp Corporation, a solar PV project distributor,
has an office in Tyler
Texas, 17th District--Rep. Bill Flores
Connexa Energy, a renewable products manufacturer/
distributer, is in nearby Boerne
The Cameron Park Zoo in Waco will be installing a
6,000 square foot PV panel system
Utah, 1st District--Rep. Rob Bishop
Salt Lake City is one of the Department of Energy's
Solar America Cities
Utah has a goal of installing 10 MW of new solar PV
power in Salt Lake City by 2015
Applied Materials, a global provider of equipment,
services and software for manufacturing PV products has a
research, development and manufacturing facility in Salt Lake
City
Virginia, 1st District--Rep. Robert Wittman
There are 91 companies creating solar jobs in
Virginia, and 6 are in the first district
Infinite Energy Resources, a renewable energy
facilities developer, is based in Fredericksburg
Washington, 4th District--Chairman Doc Hastings
Infinia Corporation, the manufacturer and supplier
for Stirling-based solar power generation systems, is
headquartered in Kennewick
Teanaway Solar Reserve is developing a 75-MW PV
project in Cle Elum
American Samoa, At-Large--Del. Eni Faleomavaega
American Samoa has 616 kW of distributed solar
operating at 25 government and commercial buildings
Guam, At-Large--Del. Madeleine Bordallo
A new 250-kW solar PV system installed at Guam Naval
Base will produce an estimated 411,000 kWh of renewable power
per year, reducing electricity costs by $106,050
Northern Mariana Islands, At-Large--Del. Gregorio Kilili Camacho Sablan
160 SCHOTT 280-watt PV panels are being installed at
Southern Saipan High School thanks to a grant from the American
Recovery and Reinvestment Act of 2009
Puerto Rico, At-Large--Resident Commissioner Pedro R. Pierluisi
Walmart and SunEdison are building the biggest solar
power project in Puerto Rico on five Walmart-owned stores. The
program could expand to 23 stores over five years.
Virgin Islands, At-Large--Del. Donna M.C. Christensen
The largest solar-powered electricity system in the
territory is being installed at King Airport in St. Thomas. The
PV panel system is expected to generate 450 kW, supplying 15
percent of the airport's energy needs.
______
ATTACHMENT 3
SEIA Comments to USFWS on Eagle Conservation Plan Guidance
May 19, 2011
Mr. Jerome Ford
U.S. Fish & Wildlife Service
Attn: Eagle Conservation Plan Guidance
4401 North Fairfax Drive; Mail Stop 4107
Arlington, VA 22203-1610
TRANSMITTED VIA E-MAIL
RE: Eagle Conservation Plan Guidance
Dear Mr. Ford:
On behalf of the Solar Energy Industries Association (SEIA) and its
1,000 members, I would like to express our appreciation for the U.S.
Fish and Wildlife Service's (USFWS) ongoing efforts to support the
deployment of solar energy projects. The United States has some of the
richest solar resources in the world and we should not miss an
opportunity to create jobs and generate clean, reliable energy with
this inexhaustible, domestic resource. USFWS can simultaneously
encourage renewable energy development and protect eagles and their
habitat. SEIA and its members would like to meet with USFWS to discuss
these critical issues and develop strategies consistent with the dual
purpose of protecting wildlife and increasing solar power generation.
Thank you for this opportunity to submit comments on these
guidelines for the wind industry. We believe that these guidelines
should not apply to the solar industry. We are eager to work with the
USFWS to create eagle conservation guidance that facilitates solar
power project development.
Best Regards,
Daniel M. Adamson
Vice President of Regulatory Affairs
Contacts
Katherine Gensler, Solar Energy Industries Association,
575 7th Street NW, Suite 400, Washington, DC 20004
(202) 682-0556 -- [email protected]
Emily J. Duncan, Solar Energy Industries Association,
575 7th Street NW, Suite 400, Washington, DC 20004
(202) 682-0556 -- [email protected]
______
These Guidelines Should Not Be Applied to the Solar Industry
SEIA appreciates the U.S. Fish and Wildlife Service's (USFWS)
efforts to develop Eagle Conservation Plan Guidance. When developed in
collaboration with stakeholders and narrowly defined to achieve the
conservation goal without unnecessary or inappropriate burdens on
regulated entities, guidance of this nature can be beneficial to all
parties. To achieve this goal, however, the Guidance should set forth
clear standards that will result in improved efficiency for government
action, reduced costs and delays to project developers, and clarity on
procedures for the involvement of third parties.
As discussed in these comments, SEIA appreciates the intent of the
Guidance to achieve these objectives. As currently proposed, the
Guidance does not provide an effective mechanism for screening out
projects affecting eagles and also includes numerous recommended
measures that are expensive, burdensome, and unnecessary. While the
draft Guidance applies to wind project development, SEIA is concerned
that the Guidance will severely hamper, rather than aid, renewable
energy development in general, and may specifically adversely affect
solar energy projects now and in the future. This is because, as USFWS
states, many of the concepts and approaches outlined in this Guidance
``can be readily exported to other situations.'' \1\ Thus, SEIA is
concerned that many, if not most, of the costly and burdensome
guidelines the USFWS is recommending for the wind industry could be
applied to the solar industry as well. In fact, SEIA has already heard
anecdotes from member companies that USFWS Field Offices have been
applying this wind Guidance to their solar power projects. USFWS should
ensure that no Regional or Field Offices are applying any aspects of
this wind Guidance to solar power projects.
---------------------------------------------------------------------------
\1\ U.S. Fish & Wildlife Service, ``Draft Eagle Conservation Plan
Guidance,'' at p. 8 (Jan. 2011). SEIA is also concerned that USFWS may
apply this Eagle Guidance to condors and raptors generally.
---------------------------------------------------------------------------
Application of the USFWS Eagle Conservation Plan Guidance,
formulated in large part to address the impacts of wind power
facilities, to the solar industry is inappropriate for many reasons.
First, the solar industry employs different equipment and technologies,
and utilizes land differently than the wind industry. Second, the solar
industry has fundamentally different impacts than other energy
industries. Both of these factors make it doubtful that solar power
plants will directly impact eagles. For instance, eagle mortality due
to direct strikes into panels or mirrors is extremely unlikely. Indeed,
extensive deployment of solar power is a key element of the overall
effort to address climate change, a phenomenon that threatens both
eagles and their habitat. SEIA appreciates that the USFWS is extremely
busy and developing guidance can be a lengthy process. However,
guidelines that may be applicable to one industry are often
inappropriate or impossible to implement for another industry. Thus
applying the same Guidance to both wind and solar projects is
unreasonable.
SEIA and its members would appreciate the opportunity to meet with
USFWS to discuss these important issues before a decision is made to
develop guidelines that would be applied to solar projects. Below are
just a few examples of the many concerns that SEIA has with this
Guidance.
USFWS Should Make a Threshold Determination Prior to Applying any
Guidance
The Bald and Golden Eagle Protection Act states that anyone who
``knowingly, or with wanton disregard for the consequences of his act
take, possess, sell, purchase, barter, offer to sell, purchase or
barter, transport, export or import, at any time or in any manner any
bald eagle commonly known as the American eagle or any golden eagle,
alive or dead, or any part, nest, or egg thereof'' may be subject to
punishment under the Act.\2\ As such, USFWS should have to make a
threshold determination of a project's adverse impact on eagles prior
to applying any Eagle Guidance to a renewable energy project. Without a
threshold finding, USFWS has no way of knowing whether the proposed
Guidance is applicable or appropriate for a given project. Moreover,
without an initial understanding of a project's impact, USFWS cannot
determine whether the Guidance will even be effective at monitoring and
protecting eagles and their environment. We believe that threshold
criteria of this nature would make it clear that solar projects are
unlikely to affect eagles. In the rare situation where some impact
could occur, any guidance that would apply to solar projects should
make it clear that compliance would satisfy all legal requirements for
take authorization and absolve the applicant of all liability under the
Bald and Golden Eagle Protection Act. In addition, whether in the draft
Guidance for wind projects, or guidance for ``other situations'' the
problems discussed below that result in excessive cost and delay should
be avoided.
---------------------------------------------------------------------------
\2\ 16 U.S.C. Sec. 668 (2011).
---------------------------------------------------------------------------
Pre- and Post-Construction Monitoring Is Unnecessarily Burdensome
The Eagle Conservation Plan Guidance provides that most wind
projects undertake an initial site assessment; perform site-specific
surveys; predict initial eagle fatalities; develop and apply advanced
conservation practices and compensatory mitigation; and evaluate post-
construction impacts. These multiple steps are extremely expensive and
burdensome and most of this cost would be expended at the outset of a
project's timeline, requiring developers to spend significant money
with little or no confidence that USFWS will issue a take permit. In
addition, this Guidance would further extend an already extremely long
permitting process for renewable projects by requiring three years of
pre-construction studies and two to five years of post-construction
studies for each project, a regulatory burden faced by no other
industry. Costly and lengthy monitoring should only be required in
situations where the facts dictate.
Furthermore, USFWS expects all projects, regardless of their size
or their category, to undertake the pre- and post-construction
monitoring. Thus, a small renewable energy project would be required to
perform the same initial site assessment as a much larger utility-scale
renewable power plant. Also, a ``category 3'' project that is defined
as posing minimal risk to eagles would still have to pay for and
conduct the same pre-construction and post-construction surveys as a
category 1 or 2 project that poses a high or moderate risk to the eagle
population. Pre- and post-construction monitoring and surveying should
be tailored to the size and characteristics of a project and should be
implemented only for those projects that could seriously harm the eagle
population.
Finally, as USFWS has acknowledged, ``effects [of energy facilities
on eagles] and how to address them at this time is limited.'' \3\ Thus,
it is unclear whether these multiple studies and surveys would be
effective or provide a scientifically accurate picture of the proposed
energy installation's impact on eagles. As such, this Guidance and the
costly and burdensome steps therein should be applied only after the
USFWS has made a threshold determination that the application of the
Guidance is necessary. SEIA is eager to work together with USFWS and
other interested parties to develop the specifics of such a threshold
determination. Establishing a reasonable threshold for application of
the Guidance will focus the efforts of USFWS, the renewable industry
and others on areas where significant impacts may occur.
---------------------------------------------------------------------------
\3\ Guidance at p. 11.
---------------------------------------------------------------------------
______
The Chairman. Next I recognize Mr. DeRosa, Senior Vice
President for North American Project Development, First Solar,
Inc. You are recognized for 5 minutes, Mr. DeRosa.
STATEMENT OF FRANK DeROSA, SENIOR VICE PRESIDENT, FIRST SOLAR,
INC.
Mr. DeRosa. Thank you, Mr. Chairman, Representative Markey
and members of the Committee. I am Frank DeRosa, Senior Vice
President for Project Development for First Solar. Our mission
is to deliver clean, affordable and sustainable energy. We
developed the technology here in the United States that has
made us one of the largest photovoltaic manufacturers and
developers of solar energy in the world. We are headquartered
in Tempe, Arizona, and manufacture panels in Perrysburg, Ohio.
We will soon begin construction on a second manufacturing
facility in Mesa, Arizona, that will employ 600 employees. We
have 2,400 megawatts of power under contract with electric
utilities in the United States. That is the equivalent capacity
of almost three nuclear power plants.
Solar energy generated by First Solar technology keeps
energy dollars here in the United States by using American
technology and equipment built by American workers, and, of
course, there is no imported fuel. We have three large solar
projects in advanced development on BLM land as well as
projects on private land.
The Committee asked about roadblocks, but I would like to
start with a few successes first. Congress, DOI and BLM have
adopted policies over the last few years that are expediting
permitting for solar. First Solar's 50-megawatt project in
Primm, Nevada, is a good example. The BLM Las Vegas office
permitted this project, devoted resources and qualified staff.
I want to point out the work of one staff person, Greg Helseth,
who kept this project on schedule, and as a result, we are now
mobilizing to start construction of this project, and it will
be the first solar project to operate on BLM land.
But I need to raise two critical issues. The first is the
Programmatic Environmental Impact Statement process that is
being run by the BLM, and the second is the impact on private--
development on private land regarding endangered species. My
written statement includes some other provisions that--other
issues that I won't go into here.
In March 2011, BLM released the PEIS for public comment. It
lists solar energy zones that could receive expedited
environmental review. The preferred alternative encourages
development in the zones, but allows development outside the
zones. And that is critically important to us. Not restricting
development to just the solar energy zones, which only comprise
less than 1 percent of Federal land, is important because many
projects, some of ours, have been in development well before
the PEIS process started.
So we urge the BLM to, first of all, revisit the zones; to
look at not only land compatibility, but technical and
commercial feasibility of these projects, things like electric
transmission access and the locational objectives of utilities.
The second is to adopt a policy that allows development outside
of these solar energy zones. And the third is to grandfather
projects that are in advanced development, but are outside of
these zones. One of our projects is an example of that as well.
It was not included in the solar energy zones, but it has a
power purchase agreement, and it has a position on the
transmission queue. In other words, it is commercially viable
and in a location that the utilities want.
My second point concerns the impediment on private land of
projects that have to receive permits because of endangered
species concern. There is an inconsistency between basically a
prudent review schedule on Federal lands versus the 4 to 6
years that it takes on private lands, and we would ask the
Committee to address this inconsistency and have one policy for
both processes.
With that, I thank you for your time, and I will address
any questions at the right time.
The Chairman. Thank you, Mr. DeRosa, for your testimony.
[The prepared statement of Mr. DeRosa follows:]
Statement of Frank De Rosa, Senior Vice President,
Project Development, North America, First Solar
Mr. Chairman and Members of the Committee, thank you for the
opportunity to testify.
Introduction and FS Background
I am Frank De Rosa, First Solar Senior Vice President for North
American Project Development. Our mission is to deliver clean,
affordable and sustainable energy. We developed the technology here in
the U.S. that has made us one of the largest photovoltaic (PV) panel
manufacturers and developers of solar energy in the world.
We are headquartered in Tempe, Arizona, and manufacture solar
modules in Perrysburg, Ohio. We will soon begin constructing a second
U.S. manufacturing facility in Mesa, Arizona that will employ 600
people, which will bring our U.S. employment to over 2,000 employees.
This is part of a global workforce of approximately 7,000. We are a net
U.S. exporter of our solar energy modules.
Solar energy generated by First Solar's technology keeps dollars
here in the U.S. by using American technology, equipment built by U.S.
workers, and the ``fuel'' from the sun. Jobs are created and dollars
stay in our economy.
First Solar has three large solar projects in advanced development
on BLM land.
Achievements
The Committee asked about roadblocks, but I would like to start
with some successes.
Congress, the Department of the Interior, and the Bureau of Land
Management have adopted policies over the last few years that are
expediting permitting, removing obstacles, and streamlining interagency
coordination, without sacrificing thoroughness.
First Solar's 50 megawatt Silver State North Project in Primm,
Nevada is a good example. BLM's Las Vegas field office dedicated
qualified staff and resources to the project. Greg Helseth, in
particular, kept the project on schedule. We are mobilizing our crew to
start construction for this project which is the first solar project on
federal land in Nevada.
BLM took another significant step in April to support solar
development on public lands with its rule proposing to allow the
temporary segregation of lands in a pending or future solar generation
right of way (ROW) application. This much needed rule will prevent the
use of specious and speculative mining claims to slow down or prevent
the development of solar energy projects on public lands.
Areas of Concern
But I'll raise two primary areas of concern as well as several
areas of regulatory oversight that require continued consultation with
industry. Of primary concern, the BLM's Programmatic Environmental
Impact Statement for solar energy development, or PEIS, and the impact
of the Endangered Species Act (ESA) on solar development on private
lands.
