19 February 2010 -- Developers of more than 7,000 MW of renewable energy projects, including wind, solar and geothermal, worry they may not have construction work started by the end of the year, the deadline set to qualify for federal grants .
The American Recovery and Reinvestment Act Section 1603 provides for 30 percent cash grants from the U.S. Department of the Treasury, in lieu of tax credits. The trouble is that projects must be under construction by the end of 2010 to qualify. Most projects need a variety of permits and approvals to then negotiate Power Purchase Agreements, secure transmission interconnection agreements and arrange financing. Only when financing is in place can construction work start. In some instances financing is contingent on a project's qualifying for the Treasury grants.
Bill Devine, an Irvine-Calif.-based attorney who represents renewable energy project developers, blames a "bureaucratic morass" with agencies requiring information that is both "too hypertechnical and too detailed."
On Feb. 18, California Governor Arnold Schwarzenegger sent a letter to county governments urging them to give large-scale renewable energy projects a "thorough yet expeditious review."
"We cannot afford to miss opportunities to reduce greenhouse gas emissions, and large-scale renewable energy plants are critical tools in reacing our goal of 33 percent of the state's energy coming from renewable sources by the year 2020, he wrote.
Project review delays at the local, state and federal levels means at least some of the 7,000 MW of capacity may be in jeopardy of not moving forward. Included are 6,500 MW of solar projects, 800 MW of wind projects and 100 MW of geothermal projects.
On Jan. 22, the California Energy Commission invited developers, state utility regulators, the U.S. Department of Energy, Bureau of Land Management and state Fish & Game officials to a meeting to try to streamline the review process. In the case of cultural resource reviews, California officials may take as much as 350 days to review a project, Devine said. The December 31 deadline for federal grant money would likely be missed if such a full review were to occur.
Also at issue is the large-scale nature of many of the projects. While a coal-fired power plant may site on 30 to 50 acres of land, some of the solar projects being proposed could occupy 5,000 to 7,000 acres.
"The scale of the projects in terms of acreage is larger than has been dealt with before," Devine said. Some of the renewable energy projects potentially affected by the December deadline have been under development for as long as five years. They may not have won approval in 2010 even without the impetus of qualifying for federal funds. But with California still reeling from the recession and a goal to source 33 percent of the state's electricity from renewable resources by 2020, the state has an incentive of its own to maximize the number of projects that are under construction.