PEIS
In March 2011, BLM released the PEIS for public comment. It lists
``Solar Energy Zones'' that could receive expedited environmental
review. The ``preferred alternative'' of the PEIS encourages
development in the Zones but does not prohibit development in other BLM
areas. Not restricting development to just the Solar Energy Zones
(which comprise less than 1% of the land under federal management) is
important because there are many projects that began development well
before BLM instituted its PEIS process. Plus, it is not clear how many
of the Zones have all of the necessary attributes for a successful
project, such as transmission capacity.
We strongly urge the BLM to:
1. Revisit the Zones not for just land use compatibility but
for technical and economic feasibility of solar development,
with particular attention to factors such as proximity to
transmission and the needs of the local electric utility buyer;
2. Adopt a policy that allows development outside the Solar
Energy Zones. Such development would still be subject to the
stringent requirements of NEPA, so environmental oversight will
be maintained.
3. Grandfather existing projects that are in advanced
development. For example, First Solar's Silver State South
Project was not included in a Zone but has a Power Purchase
Agreement and a transmission interconnection position.
Businesses require a predictable, transparent set of rules when
making multi-hundred-million dollar decisions. The BLM must not
undermine viable, near term projects that were sited several years ago
and remain subject to rigorous scrutiny under NEPA.
Endangered Species Act
I would also like to address a second federal policy issue that
seriously impedes development of utility-scale solar projects on
private land. If a proposed solar project on private land has the
potential to adversely affect a listed (endangered) species or critical
habitat, the U.S. Fish & Wildlife Service requires the solar developer
to prepare a Habitat Conservation Plan prior to the Service preparing a
Biological Opinion and issuing an Incidental Take Permit.
Unfortunately, for projects with no Federal nexus (Federal funding,
license or permit) under the current process it can take from three to
five years to receive the required permits versus four to six months to
complete the permitting process for either projects on Federal land or
with a Federal nexus. As a result, projects with no Federal nexus are
typically abandoned or not undertaken at all.
In order to encourage solar development on private land, we
recommend an approach that provides similar review timelines as
followed for projects with a Federal nexus. One way to harmonize
deadlines for preparing a Habitat Conservation Plan, Biological Opinion
and issuance of an Incidental Take Permit would be to give the Service
authority to enter into cost reimbursement agreements to augment its
staff who review solar projects. Cost reimbursement agreements would
allow the Service to hire third party resources to work under its
direction to prepare the Habitat Conservation Plan and could also
include provisions to augment funding for preparation of the Biological
Opinion and Incidental Take Permit. Congress previously authorized BLM
to enter into cost reimbursement agreements under the Federal Land
Policy and Management Act. This authority has been very successful in
improving the processing of BLM right of way grants.
Finally, I recommend that the Committee consider a recommendation
put forth by Senator Feinstein that Secretary Salazar establish a group
of Service staff dedicated to permitting renewable energy projects on
private land.
Stakeholder Engagement
Before concluding, I would like to make an observation related to
stakeholder engagement by the BLM and the Service. Whether the topic is
solar zones, solar rental policy, mitigation fees, reclamation bonding
or a host of other regulated areas, the industry should be brought to
the table as early as possible in the development of rules and
regulations the impact solar development. The track record on early
engagement in the rulemaking process is mixed, but we believe that
improving transparency and predictability in the regulatory process
should be a goal we work toward together.
Several recently released policies illustrate why industry
involvement in the formation of guidance documents and policies
applicable to solar projects is absolutely critical. The reclamation
bonding policy released by BLM in October, 2010 provides an example.
The bonding policy requires the solar industry to comply with many
of the bonding requirements designed for mining projects even though
they are not directly application to solar development. For example,
provisions to address mine clean-up when mines are abandoned because
they are no longer profitable. Solar projects are secured over their
lifetime by a valuable power purchase agreement and constructed using
recyclable materials that have recognized reclamation value. If the
solar industry had been involved earlier in the development of the
bonding policy, we believe we could have created a better policy that
offered a broader set of bond instruments and required more reasonable
bond amounts.
We would welcome the opportunity to review the bond instruments
currently accepted by BLM and expand the policy to include financial
assurance mechanisms that are accepted for decommissioning other types
of industrial projects.
The Solar Energy Interim Rental Policy issued by BLM on June 10,
2010 was likewise developed without sufficient industry involvement.
The rents established by the policy appear to have been based largely
on the value of irrigated agricultural lands, which have a higher value
than the non-irrigated lands on which most projects are proposed.
Inflated rents are obviously an obstacle to development. Additionally,
to the extent that rents on BLM lands are higher than rents on similar
private lands, the rental policy may inflate the costs of mitigating
project impacts on special-status species as the value of private lands
will increase.
As a final example, BLM's 2010 memorandum on golden eagle
protection measures for renewable energy projects could have also
benefited from industry involvement in its development. The policy
requires the Service's approval of an Aviation Protection Plan as a
precondition to the issuance of a Record of Decision and places no
conditions on the rationale of the Service in the event that it decides
to reject such plans. Given that the rejection of a plan can result in
a requirement to redesign the site late in the project approval
process, the Service's unfettered discretion on this topic creates
significant uncertainty for developers.
Some of this uncertainty should soon be resolved. BLM's golden
eagle policy is a temporary measure and will be replaced when the
Service establishes criteria for programmatic golden eagle take
permits. The Service recently issued Draft Eagle Conservation Plan
Guidance for wind projects, which is expected to serve as a model for
programmatic golden eagle take permits in other contexts. We look
forward to working with the Service when it turns to the development of
eagle conservation guidance for solar projects because the protection
measures needed at wind farms, where even temporary contact with the
facility operations could result in a take, are not necessarily
required for utility scale solar projects. If structured correctly,
these proceedings could serve as a model for how to engage industry
stakeholders in other policy-making proceedings.
Conclusion
Thank you for allowing me to testify today. To summarize:
We appreciate DOI's and BLM's commitment to opening
federal lands to American renewable energy supplies that will
reduce imports and create jobs. We applaud their progress.
We urge BLM not to restrict solar development to
specified Solar Energy Zones and to recognize the considerable
effort and expense that companies have invested in existing
projects.
We ask the Committee to address the inconsistency in
the treatment of private lands with and without a federal
nexus.
We look forward to partnering with Congress, the
Department of the Interior and related agencies as solar
policies evolve to meet the needs of a growing industry.
I ask that my written testimony and a copy of Fist Solar's formal
response to the PEIS be added to the record.
______
The Chairman. And now Dr. Piszczalski. And if you can state
your name so we will all know the correct way in case we run
across you again someplace.
Dr. Piszczalski. It is pronounced Piszczalski. So it
doesn't look as daunting as it is.
The Chairman. You are recognized for 5 minutes. Thank you
very much.
STATEMENT OF MARTIN PISZCZALSKI, INDUSTRY ANALYST, SEXTANT
RESEARCH
Dr. Piszczalski. Thank you, Chairman Hastings and the full
Committee. Again, my name is Martin Piszczalski, and I am an
industry analyst with Sextant Research. I will be giving you a
perspective of how the industry is, I believe, leading to a
rather disappointing performance.
If we look at the number of agencies involved, and look at
the number of regulatory issues that they are--over land use,
habitat disturbance and so forth, that it makes it overwhelming
for the developers to move forward in many respects. And before
I go too much farther, I would like to point out that of the 60
Federal and State agencies that regulate renewable energy, I
have not encountered officials that are obstructionists. Indeed
they are advocates of renewable energy. But let us look at what
they are facing.
For a single renewable energy project, there can be 30
agencies over that 1 project, and these 30 agencies, the lineup
changes if you go to another site. There is not a standard
uniform process, sequences and so forth, that these agencies
do. Consequently, developers are surprised, caught off guard
and hitting these uncertainties.
For instance, imagine how many permits and approvals you
believe are necessary for one project. We can see right now we
are hitting 100 permits per project, and the number is going
up. Let us say the developer anticipates 50 of these permits. I
think they would be doing a pretty good job. That means they
did not anticipate another 50. These lead to delays. If a delay
is only 2 weeks, multiply that times 50, and you have a project
that is a couple of years behind schedule.
Unfortunately officials are not terribly sensitive to the
delay issue. Nevertheless, the time value of money is very
significant. In the early stages this is high-risk money. In
the later stages we have debt service levels for the term, for
the construction loans. And consequently, we have companies
that are reeling under the financial burden.
Can I have the next slide, please?
This shows BLM's timeline internally for the many permits
and approvals that BLM alone requires. I would like to applaud
BLM for even providing developers with this timeline chart.
Most agencies, you are pretty much on your own. You are even on
your own to determine which agencies you have to get in the
mix.
Could I have the next slide, please?
Consequently, the developer is scaling a mountain of
regulatory hurdles that are vague, contradictory, uncertain and
ambiguous.
If I could have the next slide, too, please.
Earlier this month, we heard Director Abbey stress that the
BLM is not denying projects. And he said, we just delay them.
And as I indicated here, delays don't kill the project, they
kill the company. An example of this would be the solar that
ran out of money. So we have projects that have one owner after
another owner, and unfortunately the new owner might not be
able to take advantage of the previous permitting work, and
then the clock starts over again.
I would like to just kind of move forward in terms of what
would a good regulation look like where it completes all
permitting in just 18 months. So not just BLM. Remember, if we
have 100 approvals, all of them must be approved, or you might
as well not have any of them approved. So let us get all
permitting approved in 18 months. We protect the environment.
We have what I will call a deterministic transparent finish
line. We know what permits we need. If we do those steps, we
will get our permits, and we will operate.
And last, we don't need an army of lawyers, and court time
is routine for those companies in our industry. And I hope that
you can see, looking at the scope of the problem, that we need
something that will massively simplify the overall process. And
I would be happy to go into what some of those solutions might
be through your questions.
Thank you very much. I appreciate the honor to be here.
The Chairman. Thank you very much, Dr. Piszczalski. I will
get it right here.
[The prepared statement of Dr. Piszczalski follows:]
Dr. Martin Piszczalski
Industry Analyst
Sextant Research
Testimony on ``American Energy Initiative: Identifying Roadblocks to
Wind and Solar Energy on Public Lands and Waters, Part II--The Wind and
Solar Industry Perspective''
June 1, 2011
[GRAPHIC] [TIFF OMITTED] T6728.006
[GRAPHIC] [TIFF OMITTED] T6728.007
Exhibit 3, Which Agencies Participate? Some Factors
Geographical location of project (which state,
county. . .)
Owner(s) of the resources (Federal, private, State,
tribal,. . .)
Which Federal agency is owner?
Specific owner for each right: mineral, surface, and
water at the site
Agency funding the development
Particular technology
Cultural, Native-American issues
Endangered, threatened species
For geothermal: depth of well, water temperatures,
resource chemistry
Power plant size
Etc.
Source: Martin Piszczalski, (734) 657.0018 [email protected]
[GRAPHIC] [TIFF OMITTED] T6728.008
Exhibit 5 `Permitting Risk,' A Definition
I define ``permitting risk'' as all things that unexpectedly delay
getting approval. From a developer perspective these include all the
unexpected i.e., after the project is well underway:
new study ordered
new set of regulations that must be met
a new form or application that must be submitted
unexpected mitigation
A regulatory requirement takes much longer than
planned or expected
another agency that must give an approval (i.e., an
agency which the developer had not known was part of the
process)
learning that the submitted application is incomplete
uncertain if agency has regulatory authority to issue
permit/approval (hence, agency may not act)
discovering that the expected process, procedure or
sequence is different than what is actually required by an
agency
learning that one agency's approval is contingent on
the action/approval of another agency
surprised by new stakeholders that previously had not
been identified
a citizen court challenge either to the developer or
challenging one of the regulatory agencies
miscalculating the time, effort, cost to secure
approval
In the most severe form, permitting risk is getting denied the
necessary approval(s). Alternately, it could have approval contingent
on conditions so onerous that they knock the project out from being
commercially viable.
My definition of ``permitting risk'' is not intended to blame
anyone. Rather permitting risks are mainly delays. They negatively
impact financing. They impact the time value of money and greatly
increase debt service costs. Some developers have a ``burn rate'' alone
of $2 million/month.
Considering that one project was recently cited as requiring 100
permits and approvals, it should be easy to see how multiple delays
occurred, that cumulatively added years to the project. Those delays
add millions of dollars to project costs. For instance, Bronicki of
Ormat said a geothermal project takes ``6 or more years & half of that
is taken up in permitting.''
Source: Martin Piszczalski (734) 657.0018 [email protected]
Martin Piszczalski 2011
______
The Chairman. Our final witness on this panel is Mr.
Reicher, who is with the Steyer-Taylor Center for Energy Policy
and Finance at Stanford University. You are recognized for 5
minutes.
STATEMENT OF DAN W. REICHER, EXECUTIVE DIRECTOR, STEYER-TAYLOR
CENTER FOR ENERGY POLICY AND FINANCE, STANFORD UNIVERSITY
Mr. Reicher. Chairman Hastings, Ranking Member Markey and
members of the Committee, I am Dan Reicher, Director of
Stanford University's Steyer-Taylor Center and a faculty member
of the Stanford Law and Business Schools. Prior to Stanford, I
was Director of Climate Change and Energy Initiatives at
Google, had senior roles in energy technology at investment
firms, and had served as Assistant Secretary of Energy for
Energy Efficiency and Renewable Energy at DOE.
In my written statement, I review the many obstacles to a
long-sought goal: the successful deployment of renewable energy
at large scale and reasonable cost. Let me emphasize that
siting renewable energy projects on public lands, the focus of
today's hearing, is an obstacle to large-scale renewable energy
deployment, but it is a relatively modest one that to a large
extent Secretaries Salazar and Vilsack are effectively
addressing.
What I worry about more than siting renewable energy
projects on public lands is successfully navigating the
complicated road that takes the renewable energy technology
from the first gleam in a scientist's eye all the way to the
routine construction of hundreds of full-scale commercial
plants on all kinds of lands, private and public. In this
regard, I am concerned that we are increasingly getting beaten
by the EU and Asia, particularly China. Thus, while in 2004 the
U.S. had approximately 20 percent of total global clean energy
investment and China just 3 percent, in 2010 China had 20
percent of that investment and the U.S. 19 percent, with this
gap widening rapidly.
And, Mr. Chairman, the stakes are enormous, with the
International Energy Agency forecasting that over $5.7 trillion
will be invested in renewable energy globally over the next two
decades. 2010 alone saw more than $127 billion in renewable
energy project financing. Unfortunately, it is looking less and
less likely that investment will be here in the U.S. As one
investor recently put it, we are not only seeing companies
start here in the U.S. And then move overseas, but we are
increasingly seeing companies start overseas and stay overseas.
Mr. Chairman, I strongly urge you to take stock of the
major obstacles we face in our Nation's regaining its lead in
renewable energy. Siting renewable energy projects on Federal
lands is worth a look, but if that is where you stop, you will
be seriously shortchanging U.S. national security,
competitiveness, and environmental protection.
My written statement highlights four critical obstacles.
The first is inadequate R&D funding. The good news is that the
U.S. has led the world over the last several decades in energy
R&D. The bad news is that Federal R&D spending in Fiscal Year
2008 accounted for just 2.6 percent of total Federal nondefense
R&D spending, a tenfold decline from its peak of approximately
25 percent in 1980. R&D spending has increased modestly since
then, but we still have a long way to go to where our
government is investing adequately. To make things worse, U.S.
energy companies currently spend little on R&D compared with
many other industry sectors, while our competitors ramp up
their spending aggressively.
The second obstacle is technology demonstration, where
small, generally underfunded startup companies work to move a
technology out of the lab to a point where it is ready for
initial commercialization. The good news is that clean tech
venture capital investors are spending billions each year to
make this happen. The bad news is these startups often have a
difficult time breaking into markets dominated by large
utilities and regulated by public utility commissions.
The third obstacle and probably the biggest is
commercialization. It involves crossing the colorfully but
accurately named ``Valley of Death,'' where companies, having
demonstrated that a technology works in a pilot plant, now have
to prove that it works at full commercial size.
In the energy investment firm where I worked, I first
peered into the Valley of Death, seeing there the remains of
many abandoned energy projects that died trying to get to
commercial scale. We and most other firms simply couldn't
shoulder the investment risk in the scale-up of an energy
technology where a single project can cost hundreds of
millions, or, in the case of nuclear plants, even billions of
dollars. In the end we made our biggest investment in corn
ethanol plans, well proven for decades at large commercial
scale.
The Department of Energy Loan Guarantee Program has helped
to bridge the Valley of Death, having issued as of May
commitments to 27 projects representing nearly $30 billion in
financing. This is a good program, but it is subject to annual
appropriation and therefore lacks the certainty the financial
community needs to commit to long-term investment in higher-
risk projects.
Far better is the bipartisan proposal to create a Clean
Energy Deployment Administration, or CEDA, that would have an
array of financial tools to accelerate private-sector
investment. Funded with $10 billion, CEDA could become a self-
sustaining entity, that is no additional appropriations, based
on its authority to take financial stakes in projects. And
while CEDA would nominally sit within DOE, it would enjoy
significant independence with its own Administrator and Board
of Directors.
The Senate Energy Committee adopted CEDA in the last
Congress on a bipartisan basis with broad support, including
the U.S. Chamber of Commerce, The Nuclear Energy Institute and
renewable energy trade groups, and the House Energy and
Commerce Committee added a version of CEDA to the Waxman-Markey
bill by a 51-6 vote.
The final obstacle is cost competitiveness, where
technology has been proven to work at commercial scale, but
where it often can't yet fully compete with traditional
technologies. This is where Federal tax incentives come in.
Unfortunately, these incentives have often been available for
only short periods of time, causing a boom-and-bust cycle. Of
particular concern today is the incentive for wind that will
expire in 2012 unless extended. And even where these incentives
are in place, companies often can't use them if they lack
taxable income. Congress created an effective alternative
providing companies with a cash grants in lieu of a tax credit,
but this program will expire in December unless extended.
In closing, I spent the last 4 years at Google. Coming from
the energy sector, I was struck by how R&D, investment and
policy come together so effectively to build an entirely new
industry, the Internet. We must take a similarly coordinated
approach between the private sector and the government to seize
the opportunity in clean energy. While siting projects on
public lands needs some attention, it is the other----
The Chairman. Director, I have to ask you to summarize and
close, if you wouldn't mind.
Mr. Reicher. Just one sentence. If we don't get our act
together, countries like China and Germany will be the winner
of this marathon with a prize worth literally trillions of
dollars and millions of jobs hanging in the balance. Thank you.
The Chairman. Thank you very much.
[The prepared statement of Mr. Reicher follows:]
Statement of Dan W. Reicher, Executive Director, Steyer-Taylor Center
for Energy Policy & Finance at Stanford University, and Professor,
Stanford Law School, Lecturer, Stanford Graduate School of Business
Mr. Chairman, Ranking Member Markey, and members of the committee,
my name is Dan Reicher and I am pleased to share my perspective on
obstacles to renewable energy deployment on public lands. I am Director
of Stanford University's Steyer-Taylor Center for Energy Policy and
Finance and a faculty member of the Stanford Law School and the
Graduate School of Business. I also chair the board of directors of the
American Council on Renewable Energy (ACORE) and serve on the Board on
Energy and Environmental Systems of the National Academy of Sciences
and the board of directors of the American Council for an Energy
Efficient Economy (ACEEE).
Prior to my role at Stanford, I was Director of Climate Change and
Energy Initiatives at Google. Prior to Google, I was Co-Founder and
President of New Energy Capital, a private equity firm that invests in
clean energy projects and Executive Vice President of Northern Power
Systems, a venture capital-backed renewable energy company.
Prior to my roles in the private sector, I served in the Clinton
Administration as Assistant Secretary of Energy for Energy Efficiency
and Renewable Energy, the Acting Assistant Secretary of Energy for
Policy, and Department of Energy Chief of Staff and Deputy Chief of
Staff. Earlier in my career I was a staff member of President Carter's
Commission on the Accident at Three Mile Island and an Assistant
Attorney General in Massachusetts.
In my testimony I will review the many obstacles to a long-sought
goal: the successful deployment of renewable energy at large scale and
reasonable cost in our country, with all the resulting economic,
security and environmental benefits. Let me emphasize that siting
renewable energy projects on public lands--the focus of this particular
hearing--is indeed an obstacle to large-scale renewable energy
deployment. But it is a relatively modest one and an obstacle that, to
a large extent, the Department of the Interior under Secretary Salazar
and the Department of Agriculture under Secretary Vilsack are
effectively addressing.
What I worry more about more than siting renewable energy projects
on public lands is successfully navigating the long and complicated
road that takes a renewable energy technology from the first gleam in a
scientist's eye and an early pilot project all the way to the routine
construction and operation of hundreds of full-scale commercial plants
with low-cost financing and good paying jobs on all kinds of land--
private and public. And in this regard I am concerned that we are
increasingly getting beaten in the race down this road by the European
Union and Asia, in particular China. Thus, while in 2004 the U.S. was
the focus of approximately 20% of total global clean energy investment
and China accounted for just 3%, in 2010, China saw 20% of that
investment and the U.S. 19%--and this investment gap is widening
rapidly.
And Mr. Chairman, the stakes are very large. The International
Energy Agency forecasts that over $5.7 trillion will be invested in
renewable energy globally over the next two decades. 2010 alone saw
over $127 billion invested globally in renewable energy project
financing. Unfortunately, it is looking less and less likely that
investment will be here in the U.S. As Will Coleman, a venture capital
investor in clean energy companies, said in a recent Senate Energy and
Natural Resources Committee hearing: ``We are not only seeing companies
start here in the U.S. and then move overseas, but we are increasingly
seeing companies start overseas and stay overseas.'' And as we cede our
competitiveness in renewable energy we are also losing the national
security benefits that come with their development and deployment in
our nation. As U.S. Navy Vice Admiral Ret'd Dennis McGinn told the
House Select Committee on Energy Independence last December:
[W]ithout comprehensive clean energy legislation, market
enhancing policies and decisive action by our nation, fierce
global competition, instability and conflict over dwindling
supplies of fossil fuels and increasing global warming will be
a major part of the future strategic landscape. Moving
expeditiously toward clean and sustainable energy choices can
greatly lessen that danger, improve global and national
economic security and help us to confront the seriously growing
challenges of global climate change and energy insecurity.
I would note that Admiral McGinn recently became President and CEO
of the American Council on Renewable Energy.
Mr. Chairman, I strongly urge you to take a walk down this road to
get a real sense about what it will take to put the U.S. back in the
leadership position it once had in renewable energy. There is some
merit in taking a look at renewable energy siting issues on federal
lands and waters--the focus of this hearing--but if that is where you
begin and end you will be seriously short-changing U.S. national
security, competitiveness, job creation, and environmental protection.
And as you look at renewable energy development on public lands and
waters, let me make a critical point: deployed significantly and well,
renewable energy technologies can actually be central to protecting
these important public resources from the impacts of climate change
such as habitat loss and species decline. Put simply, addressing
climate change--through careful but significant development of zero
carbon renewable energy sources on public lands and waters--offers a
new strategy for stewardship of these public resources.
Mr. Chairman, your May 13 hearing on the subject we are addressing
today saw several committee members and witnesses emphasize that the
real problem for renewable energy development is not so much Interior
Department permitting--which is being improved--but instead obstacles
to getting a renewable energy project built and operating like a power
purchase agreement, adequate financing, the availability of
transmission, and reliable tax incentives. I would echo this conclusion
The testimony that follows explores these and other obstacles to the
successful deployment of renewable energy at large scale and low cost
including inadequate R&D funding and the serious challenges of
technology demonstration, commercialization, and cost competitiveness.
I conclude by providing my perspective on the siting of renewable
energy projects--solar, wind, and geothermal--on public lands and
waters.
1. Obstacle: Inadequate Funding of Research and Development
The first step on the road to the successful deployment of
renewable energy at large scale and low cost begins with research and
development: a scientist or engineer pushing the boundaries of an
existing technology, inventing an entirely new one, or advancing the
basic science which underlies both. R&D funding by the U.S. government
has played a pivotal role in energy technology innovation for decades,
probably more than any other single source globally. As a 2010 National
Academy of Sciences (NAS) Study concluded, ``[f]ederally funded basic
R&D provides the starting point for many (if not most) significant
energy-related innovations, and federally funded assistance for
technology development often is the catalyst for turning technological
innovations into practical products that are sought in the
marketplace.'' With these practical cost-effective clean energy
products come many benefits starting with significant job creation.
They can also greatly reduce the price needed to control carbon
emissions. And they can enhance national security by cutting dependence
on foreign oil.
The good news is that U.S. has led the world over the last several
decades in basic and applied research--both public and private--leading
to major progress in a broad array of renewable energy technologies
from solar, wind and hydropower to geothermal and biomass. The bad news
is that more recently we have been increasingly starving U.S. federal
energy R&D, while private sector energy R&D funding has also been
declining. Measured in multiple ways we have a seen dramatic overall
reduction in the federal commitment to energy R&D funding. The 2010 NAS
study found that measured across different key research areas, federal
R&D spending on energy in FY 2008 was approximately one-twentieth
federal R&D spending on health, one-sixth of federal R&D spending on
space, and one-fifth of federal R&D spending on general science.
Compared across time, the study found that energy R&D spending in FY
2008 accounted for approximately 2.6 percent of total federal
(nondefense) R&D spending, a 10-fold decline from its peak of
approximately 25 percent in FY 1980.
In 2008, total U.S. RD&D spending on low-carbon energy technologies
amounted to less than $2.5 billion, with just $500 million assigned to
R&D for renewables. In contrast, the National Institute of Health (NIH)
received federal R&D funding worth close to $30 billion. Over the past
fifty years, such generous funding for innovation in the health sector
has created vast economic growth and jobs, ensuring U.S. global
leadership in related technologies. It is time the energy sector
followed this example.
Compared internationally, the NAS study found that U.S. spending on
energy R&D as a share of GDP is considerably lower than that of several
other leading industrialized countries. As an example, since 1990,
Japan's energy R&D spending as a share of its GDP has remained at about
0.08 to 0.10 percent. In contrast, U.S. spending as a share of GDP
continued to fall until about 1997, eventually leveling off at between
0.02 and 0.03 percent. It is worth noting that, from 1992 to 2007,
Japanese government spending on energy R&D also exceeded U.S. federal
spending on an absolute basis, even though Japan's GDP is about one
third that of the United States. And the big new player on the block is
China where in just the last couple of years government energy R&D
funding has not only surged but U.S. companies are opening new research
facilities. As an example, the Applied Materials Corporation, the
world's largest supplier of the equipment used to make semiconductors,
solar panels, and flat-panel displays, recently opened its newest and
largest research lab in China.
All of this suggests that energy R&D is less of a national priority
in the United States than in other industrialized nations. And while
the 2009 American Recovery and Reinvestment Act provided a significant
one-time increase in federal energy R&D expenditures, this is simply
not the kind of sustained change in federal R&D spending that would
indicate advanced energy technologies to be a high national priority.
President Obama's recently released budget request for FY 2012 would
provide $3.2 billion for DOE's Office of Energy Efficiency and
Renewable Energy, a 44% increase over Fiscal Year 2010 and, within
that, $1.1 billion for renewable energy programs, an increase of about
$430 million over FY 2010. It would also provide significant funding
for the offices of electricity, fossil energy and nuclear energy. If
enacted, this budget would provide a significant increase in total
spending in DOE energy programs--to about $5.5B--at a time of fiscal
austerity but, as emphasized above, the potential returns from energy
R&D are very large. And by comparison with federal R&D spending in
other areas this spending level would still be relatively modest. The
American Energy Innovation Council, a group of current and former CEO's
from major American companies like GE, Lockheed Martin and Microsoft
recently recommended that federal energy R&D spending should be
increased to something on the order of $16 billion.
One particularly deserving recipient of federal R&D funding is the
recently created Advanced Research Projects Agency-Energy (ARPA-E).
DOE's ARPA-E has the potential to mirror the success of DARPA, within
the Department of Defense. Designed to pursue an entrepreneurial
approach to energy R&D, ARPA-E focuses on ``out-of-the-box''
transformational energy research that industry by itself cannot or will
not support due to its high risk but where success would provide
dramatic national benefits. Without adequate federal funding, however,
the institutional promise of ARPA-E will not be realized. At present,
ARPA-E is significantly underfunded, with current budget allocation
under the recently passed Continuing Resolution of $180 million. This
represents about 0.6% of NIH's annual funding and 6% of DARPA's annual
budget. As a result, in its first year of operation, ARPA-E was able to
support only 37 of the 3,700 proposals it received. President Obama has
requested $550 million in the FY12 budget for ARPA-E.
In addition to public sector funding of energy R&D, transforming
the U.S. energy sector to be more secure, competitive, and clean will
also require a significant increase in private sector R&D. Compared
with other U.S. industries, the U.S. energy sector currently spends
very little on R&D as a ratio of sales, a standard measure. The NAS
report, cited above, concluded: ``Private-sector funding of energy-
related R&D is also critical for achieving the innovations needed to
reduce GHG emissions on a large scale. Here too, however, the current
picture for U.S. industries appears rather bleak.''
Data suggest that the current rate of R&D spending by U.S. energy
industries is far below that of other industries. In 2006-2007, R&D
spending for all U.S.-based companies in the top 1,400 global R&D
performers was 4.5 percent of sales, while firms in 11 research-
intensive U.S. industries spent an average of 6.5 percent. Three
industries showed especially high percentages: pharmaceuticals and
biotechnology (16.7 percent), software and computer services (10.6
percent), and technology hardware and equipment (9.6 percent). By
comparison, R&D spending by top U.S. utilities (among the top 1,400
global R&D performers) averages 0.7 percent of sales. And utility R&D
managers have reported that, due to deregulation, utilities were
shifting their R&D focus from collaborative projects benefiting all
utilities to proprietary R&D and from long-term advanced technology R&D
(e.g., gas turbines and fuel cells) to short-term projects that would
be profitable and provide a near-term competitive edge.
The level of private sector spending on R&D is motivated mainly by
its value to a firm's profitability. The NAS study concluded that
``substantial increases in [private sector] energy-related R&D
expenditures will occur only if government policies create conditions
under which firms anticipate that such spending is likely to yield
attractive financial returns in the foreseeable future.'' These include
the federal government's own commitment to energy R&D spending as well
as policies that can help move R&D results down the road to successful
commercialization
2. Obstacle: Demonstration of Technologies
We have seen a serious increase in recent years in venture capital
investment in clean energy technology with $7.8 billion invested in
2010 alone. This investment generally moves energy R&D from the lab to
a point where a technology is demonstrated at pilot scale and ready for
initial commercialization and subsequent broad-scale deployment. There
are a number of challenges in moving venture-backed clean energy
technologies out of the lab to this point. A recent hearing in the
Senate Energy and Natural Resources Committee considered global
investment trends in clean energy technologies and the impact of
domestic policies on that investment. Will Coleman, a partner at Mohr
Davidow, a venture capital firm, discussed four obstacles that energy
technology start-ups face in demonstrating their technologies are ready
for initial commercialization.
First, energy markets are often difficult to enter for a new player
because they are either heavily regulated or dominated by incumbents,
and in the case of electricity markets we often have both. The
patchwork of state and federal regulations is often difficult to
navigate for any company, in particular a small start-up. Second,
Coleman stressed that in the case of renewable energy technologies that
generate electricity, the only road to market is often through
utilities--and the public utility commissions that oversee them--both
often risk averse. Market entry for these grid-based based technologies
can often take five to ten years in the pilot stage and small
deployments before a state public utility commission will typically
approve cost recovery for broad technology deployment. This timeframe
seriously dampens interest among many venture investors in renewable
energy start-ups who often need to see growth much more rapidly.
A third challenge for most energy technology start-ups is that
without operating track records, they are unable to get access to low
cost capital to advance their technologies toward commercialization and
full-scale deployment. This means that they typically need to raise
higher cost equity or some combination of equity, mezzanine financing,
and debt to build early plants. Often the latter two sources of lower
cost capital are not available at this high-risk stage. And Coleman
notes that this can have a perverse effect: ``if venture capital firms
don't anticipate low cost capital being available to move these
technologies to scale, then they are unlikely to invest in the early
technology development in the first place.''
The fourth obstacle is that even where there are incentives and tax
credits to support new technologies, many of them are not designed for
small emerging companies. Startups do not have the balance sheets or
track records of larger corporations and have trouble securing and
monetizing the credits, incentives, and loans that have been made
available. This often forces start-ups to enter into awkward third
party relationships or go to market through the big incumbents, which
can have dramatic impact on their value and, importantly, investor
interest.
Coleman concluded in the Senate hearing:
``If time didn't matter, if we were not in a race to remain
competitive in the global economy, if the private market valued
our national security, the domesticity of our products, and the
health and environmental impacts, then ideally we would let the
market work to adopt the best solutions. Unfortunately, time
does matter and the market does not value these national
strategic interests. For these reasons, whether we like it or
not, our government must play a proactive role in encouraging
clean energy development.''
3. Obstacle: Technology Commercialization--The ``Valley of Death''
Moving down the renewable energy road, the step from R&D and
venture capital-backed demonstrations to full-scale commercial projects
and products may well be the biggest obstacle of all in the successful
deployment of renewable energy at large scale and low cost. This part
of the road involves crossing the colorfully but accurately named
``Valley of Death'' that sits between the early stages in the research
and development of an energy technology and its full commercial
deployment.
Earlier in my career I helped form and lead a private equity firm
to invest in clean energy projects. We worked with bankers, engineers,
and construction firms to get real energy projects financed and built.
It was at this firm that I reached the toughest point along the road to
large-scale cost-effective deployment of renewable energy. Day after
day we received investment proposals for energy projects with profiles
that simply exceeded the risk threshold of our capital. Had the
underlying technologies been proven in a lab? Generally yes. Had they
operated in a pilot plant? Sometimes. Had they operated at commercial
scale? Rarely. There were relatively few proposals that fit our
investment profile. In the end, we used the biggest chunk of our
capital to finance corn ethanol plants--a technology well proven at
large commercial scale for decades.
It was at this firm that I first peered into the Valley of Death,
seeing there the remains of hundreds of abandoned energy projects:
based on exciting technologies supported by DOE or venture capital-
firms; that worked well in pilot plants but died trying to get to
commercial scale; from wind, solar, biomass and geothermal, to advanced
coal and natural gas, transmission and distribution, nuclear power and
beyond. We and most other private equity firms simply couldn't shoulder
the risk in the commercial scale-up of an energy technology, where a
single project can cost hundreds of millions or, in the case of nuclear
plants, even billions of dollars.
It was interesting landing next at Google, where engineers spend
months writing computer code for a new software product, test it, and
then one day, in my simple terms, push a button and it's deployed.
Google engineers make improvements to the product and then launch a new
version. There are certainly tough engineering challenges and products
that fail. It's just that with software, products generally succeed and
fail faster and more cheaply than in the energy world. In the energy
technology world, months turn into years, and years into decades, and
billions can be spent on a single technology before even one commercial
plant or factory is operating. In the Valley of Death companies
struggle to obtain the financing needed to deploy their technologies at
commercial scale--ironically, the very point at which their
technologies could begin to have a meaningful impact on job-creation,
energy security, and environmental protection.
The Department of Energy Loan Guarantee Program, to its credit, has
been working hard to address the investment challenges of the Valley of
Death for renewable energy and other technologies. As the program's
director Jonathan Silver said in a recent Senate Energy and Natural
Resources Committee hearing:
The Department of Energy's loan programs were designed to
address these impediments and fill this financing gap. Loan
guarantees lower the cost of capital for projects utilizing
innovative technologies, making them more competitive with
conventional technologies, and thus more attractive to lenders
and equity investors. Moreover, the programs leverage the
Department's expertise in technical due diligence, which
private sector lenders are often unwilling or unable to conduct
themselves.
The DOE loan program office administers the Section 1703, Section
1705, and ATVM loan and loan guarantee programs. The 1703 program,
created as part of the Energy Policy Act of 2005, supports the
deployment of innovative energy technologies. As a result of the
recently passed 2011 Continuing Resolution, the program currently has
$18.5 billion in loan guarantee authority for nuclear power projects,
$4 billion for front-end nuclear projects, $8 billion for advanced
fossil projects, $1.5 billion for energy efficiency and renewable
energy projects, and $2 billion in mixed authority. In addition, and
for the first time, the 1703 program, historically a ``self pay''
credit subsidy program, now has $170 million in appropriated credit
subsidy, which will support a small number of loan guarantees for
renewable energy projects.
The Section 1705 program was created as part of the American
Recovery and Reinvestment Act of 2009 to jump-start the country's clean
energy sector by supporting energy projects having difficulty securing
financing in a tight credit market. Under the 1705 program, the credit
subsidy costs associated with the loan guarantees are paid through
funds appropriated by Congress. Additionally, to qualify for 1705
funding, projects must begin construction no later than September 30,
2011.
The ATVM program issues loans in support of the development of
advanced vehicle technologies to help achieve higher fuel efficiency
standards and reduce the nation's dependence on oil. Congress funded
this program with $7.5 billion in credit subsidy appropriations to
support a maximum of $25 billion in loans.
In the recent Senate Energy Committee hearing noted above, Jonathan
Silver commented on the loan program's results to date explaining that
between 2005, when the program began, and 2009, DOE did not issue a
loan or loan guarantee. Mr. Silver said that since March 2009, the
Department had issued conditional commitments for loans or loan
guarantees to 27 projects, 16 of which have reached financial close.
This represents nearly $30 billion in financing to these 27 projects,
which have total project costs of nearly $47 billion and include an
array of clean energy technologies, such as wind, solar, advanced
biofuels, geothermal, nuclear, transmission, and battery storage. The
projects include the world's largest wind-farm, two of the world's
largest concentrating solar power facilities, the first nuclear power
plant to begin construction in the United States in decades, the
world's first flywheel energy storage plant, and a biodiesel refinery
that will triple the amount of biodiesel produced in the United States.
Project sponsors estimate that these 27 projects will create or save
over 61,000 direct jobs and hundreds of thousands more indirect jobs,
and generate enough energy cumulatively to power over two million
households.
President Obama's FY 2012 request would provide $200 million in
credit subsidies to support approximately $1 to $2 billion in
additional loan guarantees for renewable energy and other technology
deployment. It would also provide up to $36 billion in additional
authority to loan guarantees for nuclear power projects.
Those of us watching from the outside have been impressed with the
recent progress and professional skills of the DOE team, but continue
to be concerned about the intricate multi-agency review process in the
loan guarantee program and the great uncertainty of the yearly
budgeting cycle. I and many others across the energy technology
spectrum--from renewables to fossil to nuclear power--believe that as
long as the loan guarantee program remains as currently structured
inside DOE, it will continue to be subject to these challenges. And I
and many other observers of the global clean energy race believe that
our country would be better served by taking a new approach to the
critically important task of energy technology commercialization.
We support significant FY 2012 funding for the DOE Loan Guarantee
Program to continue its important work in the near term. Congress
should substantially increase the funding for credit subsidies to
support renewable energy and other projects. Something on the order of
$1.5 to 2.0 billion in credit subsidies, versus the $200 million
requested, would support a good proportion of projects currently in due
diligence. However, over the longer term, supporting the financing of
capital-intensive energy projects with serious scale-up risks--in close
collaboration with the private sector--is not a good match for the
current structure, oversight, risk tolerance, and financial tools of
the Department of Energy.
Commercializing energy technology requires a new more effective
approach--and that approach is the Clean Energy Deployment
Administration (CEDA). CEDA, in strong partnership with the private
sector, could more effectively support the scale-up of clean energy
technologies--and U.S clean energy competitiveness--than the current
approach. CEDA, as developed over the last couple of years in the
Senate Energy and Natural Resources Committee--on a bipartisan basis--
would have an array of tools, such as loan guarantees, insurance
products, and bonds to accelerate private sector investment. Initially
funded with an appropriation of $10 billion, CEDA could become a self-
sustaining entity--that is no additional appropriations--based on
mechanisms in the bill that would allow it take financial stakes in
projects. Also, while CEDA would be established as an agency within DOE
it would have an administrator and board of directors, and enjoy an
important degree of independence, like the Federal Energy Regulatory
Commission, an independent arm of the DOE. As one expert in clean
energy finance put it: ``CEDA is the current loan guarantee program
with more tools and less fuss.''
In the Senate, CEDA enjoys bipartisan cosponsors and was adopted in
the last Congress by the Senate Energy Committee on a bipartisan basis.
The Senate bill has broad support including renewable energy trade
associations, the Nuclear Energy Institute, and the U.S. Chamber of
Commerce. In the House, a version of CEDA was added by a 51-6 vote of
the House Energy and Commerce Committee to the Waxman-Markey bill.
Mr. Chairman let me emphasize that one way or the other--creating
CEDA and/or making additional funding available for the loan guarantee
program--we need to ensure that we provide a serious financing
mechanism for moving U.S. clean energy projects through the Valley of
Death. Opponents of these mechanisms are concerned about ``the
government setting industrial policy,'' ``picking winners and losers,''
etc. These are understandable issues but they do not recognize several
key facts. First, virtually all our nation's economic competitors,
including China, are providing major help to companies facing the
Valley of Death. Congress, in part recognized this fact, when it
created the loan guarantee program. Second, U.S. agencies, like the
Export-Import Bank (ExIm) and the Overseas Private Investment
Corporation (OPIC) regularly provide help that is not terribly
different from the loan guarantee program and CEDA for U.S. companies
wanting to build projects in other countries. Mr. Chairman, it simply
can't be that Congress intends to make it easier to help finance energy
projects in India than Indiana.
Third, and most importantly, if the DOE loan program office finds
itself without additional funding next year, if the Section 1603 Grant
program is not renewed (see below), and if the enactment of CEDA
stalls, the federal government could find itself with almost no tools
to help with the financing of higher risk energy projects, involving
renewables and other technologies. This would be a terrible blow to one
of the highest potential areas of U.S. economic growth--and job
creation--over the next two decades.
4. Obstacle: Cost-competitiveness
Proceeding down the renewable energy road we now reach the stage
where a technology has been proven to work at commercial scale but
where it often can't yet compete fully because of higher costs than
traditional technologies. The good news is that renewable energy costs
have come down significantly over the last two decades with technology
improvements and expanding manufacturing and deployment. At the same
time, many of the renewable energy technologies still have some
distance to go in terms of cost. This is where federal tax incentives,
financing help, and related support have been so critical to the
deployment of renewable energy in our country. It is also where state
renewable energy standards have helped lower the cost of renewable
energy and drive deployment.
Federal tax incentives help lower the delivered cost of a project
or the energy it produces. There are two general categories: Investment
Tax Credits (ITC) and Production Tax Credits (PTC). The ITC and PTC
enhance renewable energy project economics, complement state renewable
energy policies, and as such have been a major driver of growth. Yet
these policies are incapable of sufficiently scaling renewable energy
development for two main reasons. First, is the generally short-term
nature of these tax credits and uncertainty surrounding their
extensions. This has resulted in a wax and wane cycle for wind and
solar development. For example, in 1999, 2001 and 2003 when the PTC
expired, new U.S wind capacity decreased by over 75% from the prior
year. This ``on again, off again'' behavior creates strong market
uncertainty and causes abrupt changes in business investments and R&D
spending.
The other significant drawback of the ITC and PTC is that they
force renewable energy development to be calibrated around the
projected availability and size of the tax equity market. Only
investors with sufficient capacity to ``monetize'' the tax credit, i.e.
with sufficient taxable income to off-set, can take advantage of them,
forcing many renewable energy project developers to rely on third party
``tax equity investors.'' This raises financing costs, driving up the
delivered cost of energy and driving down the public benefits the tax
credits produce in terms of megawatts of renewable energy delivered.
The risks of tax-based incentives were seen in the recent ups and
downs of the Investment Tax Credit for solar. The good news is that it
was extended for eight years in 2008, providing an attractive degree of
certainty for project investors. The bad news is that during the recent
financial crisis and recession the renewable energy tax equity market
shrank by 83%, from $6.1 billion in 2007 to $1 billion in 2009
To promote economic recovery, stimulate private investment, and
maintain market momentum, the ``Section 1603 Grant in lieu of tax
credits'' program (``Section 1603 Grant'') was adopted in the 2009
American Recovery and Reinvestment Act to specifically address
insufficient tax equity in the market and corresponding inability to
take advantage of the PTC and ITC. The Section1603 Grant allows project
developers eligible for the ITC and PTC to elect to obtain an
equivalent grant from the Treasury Department in lieu of these credits.
It has provided certainty for tax equity financing and boosted
insufficient tax equity supply to meet developer demand. It originally
required projects to begin construction by December 31, 2010 but in
2010 Congress extended this date to December 31, 2011.
As of May 2011, $7 billion in grants have been awarded to 2601
renewable energy projects leveraging approximately $22 billion in
private sector investment. There is a rising view that the Section 1603
Grant is a more cost-effective approach to providing incentives for
renewable energy projects than tax credits. A study conducted by
Bloomberg New Energy Finance estimated the 19,000 megawatts of wind
installed in the U.S. between 2005-2008--costing the government $10.3
billion via the PTC--could have been achieved with $5 billion in
Section 1603 Grants.
There are a number of other market-based policy mechanisms that can
help lower the cost of and drive private sector investment in renewable
energy technology. Under a ``feed-in tariff,'' eligible renewable
electricity generators are paid a premium price for renewable energy
they produce. Typically regional or national electric utilities
electric are obliged to take the electricity. Feed-in tariff policies
have been enacted in more than 60 countries and 12 U.S. states with
impressive results in driving scale and cost reduction.
Another policy mechanism is a Renewable Electricity Standard (RES)
that typically places an obligation on electric utilities to produce a
specified fraction of their electricity from renewable energy sources.
RES programs are often implemented through utility renewable energy
systems or bidding processes for independently developed generation. In
the latter approach, certified renewable energy generators earn
certificates for every unit of electricity they produce and can sell
these to utilities. The utilities then pass the certificates to a
public utility commission to demonstrate their compliance with their
regulatory obligations. RES programs can promote significant
competition and innovation allowing renewable energy to compete with
cheaper fossil energy sources. RES-type mechanisms have been adopted in
29 U.S. states as well as several countries.
Congress has been considering a national RES for several years. The
Senate Energy and Natural Resources Committee adopted an RES in 2009 in
the American Clean Energy Leadership Act. The Waxman-Markey bill,
enacted by the full House in 2009, contained an RES. More recently,
President Obama proposed a broader Clean Energy Standard requiring that
the nation derive 80 percent of its electricity from a broad array of
clean energy technologies by 2035. The Senate Energy Committee is
considering the proposal.
5. Obstacle: Siting
Having moved a renewable energy technology to a point where it
works at full scale and where the energy it produces can be sold
competitively, at least with attractive financing and some reliable
incentives, the issue of siting now is worth a look. Public lands hold
significant potential for renewable energy development. The Interior
Department estimates that more than 23.000 megawatts of utility-scale
solar is reasonably foreseeable to be developed on public lands in the
desert southwest. Offshore, DOE's National Renewable Energy Lab
estimates that the wind potential off the coasts of the lower 48 states
exceeds the entire U.S. electricity generating capacity. And U.S.
geothermal potential, using traditional and advanced technologies, is
estimated at roughly half of U.S. electricity generation. Although not
without some challenges, the Obama Administration has stepped up well
to siting renewable energy on public lands.
In May, the Departments of Interior and Agriculture issued a major
report--``New Energy Frontier: Balancing Energy Development on Federal
Lands''--that reviews issues associated with the development of both
renewable and conventional energy on Federal lands, both on and
offshore. The report emphasizes that these lands have:
``[V]ast potential for renewable energy production from wind,
solar, geothermal, hydropower, and biomass that--together with
conventional energy sources--can contribute to the Nation's
energy security and to the clean economy of the future.
However, the development of these energy resources must be
carried out in balance with many other uses and values that
serve the public interest and support the quality of life
American citizens enjoy.''
Both Secretaries Salazar and Vilsack have developed strategies to
advance renewable energy development while balancing these other
important interests. These strategies include: developing research,
policy and management tools to minimize impacts of energy development;
supporting key agencies like the Department of Energy, Federal Energy
Regulatory Commission, and relevant state agencies; and involving
interested stakeholders. The May report from the two Departments
emphasizes that:
``[T]he renewable energy strategies of both the DOI and USDA
are guided by the fundamental belief that renewable energy for
America will allow us to diversify energy sources and
ultimately reduce our reliance on fossil fuels. The development
of new renewable energy sources need not come at the expense of
our Nation's natural and cultural heritage. If promoted and
sited in a thoughtful way, new energy development can, instead,
contribute to conservation and protection of the environment.''
Two of the biggest renewable energy siting issues on public lands
have involved solar projects on desert lands and wind farms off the
Atlantic coast. Siting issues around geothermal energy projects--an
important renewable energy technology with a vast resource and 24/7
operation--is also worth consideration.
a. Desert Solar
Some of the best solar resources in the world are located on public
land overseen by the Interior Department's Bureau of Land Management
(BLM) in Arizona, California, Colorado, Nevada, New Mexico, and Utah.
Federal agencies have developed extensive processes to authorize use of
these lands for a variety of purposes, including recreation, grazing,
mining, and energy development. There is also great potential for these
lands to produce safe, clean solar energy, yet limited agency action
has delayed the permitting of solar projects for years. By contrast,
over the past 20 years, federal agencies approved about 74,000 oil and
gas drilling permits.
In June 2009, Interior Secretary Salazar moved to ``fast-track''
development of solar energy projects on federal lands. First, by
secretarial order, he withdrew from other development activities
670,000 acres in 24 potential solar energy zones that had been
identified through a number of different processes. At the same time,
Interior kicked off a long-term planning process based on a Solar
Programmatic Environmental Impact Statement (SPEIS) to designate
priority areas for development in the longer term, beginning with the
study of the 24 zones.
At the time of these announcements, BLM had already received 155
applications for solar installations. Since existing statutes provide
specifically for leasing federal land for oil, gas and geothermal
activities but not for solar energy, these applications were received
under the authority of a grant of a federal Right of Way under the
Federal Land Policy and Management Act (FLPMA). Secretary Salazar
announced that when the SPEIS was completed, that document would guide
considerations of applications going forward but that pending
applications would be evaluated based on interim standards.
The Secretary also announced that a set of fourteen large projects,
which had greater potential to be permitted and begin construction by
the end of 2010, would be given special ``Fast Track'' status. These
projects would not be subject to less stringent environmental analysis,
but they would receive priority attention from federal regulatory
officials. This December 2010 date was critical because, at the time,
the Section 1603 Grant Program (see above) could only be claimed for
projects that started construction by December 31, 2010. For many of
these large projects, the ability to monetize tax credits was critical
to their ability to secure financing because the recession froze--and
continues to negatively affect--credit markets and available tax
equity.
Under California law, concentrating solar thermal power projects
(which use mirrors to boil water, create steam, and drive a turbine to
generate electricity) are treated as power generation facilities and
must be permitted, like all other power plants, by the California
Energy Commission, even if they are located on federal land. (Solar
photovoltaic facilities, however, do not fall under the California
power plant jurisdiction and only need Interior Department approval.)
Thus, solar thermal projects have to move through two separate
regulatory processes and two separate environmental analyses, one under
the federal National Environmental Policy Act (NEPA) and one under the
California Environmental Quality Act (CEQA). To avoid this duplication,
and to make certain that the State and federal agencies were fast-
tracking the same projects, Interior Secretary Salazar and then
California Governor Arnold Schwarzenegger signed a Memorandum of
Understanding in October 2009 to integrate the two processes.
As a result of this more coordinated and focused program, nine
large solar projects were approved by the BLM prior to the end of 2010,
seven using concentrating solar technology and two using solar
photovoltaics, comprising a total of about 3650 MW. Six of these
projects are in California and three in Nevada. In addition, the
California Energy Commission permitted an additional 1100 MW of solar
thermal capacity in 2010 that is not on federal land.
Looking ahead, the further development of utility-scale solar in
the Southwest faces some challenges. These include finalizing the SPEIS
which, done well, can help provide predictability and speed in the
permit process by steering solar development into Solar Energy Zones
(SEZ) where the solar resource is high, which are near existing
transmission (or to which transmission will be constructed), and where
there are few environmental conflicts. Solar project developers have
raised concerns that the Solar Energy Zones (SEZ), as currently
conceived, do not adequately evaluate the suitability of the proposed
zones from a technical, environmental, transmission, and cultural
perspective and therefore make planning more difficult. Further, some
of the developers have stated that successful application of the SEZ
approach will likely require a larger universe of solar zones than is
described in the draft SPEIS and flexibility in expanding the zones.
A broad group of solar developers and environmental organizations
have joined together to suggest establishing Areas of Facilitated
Development (AFDs) for utility-scale solar development. AFDs would be
established, based on: technical criteria (e.g. insolation, slope); low
conflicts with biological, cultural, and other resources; and access to
transmission and proximity to load. Solar developers have said that
AFDs could provide real incentives for development within their
boundaries, such as project-specific Environmental Assessments instead
of broader Environmental Impact Statements and assurance of
transmission interconnection. AFDs could also be large enough to allow
for siting flexibility, and BLM could establish a clear process for
expanding AFDs and adding new ones.
As indicated above, to a large extent, issues related to the
permitting of solar on public lands are being addressed by the Interior
Department in coordination with developers and environmental
organizations. The current challenges in solar energy development have
little to do with permitting issues, but instead the current
unpredictability of federal incentives, financing help, and other
programs. If there is one refrain we hear constantly from industry it
is this: ``We need a consistent long-term energy policy from the
federal government.'' As discussed above, the Section 1603 Treasury
Grant program's deadline for start of construction was extended in
November 2010 but only for one year. Also, as noted, important
components of the federal loan guarantee program added by the American
Reinvestment and Recovery Act, which have been instrumental in
promoting solar energy development, will expire September 30, 2011
unless extended. These challenges will likely cause many projects to be
delayed.
Added to these policy and market uncertainties is the balkanized
jurisdictional system in the U.S. for making needed upgrades to the
transmission system to improve access to renewable generation and
simultaneously enhance grid efficiency and reliability. While the
Federal Energy Regulatory Commission (FERC) and a number of state
public utility commissions are struggling with these issues, there is a
pressing need for more regional multi-state/federal cooperation--and
for Congressional attention--to address these problems. This industry
cannot flourish without multi-state and federal cooperation on
transmission issues in the southwestern states.
It is the lack of predictability and consistency of federal
incentives and financing help, and the need for greater federal
leadership on regional transmission planning, which are the major
barriers to the growth of the utility-scale solar industry today.
Federal permitting of solar projects on federal lands needs continued
attention, and must be further improved, but that effort is on course.
b. Offshore Wind
Although existing law governing energy development on the Outer
Continental Shelf was designed for oil and gas, not for offshore wind
or wave energy, the Obama Administration has moved expeditiously to
design and streamline the permitting process and help build an offshore
wind industry. First, for years there had been serious and unresolved
disputes among federal government agencies about jurisdiction over off-
shore wind and wave development, particularly between the Federal
Energy Regulatory Commission (FERC) and the Department of Interior's
Minerals Management Service (MMS). The Obama Administration settled
this dispute through a Memorandum of Understanding between the two
agencies signed in March 2009.
Second, in April 2009, MMS issued a final ``Renewable Energy
Framework'' rule specifying the steps necessary to permit an offshore
wind farm. Third, shortly thereafter MMS announced a decision to issue
``limited leases'' for five years for sites off Delaware and New
Jersey, based on its own completed environmental analysis. These leases
would allow developers to erect meteorological towers to test wind
conditions and do other studies for potential wind farms. MMS issued
four leases to three different companies later that year. These sites
had been narrowed down from 40 initial nominations and 16 areas chosen
for potential study.
In the spring and summer of 2010, considerable uncertainty was
generated by how the environmental analysis required under the National
Environmental Policy Act (NEPA) and other environmental statutes would
be integrated with various stages of the permit process. Concerns were
also raised by several states eager to go forward with off-shore wind
about the federal process, in particular about the Cape Wind project in
Massachusetts that had struggled for nearly a decade to secure the
nation's first off-shore wind permit.
In response to this uncertainty, the Department of Interior, which
had already worked with coastal state governors on joint state-federal
planning for off-shore wind development, resolved the Cape Wind issues,
and issued a permit. In November 2010, the Bureau of Ocean Energy
Management, Regulation and Enforcement (BOEMRE), the successor agency
to MMS, announced the ``Smart From the Start'' program to streamline
the permitting and NEPA requirements for off-shore wind. BOEMRE
announced: that it had identified targeted areas off North Atlantic
states as zones for off-shore wind farms that had local support and few
environmental conflicts; that coordinated environmental studies
including Environmental Assessments (EAs) under NEPA would be performed
by the federal and state governments for these targeted areas; and that
within a year thereafter leases could be advertised and entered into by
developers.
Earlier this year, Secretaries Chu and Salazar announced the first
joint departmental ``National Off-Shore Wind Strategy'' including final
designation of the targeted zones off Delaware, Maryland, New Jersey
and Virginia that would be the subject of accelerated environmental
analysis leading to prospective leases. At the same time, DOE announced
$50 million in grants aimed at improving turbine blade design for
increased efficiency, reducing market barriers, and supporting research
into ``next generation'' drive trains. Gearless or ``direct drive''
wind turbines now under development are expected to have many fewer
maintenance requirements than current products, which is important for
off-shore facilities because of the high cost of accessing these
machines.
The principal barriers that now confront the development of
offshore wind off the Atlantic Coast today are not permitting and NEPA
barriers, they are market barriers. The Cape Wind project off
Massachusetts has its permit, but must still negotiate a power purchase
agreement for the second stage of the project under less favorable
market conditions than when it signed its first agreement, and then
find financing. As discussed above, the future of the DOE loan
guarantee program is highly uncertain, the Section 1603 Grant program
is expected to expire at the end of this year, and tax equity investors
are still scarce. The large capital investment required, low natural
gas prices leading to lower off-take prices, and the lead-time required
for a project all combine to make it more difficult to successfully
develop an offshore wind facility today.
If we are to see significant development of offshore wind, with
substantial associated domestic manufacturing, we need to ensure
predictable and sustained demand at a reasonable level. This can be
done through federal policy and, perhaps more expeditiously, through
the federal government promoting and supporting regional and state
efforts to procure offshore wind. This may include the federal
government encouraging Regional Transmission Organizations and
Independent System Operators, such as the PJM Interconnection, the
NYISO, and ISO New England to plan for large-scale transmission that
will facilitate the development of significant offshore wind projects
rather than rely on individual developers to plan and pay for separate
tie lines for each offshore project. The lack of coordinated federal
policy that addresses all barriers to creating an industry will leave a
valuable clean energy resource--in the vicinity of large population
centers--largely untapped. If we want to encourage a robust offshore
wind industry, like that which has developed in Europe and now is
expanding rapidly in China, further incremental streamlining of
permitting and related environmental processes would be helpful, but
this is only a small piece of the interrelated set of factors
inhibiting growth of the industry.
c. Geothermal
Geothermal energy is a 24/7 resource providing clean base-load
power in utility-scale quantities. The federal government figures
prominently in the future of geothermal energy in the U.S. First,
approximately 90% of known hydrothermal resources lie under Department
of Interior and Department of Agriculture lands. Second, as of 2005,
approximately half of US geothermal production occurred on federally
managed lands and many of the 7,000 megawatts of geothermal projects
currently under development will be developed on federal lands. Third,
much of the nation's advanced geothermal resources such as Enhanced
Geothermal Systems and Geo-Pressured Geothermal--which exceed 500,000
megawatts of potential--lay beneath federal lands in the west.
Compliance with NEPA and other federal and state environmental laws
add complexity throughout the development cycle. After a lease has been
acquired, completing the necessary permitting for even initial
exploration drilling can take well over a year--adding cost, risk, and
time to project development. The good news is that BLM is stepping up
to the plate as an active development partner. In 2008, the BLM, as
well as the U.S. Forest Service opened over 190 million acres to
geothermal exploration and leasing, potentially facilitating an
additional 11,100 megawatts of hydrothermal development by 2025. And
the Obama Department of Interior has moved aggressively to accelerate
geothermal development on federal lands including:
Leasing dozens of parcels of land in California,
Idaho, Colorado, and Nevada;
Approving the 236-mile ON Line transmission project
connecting Las Vegas to geothermal zones in northern Nevada;
Fast tracking over 200 megawatts of geothermal
projects in Nevada for approval;
Reaching an agreement with Colorado to accelerate
geothermal permitting.
Additionally, the Department of Energy has reinvigorated the
Geothermal Technologies Program, investing in badly needed new
technologies and demonstration projects.
Conclusion
Wrapping up, I spent the last four years at Google helping to
develop and implement the company's approach to energy policy,
investment and technology. Coming from the energy sector, I was struck
at Google by how innovation, investment and policy came together so
effectively to help build an entirely new industry--the Internet--that
has fundamentally transformed life as we know it and created vast
numbers of good paying U.S. jobs. The federal government had a large
role in the creation of the Internet, providing early R&D support and
becoming one of its initial users. Critical policy decisions by
Congress, a series of Democratic and Republican Administrations, and
regulatory bodies like the FCC, set smart rules of the road for
development and use of the technology. Trade policy has helped ensure
opportunities for U.S. companies in advancing the Internet across the
globe.
We must take a similarly coordinated approach between the private
sector and the U.S. government in order to seize the opportunities in
clean energy technology. We face declining federal R&D funding,
inadequate financing mechanisms, unreliable incentives, and a lack of
transmission capacity. While siting of renewable energy projects on
public lands needs some continuing attention, it is this broad array of
other obstacles that really cry out for help.
And arguably, cooperation between industry and government is even
more critical in clean energy technology than the development of the
Internet as the stakes are higher in terms of our nation's security,
competitiveness, health, and environment. We tend to measure progress
in information technology in months or years. In contrast, we measure
progress in energy technology in decades. If we don't get our act
together between our government and the private sector, other
countries, like China and Germany, that are taking the long view when
it comes to clean energy technology, will be the winners of this
marathon. A prize worth trillions of dollars and millions of jobs hangs
in the balance--to say nothing of our national security and the future
of the planet.
______
The Chairman. And I want to thank all of you on the panel
for your testimony. We will start the round of questioning, and
I will begin. But before I do, I just want to make an
observation.
It is very interesting hearing the tone of what you are all
saying, at least from some commonality, and you are asking this
Committee to consider what I think any, any, any energy
production committee would ask for, whether you are talking
about renewables or fossil fuels or whatever, and that is
certainty so that you can proceed forward from whatever,
whether it is regulatory or statutory. And I certainly hear
that loud and clear, and I just want to make that observation.
By full disclosure, I should say, too, that my district has
a lot of diversity in its energy. I come from an area where
hydropower is the primary source of energy. But as Mr. Resch
alluded to, I have a manufacturer of solar components in my
district. There is going to be a solar facility in one of my
counties that is in the planning stage, and I understand my
district is the 15th largest wind producer in the country. So I
am very much in favor of an ``all of the above'' energy plan,
as I mentioned in my opening statement.
But there is always one caveat that I think we always have
to take in mind as policymakers, and that is that the ultimate
purchaser of our energy is going to be the consumer, and they
want the best possible price that they can get, and that is
something I know you are all striving for. But we should never
lose sight of that. That is why I think an ``all of the above''
energy plan is so important.
Now, I have just one question, and this is alluded to by
virtually all of you in your testimony. The question may answer
itself, but I think it has to be asked from the standpoint to
get it directly on the record. All of you in one way or the
other alluded to problems you had with permitting and so forth.
So my question to all of you is this: Do you believe that the
Bureau of Ocean Energy Management, Regulation and Enforcement,
or BOEMRE, and BLM, Bureau of Land Management, has an efficient
and effective process for reviewing and approving permits and
plans in a timely fashion right now?
Mr. Roberts, I will start with you and just go down the
panel.
Mr. Roberts. Thank you, Mr. Chair. No, I don't.
The Chairman. OK. You don't have to elaborate if you don't
want to, because that is what we are trying to find out.
Go ahead. Ms. Reilly?
Ms. Reilly. I would say that these bureaus are full of
people who are very well intended and people who care about the
environment. I think we heard that from one of the other
speakers today. But we need much improving and streamlining in
the efficiency of the bureaus.
The Chairman. Thank you.
Mr. Gordon.
Mr. Gordon. I think under Secretary Salazar's leadership,
he has come in and he is making reforms and trying to expedite
the review process for offshore wind with the Smart from the
Start initiative. It is going to take a lot of work.
The Chairman. It is not efficient and effective right now
then?
Mr. Gordon. It could be more efficient, sir.
The Chairman. Thank you.
Mr. Lanard.
Mr. Lanard. Thank you, Mr. Chairman.
When I started in the offshore wind industry 5, 6 years
ago, the permitting timeline under the Federal Government
looked like it was 7 to 9 years. Under Director Bromwich and
Secretary Salazar, we have cut 2 years off of that. We are now
5 to 7.
Director Bromwich testified recently before your Committee
and talked about the fact that the permitting process still
needs to be refined more. So we do agree with him. We would
like to see that refinement. We are satisfied that the agency
is committed and working very hard to find those time savers,
and I think we will see them in the next 6 months to a year as
we move forward with leasing for the Outer Continental Shelf.
The Chairman. Mr. Resch.
Mr. Resch. Two quick points. There has been great
improvement, as everybody has said so far, and I certainly
concur with that, and we hopefully are going to see that
continue, and hopefully it will continue along the lines of
what other energy industries enjoy.
And just to kind of give you a quick example, the oil and
gas industry received 1,308 permits to drill on Federal lands
last year, and we were ecstatic to get 9 in the solar industry.
So the technology and the emphasis that the Bush Administration
focused on expediting oil and gas permits, I think, can be
applied directly to renewable energy permits as well, and we
can see it move faster.
The other competing issue, of course, is the fact that you
have not only a permit process through BLM, but you also have
these Federal tax policies that expire and create a tremendous
amount of stress on everything within that system. So if we had
extension also of the tax policy, I think it would streamline
and make things easier at BLM as well.
The Chairman. Mr. DeRosa.
Mr. DeRosa. We have had a positive experience with BLM. I
mentioned our Silver State North project that was permitted
with alacrity, and we have other projects that are in the fast
track of BLM's designation that are proceeding through the
process. So we applaud the dedication that BLM has given to
this sector, to this permitting.
The Chairman. I heard you say it, Mr. DeRosa, but you also
pointed out one individual, and I would just simply say if the
success of any project is reliant on one individual, that is
not good policy.
Mr. DeRosa. Right.
The Chairman. Clearly I want to make that point.
Mr. DeRosa. I appreciate that. I wanted to give credit
where credit was due there. But on the other hand, we want to
make sure that the policy going forward is an expansive policy,
that there are not prohibitions.
The Chairman. My time is about running out. I asked the
question if you think it is efficient right now, and I am
hearing generally from you that there could be improvements,
and some need a lot of improvements.
Mr. DeRosa. Yes.
The Chairman. OK. Dr. Piszczalski.
Dr. Piszczalski. Within the current structure, I think BLM
is doing fine, and I hope that I conveyed that it is a
structural problem. We still have--for a typical project half
the time is being spent on permitting. That means there is a
lot of room for improvement.
The Chairman. OK. Mr. Reicher.
Mr. Reicher. Chairman, I think we have seen significant
improvement in the programs. Obviously, like all programs, they
can be improved further. But I would emphasize that permits
without adequate policy, financing incentives and the like
aren't a very useful device.
The Chairman. Thank you all very much.
Mr. Markey, you are recognized.
Mr. Markey. Thank you, Mr. Chairman, very much.
In the Republican budget they kept in the $20 billion for
loan guarantees for nuclear power projects, but zeroed out the
money for loan guarantees for wind and solar. Can we go down?
We will give each one of you a chance to answer yes or no.
Would you like to see the line guarantees for renewables
restored? I will make it a positive for you so you don't have
to say no. You can each say yes, if you would like.
Mr. Roberts. From an industry perspective, yes.
Mr. Markey. OK, good. Thank you.
Ms. Reilly?
Ms. Reilly. Yes, we would. We think that a level playing
field would be tremendously helpful.
Mr. Markey. OK. Good. You would like them restored. Yes.
Mr. Gordon?
Mr. Gordon. Absolutely, yes.
Mr. Markey. OK. Yes.
Mr. Lanard. Mr. Markey, in bold, 72-font, underlined, yes.
Mr. Markey. Thank you.
Mr. Resch. Absolutely. A critical program.
Mr. Markey. Thank you.
Mr. DeRosa. Yes.
Mr. Markey. Thank you.
Dr. Piszczalski. Yes, the incentives do make a big
difference.
Mr. Reicher. Loan guarantees with credit subsidies
absolutely, and let us get on to a more reliable program, which
would be the Clean Energy Deployment Administration.
Mr. Markey. No, we are ready for question number 2. You are
too smart for Congress. We are going to break it down a little
bit. Let us move on here. He is the kid with his hand up right
from the first grade, you know?
The Republican budget also cut the clean energy programs,
you know, the alternative to oil programs, by 70 percent. Would
you like to see that money restored for the clean energy
programs that was cut out of the Republican budget? Yes, sir?
Mr. Roberts. I am not familiar with those programs.
Mr. Markey. Good. Thank you. You should familiarize
yourself with them. I think that would be a good idea. It is
the clean energy part of the Federal budget.
Ms. Reilly?
Ms. Reilly. Yes, we would.
Mr. Markey. Thank you.
Mr. Gordon. Yes, we would.
Mr. Markey. Thank you.
Mr. Lanard. Yes, we would.
Mr. Markey. OK. Thank you.
Mr. Resch. Absolutely.
Mr. Markey. Thank you.
Mr. DeRosa. Yes.
Mr. Markey. Thank you.
Dr. Piszczalski. I would say yes, with better targeting,
too.
Mr. Markey. OK, good.
Mr. Reicher. Yes.
Mr. Markey. OK, thank you.
And, more predictably, would you like it all to be more
predictable for a 4- to 5-year period on all of these tax and
loan guarantee programs for your industries? We will go down
again. A yes is the preferred answer.
Mr. Roberts. Yes, predictability is really important.
Mr. Markey. OK. Thank you. Yes.
Ms. Reilly. Yes, absolutely.
Mr. Markey. OK. Thank you.
Mr. Gordon. Yes.
Mr. Lanard. As the Chairman said, it certainty is very
important, yes.
Mr. Markey. Good. Thank you.
Mr. Resch. Yes. And just to put it in perspective, we are 1
gigawatt today. We expect to be 10 gigawatts annually by 2015
if we can keep these programs in place.
Mr. Markey. Great. That is great news.
Mr. DeRosa. Yes. And let me just say it is that
predictability of those programs.
Mr. Markey. I have other questions. Yes. Next?
Dr. Piszczalski. I would say yes, especially because the
financing is so hard to handle.
Mr. Markey. Thank you.
Mr. Reicher?
Mr. Reicher. Yes.
Mr. Markey. Thank you.
Now, in the Republican appropriations bill for 2012, they
actually are $4 billion below the President's program for the
Department of the Interior, and we heard here at this table 2
weeks ago from the Director of the BLM, from the Bureau of Land
Management, that those kind of draconian budget cuts will slow
down their ability to be able to deal with all of the kind of
the technical issues that you would like to in your testimony
have a telescoped timeframe to deal with so we can move more
quickly toward permitting of wind and solar projects. But if
they have much fewer personnel, it is going to be a lot harder
for all of them because of all the projects you have planned
all an across the country.
Ms. Reilly, would you say that $4 billion less for the
Department of the Interior will likely increase or decrease the
amount of time it takes for the Department of the Interior to
deal with those permitting issues that you were referring to in
your testimony?
Ms. Reilly. The reduction in the budget is clearly going to
put more strain on the operations within those agencies.
Mr. Markey. Can we just go down? Do you all agree this is
not the time for us to be decreasing the budget in the areas
where you are trying to have an expedited dealing with all of
these very sophisticated issues of environment and ESA and wind
and solar issues all now combined really for the first time?
Mr. Roberts. Cutting the DOI's budget will increase the
permitting time and is not in the national interest.
Mr. Markey. Great.
Ms. Reilly. The good news is the BOEMRE budget was not
decreased significantly, perhaps because the focus was more oil
and gas, but we would like them----
Mr. Markey. No, BLM I am talking about. You are an offshore
guy. OK, good. BLM.
Mr. Gordon. I concur that the programs that have been put
in place by Secretary Salazar need to be funded in order to see
the results that the country is really requesting.
Mr. Markey. Mr. DeRosa?
Mr. DeRosa. I agree.
Mr. Markey. Good. Thank you.
Dr. Piszczalski. Yes, in the current structure, they will
lead to more delays.
Mr. Markey. OK, good. Thank you.
Mr. Reicher. Having been a bureaucrat for 8 years, when our
budgets got cut, we could do less on the regulatory side.
Mr. Markey. Thank you. I appreciate it, and I thank all of
you for your testimony.
Thank you, Mr. Chairman.
The Chairman. We have just been advised that a vote is
imminent on the Floor, so that will probably disrupt where we
are.
The Chair recognizes the gentleman from Louisiana Mr.
Landry.
Mr. Landry. Since Mr. Markey has done such a wonderful job
of training you all how to answer, if you could just stay in
that pattern.
Wouldn't you all, if you would, if any of you all have
children, wouldn't you like your children to have the same
opportunity or a better opportunity than you have had in
today's America? And do all of you all work under budgets,
meaning you can only--revenue comes, and you spend that
revenue? I just want to make sure we level the playing field as
to why maybe some of these cuts are here.
I do understand, and I am just shocked at the constant
problem of permitting and uncertainty. I think it is Dr.
Piszczalski's slide--if you wouldn't mind, I would like to
borrow that and make it a yard sign for the White House and the
Capitol, the guy climbing up the hill with the permitting
process, because we have that in all of the industries. In
fact, I think it was--I can't see the names over there. Where
are my names? One of you said that you are having problems in
the judicial process.
So my question to each of you would be wouldn't you all
support an across-the-board reform of the judicial process and
the permitting process in the Federal Government, across-the-
board meaning for all industries, whether it be solar, wind,
nuclear, oil and gas?
Mr. Roberts. Congressman, getting certainty around siting
and permitting is extraordinarily important. So if we could
figure out a way to protect the environment and yet make a
timely, efficient process, that would be extraordinarily
important.
Mr. Landry. Regardless of the industry, it should be that
for every industry.
Ms. Reilly. Yes. Certainty in the process is paramount. But
also a focus--the fast-track program that we have heard about
today has been very successful for solar so far. We haven't
seen that for wind. We think that there needs to also be a
focus on getting things on a fast track, but also getting them
out at the other end. So a focus on outcomes and delivery is
also helpful.
Mr. Landry. For all industries.
Ms. Reilly. For all industries, business and government,
everywhere. The focus on the outcome is important.
Mr. Landry. Great.
Mr. Gordon. I think any time we can cut unnecessary delays
and procedures across a wide range of industries is a good
thing.
Mr. Lanard. Congressman, I can only speak to the offshore
wind industry perspective on this. I can't speak to the
industrywide question that you have raised. We work with lots
of different stakeholders, and there are a number of groups,
mostly national environmental groups, that have concerns about
the National Environmental Policy Act. They feel that it is a
very important component of their role in protecting the
environment and endangered species, and they would have perhaps
wanted a better understanding of how we get to that certainty
and we work closely with them. So we would want to work with
those national groups to have a better understand of how
judicial reform and some of the other certainty questions that
you are asking would apply.
Mr. Landry. Who had the problem with the eagle?
Ms. Reilly. I did.
Mr. Landry. You understand? Look, you all can be nice and
sugarcoat this over here, or you can just say it as it is, and
that is we are having a problem with uncertainty in any
industry. And I think it is fair to say that regardless of what
industry, whether it is the solar, or the wind, or the oil and
gas industry, or the nuclear industry, we should be out here,
this Federal Government should be out here, getting the message
that we need to create certainty in all of the industries. It
is not fair for us to create certainty in your wind industry
and solve the problem of the eagles for you to build your wind
farm, when there may be a snail that is inhibiting the
Chairman's ability to build a hydrodam.
What I am saying is everyone has to be on the same level
playing field, and that is what I am trying to get you all to
tell me is whether you support everyone being on the same
playing field or not in the permitting and the judicial
process.
Mr. Resch. Before I came to the solar industry, I worked in
the natural gas industry, a lot of time on lands issues, very
similar kinds of issues that the solar industry is facing
today. So I can say pretty clearly that both industries would
be able to substantially lower costs to the consumer for their
products if you had a streamlined regulatory and permitting
process, yes.
Mr. DeRosa. Yes. I agree. There needs to be common
standards, certainty and predictability.
Dr. Piszczalski. As part of my work, I see what other
countries are doing. So for instance, the Netherlands does have
a much more standardized permitting process for shopping
centers, everything. At the same time, we have to have the guts
to be able to kill these projects too. Right now we let them
drag on and just whack at them with a dull knife. If it is a
bad project, I think we need to kill it as well.
The Chairman. Answer real quickly. We have a vote going. So
answer real quickly. We want to get these questions in before
the vote ends.
Go ahead, Mr. Reicher.
Mr. Reicher. Certainty certainly helps, but I think we have
to strike the right balance between the speed of development
and other key issues like environmental protection.
The Chairman. The time of the gentleman has expired.
Mr. Holt, I just want to advise Members that there is a
vote on the Floor right now. We will try to get these questions
in as quickly as we can.
Mr. Holt, you are recognized for 5 minutes.
Mr. Holt. Thank you.
Of course, there is much to be said about--and not enough
time to say it--about the cuts in the research and development,
the cuts in the DOI budget, that will affect permitting, adding
loopholes for Big Oil while making it harder for the
alternatives.
Mr. Roberts, I wanted to talk to you a little bit about tax
policy. We deployed something on the order of 10,000 megawatts
of wind a couple of years ago; and then less, about 7,500 the
following year; and then last year it was less, down to about
5,000. It seems to me there is a relationship between the
number of years left on the tax credits and the number of
megawatts we are able to deploy. Do you see a connection there?
Mr. Roberts. Again, it is all about long-term uncertainty,
and it is extraordinarily difficult on the manufacturing side.
We have had great success bringing over 400 manufacturers just
for wind alone into this country. And lack of long-term stable
policy----
Mr. Holt. Thank you.
It is worth pointing out that in 2005, the Congress, we
passed a law regularizing the regulatory guidelines, and they
were not implemented by the last administration. So following
Mr. Landry's comments, I would like to point that out.
We should be talking about jobs here. Let me ask Mr.
Roberts and Mr. Resch, how many jobs today in your industries--
defined broadly, how many jobs are associated with the projects
that you think are reasonably on line or could move ahead
promptly? And need we compare this with the Big Oil companies
that, despite hundreds of billions of dollars of profit,
actually are employing 10,000 fewer people?
Mr. Resch. I will give it a shot. It is a little bit tricky
because the policy we are talking about really affects the
entire industry regardless of whether you are distributed
generation or----
Mr. Holt. OK. How many jobs today in the industry?
Mr. Resch. We have about 100,000 jobs. We did a census this
time last year.
Mr. Holt. OK. And define reasonable projects some way or
another.
Mr. Resch. If we look at the utility-scale projects that we
consider reasonable, there is about 25,000 megawatts of those
projects. About 20,000 new jobs will be created by those
projects on site at the facilities. And then you have all the
secondary jobs, manufacturing, around them.
Mr. Holt. Mr. Roberts?
Mr. Roberts. In a study by the previous Administration, it
was estimated that if we hit our 20 percent goals on wind, that
there would be close to 400,000 to 500,000 new jobs. So the
question, I think, ultimately is how do we continue to build
off of the success? Right now we have 75,000 jobs in our
industry.
Mr. Holt. Mr. Reicher, you spoke about research and
development and some of the cuts in store there in a rather
small percentage of both revenues or--by any measure, the small
investment in research and development. What kinds of
innovations in wind capture and energy transmission might be in
store there, and what would be a reasonable investment in
research and development, private sector, public sector?
Mr. Reicher. In terms of technologies, Mr. Holt, there is
an extraordinary array of opportunities with wind turbines,
moving from turbines that use gears to turbines that don't use
gears, to so-called direct-drive wind turbines that would
improve the efficiency, lower costs, lower the need for
service. So that is one thing. Offshore wind turbines, we heard
earlier, lots of revolutionary things can be done to build
those better, cheaper, faster than we do today.
In terms of funding, I am just floored that we are spending
roughly one-tenth of what we were in 1980 in the energy R&D
area. We were at 25 percent of Federal R&D spending in 1980. We
are at a tenth of that today.
Mr. Holt. Let me get a quick question in, if I may, for Mr.
Lanard. Does the government have a role to do a better job in
characterizing the offshore wind out there, or will private
industry be able to do it?
Mr. Lanard. Congressman, I listened to your question to the
last session on this as well, and I think that the industry can
do it. There are still some proprietary techniques that the
industries are using for competitive advantage, so right now
our recommendation would be to at least leave that to the
developers. There is plenty for the Federal Government to do
with the permitting process.
Mr. Holt. Thank you, Mr. Chairman.
The Chairman. The time of the gentleman has expired.
Mr. Gosar is recognized for 5 minutes.
Dr. Gosar. I am going to try to keep this brief, and I hope
you would keep your answers brief. I am a businessman; I am a
dentist. I am also from Flagstaff, so I have seen innovative
industries. Motor Excellence is one reinventing how we look at
electric engines, and Southwest Wind Power, all at our back
door, all in our backyard and garages. So the business model I
have got to concentrate, I have heard the complementary aspects
from the Democratic side talking about lack of funding.
Let us go back to the business model. Real quickly, in a
percentage of your budgets, how much goes to administrative
aspects and judicial aspects within your businesses toward
permitting?
Let me give you a real quick question or analogy. The Army
Corps of Engineers gives the Flagstaff city a grant of $3
million, yet 60 percent of that is lost in administration. I
want to make sure we are talking efficiency here.
So how much money out of your budgets goes to the
permitting process having to deal with the justice--and, oh, by
the way, I also want you to talk to me also about how much
money or have any of you had to deal with lawsuits from equal
access to justice accounts? So give me a number.
Mr. Roberts. I am not aware specifically industrywide
exactly that number. Unfortunately, it is relevant to us, and
it does seem to be increasing in a lot of projects.
Dr. Gosar. Would you say it is 50 or 60 percent?
Mr. Roberts. I don't think it is that high.
Dr. Gosar. Really. OK.
Ms. Reilly. I don't have a number that I can give you, but
it is a significant part of the development costs, and quite a
lot of what our company does is development and construction.
But in the development phase of a project, a large part of the
spend is focused on permitting.
Mr. Gordon. Mr. Gosar, the Massachusetts Bar Association
has voted me client of the year for the last 10 years in a row.
I would say that over 70 percent of our investment in the Cape
Wind project, which I mentioned before, has gone to permitting
and judicial. But here is the saddest part of it all: The
judicial is driven by basically one opponent. And although the
project has the support of over 86 percent of Massachusetts
citizens, the national, local, regional environmental
organizations, labor, health advocates, the Massachusetts
Legislature, the Patrick Administration, the congressional
delegation, one small group can tie you up in knots for many
years.
Dr. Gosar. Thank you.
Mr. Lanard. I don't want to contradict my colleague here,
the client of the year, so I will just pass. I agree with him.
Mr. Resch. We represent large-scale and small-scale solar,
and I think that the biggest problem is not necessarily the
percentage, but how it becomes a fundamental barrier for small
businesses to enter in and actually have a business, where you
can't spend the $10 million or the $20 million to get from
concept to contract. And that, I think, is a huge barrier for
frankly what is the backbone of the American economy, small
business.
Mr. DeRosa. Representative Gosar, I will give you some
numbers. First of all, we have a small project in your
district. But these larger projects, utility scale, we might
spend $20 million in the development of those projects, and I
would say roughly $5 million of that goes to the permitting
process.
Dr. Piszczalski. I think that it is difficult to put your
finger on the figure. For instance, if there is a delay that
can have the company not hit its contracted delivery date of
the power, and hit penalties there, because the utility doesn't
get the power when they expect it. But to give you one number,
for instance, SunRun of San Francisco spends 33 percent of
their costs on permitting.
Mr. Reicher. I am going to take a different view. There are
development costs in a project, and there are finance costs. I
was in the project finance business for a number of years. You
can face a significant percentage of development costs for
permitting. The big costs in a project, the vast proportion of
costs, are in the project finance, the equity and the debt. We
just heard 5 of 20 million, but this could be a solar project
that costs hundreds of millions to ultimately bill.
You have to be careful when we say that it is a high
percentage. It could be a decently high percentage of the
small, relatively small, development costs. It will be a very
small percentage of the total project costs.
Dr. Gosar. However, each time that you have a delay, that
is running money.
Mr. Reicher. No doubt. But, again, let us be careful here.
When you are talking about these projects that are measured in
hundreds of millions and billions of dollars, permitting costs
are a very small piece of that.
Dr. Gosar. When you start looking at the processes in my
district, when we are talking about a NEPA process now going on
to 6 years, and we are looking at these lawsuits, we got
projects on the Native Americans that they go through another
step. They go through the BIA, which is another hurdle. How
absurd is this? Some of these projects will never, ever see
fruition because of the agencies.
Thank you.
Mr. Reicher. Those absolutely need to be fixed. No doubt. I
just want to correct the math.
The Chairman. The time of the gentleman has expired.
Unfortunately, we are going to have to break. We only have
2 minutes on this vote, and we have two Members that want to
ask questions. So we only have one vote. We will recess so the
Members can go over and vote and come back. Let us try to set a
target time of 1:20 to try to reconvene.
The Committee stands in recess subject to the call of the
Chair, which we hope will be around 1:20.
[Recess.]
Mr. Lamborn. [presiding.] The Committee will come back to
order, please.
Thank you for your patience while we took a vote recently.
I will be filling in as Chairman now for the remainder of this
hearing. Thank you for being here today. I know a couple have
had to get to the airport. Thank you also for your indulgence.
Because of the meeting at the White House, which wasn't
anticipated until maybe even yesterday, that pushed everything
back for our schedule today. So sorry for any inconvenience,
but we appreciate your finishing up the hearing.
I believe the next person in line to ask questions is
Representative DeFazio of Oregon.
Mr. DeFazio. Thank you, Mr. Chairman.
For Mr. Roberts with AWEA, the AWEA sent out a press
release on May 17th that refers to nitrogen levels in the
Columbia. The controversy is that we have perhaps what one can
say is too much of a good thing, too much wind, too much hydro.
BPA has curtailed as much thermal as they can curtail and is at
this point having to curtail wind, and the wind energy is upset
because they--even though their customers still get their
electricity, as you know, you don't get your subsidies through
the tax system.
So, you are purporting to say that we could spill more
water, depending upon Save Our Wild Salmon. And I am a bit
curious, are you an attorney?
Mr. Roberts. No, Congressman, I am not.
Mr. DeFazio. All right, you are not an attorney. Good,
because I am not either. So we are off to a good start.
But the point here is that the judge, who is both an
attorney and a Federal judge and lord and master, has said EPA
must comply with the Washington State standards. That judge has
ruled that. Save Our Wild Salmon doesn't like that, and, you
know, if we followed the lead of Save Our Salmon, we would kind
of incur the wrath of the judge. So I would suggest that you
might look for other practical ways of addressing this issue.
But that is not one, given Judge Redden's position on this
issue, which is quite firm, that we cannot increase the
dissolved gas levels.
So since spill is not possible, I guess I would like to
ask, the implication here is that--I mean, first off, it seems
to be--as I said, it is not preventable, but second, are there
things we could do so that you could continue to produce and
get your tax subsidies while we have high-water years? And I
think, yes, there are a couple of things.
One would be improved transmission. BPA is looking at
improving the DC line. It would be phenomenally expensive.
Would the wind energy producers be willing to share in the cost
of improving transmission if they could be given more assurance
that they could transmit their power and get their tax subsidy
during periods of high water?
Mr. Roberts. Congressman, on the nitrogen levels, I agree
with you that this is a very thorny issue.
Mr. DeFazio. Look, we are done with nitrogen levels. I
mean, the judge has ruled. The judge has ruled. I agreed with a
lot of what the judge has done, as has Doc Hastings, but that
is where we are at. So let us get on to the other issue.
If we could look at other ways of allowing you to continue
to produce electricity so you can get your subsidies--even
though your customers are always held harmless in this
condition, but so you could continue to get your subsidies--in
order to get those subsidies, would you be willing to pay some
of the costs of upgrading transmission to your customers in
California?
Mr. Roberts. Congressman, of course we would. I mean, to
make a more flexible system. One point I do want to disagree
just slightly is we have contracts, and those contract
obligations potentially will not be met. It is more than
subsidies.
Mr. DeFazio. Well, your obligations are met in that these
people are getting their power. California has some very
perverse rules regarding what is renewable and what isn't, and
they don't seem to like hydro, so therefore these people aren't
meeting their renewable energy requirements. I would say that
that is a problem you have with the State of California and not
with the Northwest region.
I mean, the bottom line for me is our ratepayers are not
going to subsidize you since taxpayers already are, and if you
want to bump us off the system somehow, that is a problem and a
concern. I represent the Northwest, I represent Northwest
ratepayers, and we are looking for a way out of this. To me,
that would be enhanced transmission, and I am pleased to hear
you would be willing to negotiate some additional cost to the
industry to looking at upgrading the DC line, which might be a
solution that works for both. That way, other ratepayers could
avoid that part of the cost, could benefit you, and then your
customers could still get their electrons, which apparently are
labeled with a W as opposed to an H down there in California so
that they can meet their obligations for the State. But I think
the State might sort of rethink some of their bizarre
rulemaking down there.
Thank you, Mr. Chairman.
Mr. Lamborn. Thank you.
Now Mr. Duncan of South Carolina.
Mr. Duncan. Thank you, Mr. Chairman. I appreciate the
Chairman having this hearing.
The first time I saw wind power was over in Germany. I was
fascinated with the windmills. Then I was out in the Chairman's
hometown, Pasco, Washington, and saw some windmills out there,
and actually were able to drive up and stand right under them,
and sort of looking into the wind industry at the Hanover trade
fair in Germany as well. So I appreciate the industry being
here to talk with us about this.
You know, sitting on this Committee, I can tell you, most
of us are all about a complete and comprehensive energy policy
for this country, which includes renewables of wind, solar,
hydrogen, algae production for fuel. We just saw the Blue
Angels, I believe, fly on algae jet fuel. So we will continue
down that comprehensive energy policy, but we cannot ignore the
fossil fuels, the hydrocarbons and also nuclear power. So I
want to make that statement.
But what we see out of this Administration is them saying
one thing and doing something completely different; saying that
they are all about renewables, about increasing opportunities
there, but then they tie your hands with the regulations, and
they tie your hands with areas that they are going to allow
some of this wind farms or solar fields to be implemented.
Last week, Mr. Chairman, we discussed in the Subcommittee
the Fish and Wildlife Service and the amount of land they are
wanting to continue to buy, and they can't maintain what they
have now. They are asking for more money. It was very obvious
they can't maintain the new structures that were being built
with stimulus money.
Looking at this map, and thinking about the Western States
where the solar possibilities are, and thinking about how much
Federal land is owned in Utah and Arizona and New Mexico, and
wondering how much in this darkest circle here could possibly
be used for solar power. It is ungodly, the amount the Federal
Government owns. I know the Western Caucus has been talking
about this, trying to reverse that trend and put some of that
land back in private hands.
Another Committee hearing we had, Mr. Chairman, we talked
about the secretarial order that Secretary Salazar, I think,
signed in December to expedite the designation of wilderness
areas from wilderness study areas. Only Congress has the
ability, I believe, to designate wilderness area, but the
Bureau of Land Management is implementing what the Secretary,
their boss, told them to do.
So we are having properties being taken off the table
designated as wilderness areas, and once they are designated as
wilderness areas--and I have been to the Bob Marshall
Wilderness Area in Montana. I know what you can and cannot do
there. You can hike or go on horseback, and the only other
means of transportation going in there, hiking and horseback.
You take everything in that you need, and you pack it all back
out. There are no telephone lines, no power lines, no cell
towers, no roads, no bridges. And so once these properties are
designated as wilderness areas, they are off the table for
good, and you won't be able to put a wind farm or a solar field
there at all.
So, anyway, I want to change the line of questioning here
and tell you from South Carolina, we might have a little wind
off our coast. There is one little area off Georgetown that
might be a possibility. And the reason that is the only
possibility is that is the closest area to the grid.
Having access to the transmission lines are one of the
biggest obstacles, I think, to wind power in this country. You
can simply ask T. Boone Pickens, who was running down that
track and realized that was the number one obstacle. It would
be the biggest cost hurdle for him in developing solar. Then
you had the fuel prices change. I think that helped out a
little bit, or stymied him a little bit.
So the questions I have, first off, is what do we need to
do to increase access to the grid? Is that an issue? Because I
haven't heard it, and I haven't been sitting here the whole
time.
Then the second thing I want to ask is about the golden
eagles. I would like to find out from Mr. Roberts, how many
golden eagles have been killed in the last 20 years? I am going
to ask you that one first because that is an easy one.
Mr. Roberts. Congressman, I defer this to Ms. Reilly,
because she has been working on that issue.
Ms. Reilly. Sir, we recently have a report on the
mortalities with the golden eagles, and if you look at the
mortality rate of eagles killed by human sources, the wind
industry accounts for less than 1 percent. In the last 24
years, 24 years, we calculate about 12.
Mr. Duncan. When you say less than 1 percent, is that from
wind, or is that from all human sources?
Ms. Reilly. No. The wind industry, modern wind turbines
account for less than 1 percent of mortalities of eagles caused
by human causes, like buildings or traffic.
Mr. Duncan. We are going to stymie a whole industry over
less than 1 percent of the man-made kills, which I think are 5
or 6 in the last 20 years. It hasn't been that many.
So I know I am out of time, Mr. Chairman. If we are going
to have a second round of questioning, or I can continue.
Mr. Lamborn. First let us take Representative Napolitano
from California, and then we will see what the witnesses want
to do.
Ms. Napolitano. Thank you, Mr. Chairman. Am I next?
Mr. Lamborn. Yes, I meant to recognize you. Please
continue.
Ms. Napolitano. Thank you, Mr. Chair.
I have a great interest in wind, but more than that in
solar, photovoltaic production, and the questions that I have
are going to be mostly related to that, although I have one
specific one to the Federal Advisory Committee guidelines.
The guidelines used are significant, the adverse impacts or
effects, contrasted with the February 2011 guidelines that use
merely adverse impacts. Projects that pose low risk to wildlife
with potential insignificant adverse impacts thus would require
the same level of assessment and efforts as higher-risk
projects, using significant adverse impact as a threshold, well
established under both the NEPA and ESA.
Could you indicate, any of you, what your comment is on
that?
Mr. Roberts. Yes. Congresswoman, the issue is that----
Ms. Napolitano. Now, I have 5 minutes, so please be very,
very precise.
Mr. Roberts. The industry worked with advocates and
stakeholders on creating a process called the Federal Advisory
Committee. It started with the last Administration and was
accepted by this Administration. These rules changed that
process. What this does is--one of the biggest problems is the
proportionality thing in Utah. A site that we all know is not a
problem we have to do the same amount of research on.
Ms. Napolitano. I have other questions, sir. Thank you.
Anybody else, real quickly?
No. OK.
I want to focus a little bit more on the Native American
issue that I have a great concern about, because none of you
talk about placing on Native American land any of the wind or
solar. I am involved with two organizations, IBW and NECA, that
are doing this and California tribes. How would that affect
what you do, or how can we continue to push forward? Because
the budget in the BIA and the operation of Indian programs is
dismal, to say the least, to be able to help them.
This would build on site many factories of solar panels,
training Native Americans in IBW, the electrical engineers, to
become engineers. So you produce not only training, but job
programs and economy. Is anybody looking at that?
Dr. Piszczalski. I could comment a little. Doing power
projects on tribal lands is even more difficult than on public
lands that are nontribal. So that certainly has been a major
holdup.
Ms. Napolitano. I would like to talk to you about that,
sir, because we are trying to get through with Secretary
Salazar in the last year to develop some kind of guidelines to
expedite these things.
Dr. Piszczalski. OK. I could talk to you off line on that.
Mr. DeRosa. If I could speak to that, we have some
firsthand experience with that, and some tribal land in the
Southwest is excellent solar land. And First Solar, we are
working with tribal entities--it is not public, so I can't say
with whom, but we are working hard on that.
Ms. Napolitano. I would love to talk with you about it,
sir.
Then are you doing any partnering with R&D universities and
then universities that are doing a lot of the research to help
with explanations and comments on some of the projects that you
have been working on, whether solar or wind, or geothermal for
that manner? Nobody?
Mr. DeRosa. We work on the local project level. Like in
southern California we work with some of the community colleges
on education and job training.
Ms. Napolitano. No, I am talking specifically on some of
the research they are doing on water and things that they are
finding out about new technology, and even such dumb things as
the elimination of the quagga mussel.
Mr. DeRosa. I would have to look into that one.
Mrs. Napolitano. Anybody else?
Mr. Resch. There are certainly partnerships between the
solar industry and a variety of different universities, Arizona
State in particular is one that has really stepped forward and
brought together their business school, their law school, their
engineering departments and created some very robust
decisionmaking programs. And their Decision Theater at ASU is
really world class in helping identify multiple issues that
would prevent solar----
Mrs. Napolitano. Well, the Department of the Interior finds
some 30-some universities to do R&D, and we are not asking them
to focus on specific issues. So maybe that is when we begin to
throw some ideas their way.
Then the last question I have is public-private
partnerships, setting up a fund or being able to work and being
able to bring those folks in, especially those from Wall
Street, any others that are interested in a sure thing, because
this is a technology that is evolved already. It is just
assistance with the funding. The same thing in transportation.
We find that we don't have the ability to go out and do it
ourselves, or the locals don't. So public-private partnerships
are going to be critical.
Has anybody begun to ask who, where, when and how of being
able to formulate bringing them in?
Mr. Lamborn. [presiding.] Can anyone answer that in 25
words or less?
Mrs. Napolitano. Or in writing, for that matter.
Mr. Reicher. I would simply say that smart developers of
renewable energy projects, solar and wind, increasingly know to
go where there are big resources available and where there is
support at the public level.
Mrs. Napolitano. It is like the university. They do a lot
of research, and only they know--they put it on their Website,
but nobody knows what the Website is. So we have to be a little
more transparent in being able to get the information so people
can use it, really can get to it.
Mr. Lamborn. All right. Thank you.
And rather than ask your indulgence for a second round of
questions, even though there are only a handful of people here,
I am going to just wrap up this round, and that will be it. I
am the last person, but I am going to give my time and yield to
the gentleman from South Carolina, who will finish us up.
Mr. Duncan. Thank you, Mr. Chairman. I just want to finish
the line of questioning about the transmission before I ask my
final question. And I guess the Wind Association would be the
person to ask.
A transmission is an area that you don't hear that much
about. You hear about the sound of the windmills, and the
flash, and the killing of the eagles and that sort of thing.
But I understand transmission lines being a big obstacle. Can
you touch on that for me and what we are doing about that?
Mr. Roberts. Yes. It is a big obstacle. It is very
important to our industry to deal with. On the public lands we
can do some more streamlining, and we really encourage the
Federal agencies to work with the regulatory commissions and
work with the legislators to help us make siting of
transmission faster and easier. And that is some work that can
be done.
On a national level, of course, we need to work with the
FERC, with the regional planning groups, et cetera, to create a
strategy to reinvest in our transmission system, and we have a
long way to go there. It has been woefully invested in for the
past 50 years, and we have some catching up to do. So that is a
high priority for the industry and something that leadership
from this Committee and from this Congress would be greatly
appreciated.
Mr. Duncan. Is that a big hang-up with offshore areas, too,
where you are limited?
Mr. Lanard. Mr. Duncan, let me just talk about the offshore
for 1 second, if I may. Thanks.
Congressman, we work a lot with Santee Cooper. They are
doing some really thoughtful, progressive work on assessing
wind resources and how to move forward in South Carolina for
offshore wind.
The question on transmission for us is looking at possibly
the opportunity for an offshore back--I would defer to you,
Dan. I think you are going to talk about that. The Atlantic
Wind Connection is one of our members proposing a project that
will go from northern New Jersey down to Virginia, and it could
possibly even go further if those States demonstrate an
interest and create the demand for offshore wind. So we do
have--and what would be interesting there is we would be
bringing power from the east to the west, which doesn't occur
in the United States generally along the coast. It has always
flowed the other way in a radial feed situation. So this type
of transmission system improves reliability. It is much greater
than just serving the offshore wind industry; it is serving the
ratepayers by having a more reliable and more robust system.
Mr. Reicher. Can I just add that when I was at Google, we
made an investment in this Atlantic Wind Connection, the
offshore backbone transmission line that would run from New
Jersey to Virginia, And it is a great project, Mr. Duncan. It
would avoid a lot of individual lines having to be built from
each wind farm to the grid on the East Coast, and it would
improve the efficiency of the transmission system on the East
Coast. It would allow wind turbines to be sited further
offshore so permitting is easier, and there would be less
objection from residents along the coastline, and it would add
to the security, frankly, of the East Coast grid. So it is a
real win-win, and I think it is one of those projects that, if
it works its way successfully through permitting, it is a great
one to build.
Mr. Duncan. Thank you.
We often hear--last question--about the impacts of budget
cuts and regulation on industry development. And so in your
opinion, do you think budget cuts or regulation have a bigger
impediment to renewable energy development on public lands? I
ask each one of you there.
Mr. Roberts. Mr. Chair, good question. I think it is a
combination of both. I mean, if we had a simpler process and a
more streamlined process, we could get away with less staff.
But with the existing regulations and not change them and
cutting staff would be very harmful to us getting our permits
done in a timely fashion.
Mr. Duncan. Ms. Reilly.
Ms. Reilly. To repeat what we said earlier, we need
efficiency in the process. And we think we can make savings if
we have more efficiencies and people are focused on getting
outcomes.
The other thing I would just mention is that the industry
has offered to help with the cost of processing permits in a
more expeditious fashion, and we would ask that to be
considered.
Mr. Duncan. Just the rest of you, just regulation or budget
impacts, which do you think?
Mr. Lanard. Budget impacts for offshore wind, and the
investment tax credit, and loan guarantees are critical for our
industry right now.
Mr. Resch. Absolutely, budget impacts for solar as well. We
have great systems in place; we just need the staff to make
sure they are administered and processed.
Mr. DeRosa. Yeah, I agree. But we have to be careful not to
cut off our nose to spite our face. There are laws on the
books. If a permitting process is not done thoroughly, it just
opens a project up to lawsuits. So in our terminology, a
project needs to be bulletproof in its permitting effort.
Mr. Piszczalski. I guess I would weigh in on the regulatory
side in that it is then given too little attention.
Mr. Reicher. I would just say healthy budgets and effective
regulation, we need both.
Mr. Duncan. Thank you.
Thank you, Mr. Chairman.
Mr. Lamborn. Thank you. And thank you, each member of the
panel who came here to testify today. We appreciate your
testimony. We appreciate you making yourselves available to
answer questions. And please remember that there may be
additional questions that members of the Committee submit to
you in writing, and we would ask you to respond to those.
Mr. Lamborn. And as a final piece of business, I ask
unanimous consent to add two additional pieces of testimony to
the record. If there is no objection, so ordered.
Mr. Lamborn. If there is no other business, then, without
objection, the Committee stands adjourned. Thank you.
[Whereupon, at 1:51 p.m., the Committee was adjourned.]
[Additional material submitted for the record follows:]
[A letter submitted for the record by Johanna Wald, Western
Renewable Energy Project, Natural Resources Defense Council;
Pamela Pride Eaton, Deputy Vice President, Public Lands, The
Wilderness Society; and Jim Lyons, Senior Director for
Renewable Energy, Defenders of Wildlife, follows:]
[GRAPHIC] [TIFF OMITTED] T6728.009
[GRAPHIC] [TIFF OMITTED] T6728.010
[GRAPHIC] [TIFF OMITTED] T6728.011
[GRAPHIC] [TIFF OMITTED] T6728.012
[GRAPHIC] [TIFF OMITTED] T6728.005
[A statement submitted for the record by Chris Donavin,
President, Energy Dense Power Systems, follows:]
Statement submitted for the record by Chris Donavin, President,
Energy Dense Power Systems
Mr. Chairman, thank you for the opportunity to submit testimony for
today's hearing before the House Natural Resources Committee. My name
is Chris Donavin, and I am President of Energy Dense Power Systems
(EDPS), a privately held company headquartered in Owings, Maryland that
was established to develop unique battery-based power management
product solutions. Our products have been integrated into a variety of
applications requiring remote power across many industries, including
the scientific, military, marine, and telecommunications industries.
Our products are safe, rechargeable Lithium-Ion power systems that
are lightweight, rugged, and portable. One of the most exciting
features of our technology is the ability to store and manage input
power from renewable sources such as solar, fuel cells and wind
generator as well as conventional generators and the grid.
We are currently providing our product to the Department of Defense
to meet very specific needs for smaller, lighter, and more energy dense
power solutions. We are also reaching out across the federal agencies
to offer this unique product as a strategic capability to help the
federal government generate and store power more efficiently, and to
make better use of alternative and renewable energy sources.
While today's hearing is focused on large scale efforts to harness
renewable resources on federal land, I believe that it is also
important to discuss the opportunity for the federal government to more
broadly utilize products such as those developed by EDPS in order to
reduce their own reliance on fossil based fuels.
About EDPS
Energy Dense Power Systems LLC specializes in high energy density
scalable power solutions ranging from small portable applications
(<12OO Watt-hours) up to larger fixed installations (>25 kWatt-hours).
Our power management technology generally is used to provide primary
and backup energy storage, to power electronics, medical and
telecommunications equipment, provide UPS backup as well as provide
power to a variety of other DC and AC appliances. Our system is
extremely scalable to accommodate almost any power requirement. In
general, our installation base includes systems with energy densities
between 65-200 Watt-hours per kilogram. (30-90 Watt-hours per lbs). The
system readily accepts and manages input power from renewable sources
including solar and wind.SE I63
We believe that EDPS is currently the only US manufacturer of a
patented energy dense lithium-ion, scalable power management system. In
addition we believe EDPS is the only company currently that complies
with the DOT-UN transport requirements for lithium ion batteries
transportable as non-hazardous cargo.
Department of Interior Need for Portable Power
The Department of Interior, with expansive land in remote areas,
has a significant need for renewable and portable power. In fact, the
Agency has posted numerous requests for proposals to provide portable
power solutions to the Agency. In my experience, the Agency often posts
very prescriptive and specific solicitations for portable power that
offer limited opportunities for creative technology applications.
For example, in November 2010, the National Park Service solicited
bids for a renewable energy system for the Bechler Ranger Station
(Solicitation Q1574110004). As outlined in the solicitation, EDPS has
several products that could have fulfilled the needs of the National
Park Service that would have been both environmentally friendly, and
cost effective.
Unfortunately, our product is a Lithium-Ion based system and, as a
result, was not eligible under this solicitation. As President of EDPS,
I reached out to the contract officer to share the features of our
safe, rechargeable Lithium-Ion power system. Specifically, I shared the
fact that the EDPS product would be a lighter, more cost-effective and
more environmentally friendly alternative to the lead acid system that
the National Park Service was soliciting. I also highlighted the
tremendous life cycle cost savings that the Park Service would benefit
from as well as reduced logistical costs associated with a battery
system that is roughly half the weight of comparable lead acid systems.
The life cycle of lithium based systems is up to 3000 charges at 80%
DOD. That eclipses lead acids capability of roughly 300 at 50% DOD.
We believe that the EDPS product could provide dramatic cost and
energy benefits not only for the Bechler Ranger Station, but for any
facility within the Department of Interior that has a need for portable
and energy dense renewable power. We look forward to the opportunity to
discuss our product not only with the National Park Service, but also
with the Bureau of Land Management and other Department of Interior
agencies. As the Department of Interior continues to examine its power
needs, however, we do urge the Agency not to include overly
prescriptive requirements that preclude specific technologies.
Conclusion
One of the great challenges facing increased utilization of
renewable power sources such as solar and wind power is the difficulty
in capturing and storing the power. There is a nearly infinite supply
of power that could be generate by sun and wind. But we are limited in
our ability harness that energy, and deliver it to consumers in a cost-
effective manner.
As the federal government discusses opportunities to dramatically
increase the scale on which we generate this type of renewable power,
we believe it is also important to examine the mechanisms that exist to
distribute this power to consumers. EDPS has developed a product that
can help both government and industry to harness and utilize renewable
power. We stand ready to assist with this technology as our nation
struggles to become less dependent on fossil based fuels. Thank you
again for the opportunity to submit testimony for today's hearing. I
look forward to continuing to work with you.