Feature Stories - September 2010

Alternative Energy

Nevada's Future

by Jeanne Lauf Walpole

    As Nevada’s construction and gaming industries persistently remain on the ropes, its financial and political leaders look more and more to alternative energy as the economic redeemer that can help propel the state out of the current recession. Reeling from the highest unemployment rate in the nation, Nevada’s future is on the line as the need for economic diversification has reached a critical point. “There’s been a lot of fluff talking about it,” says Jim Goth, director of the Nevada State Office of Energy. “We need the economic development now.”

    With green energy potential that makes many states green with envy, the Silver State has long been touted as the future leader in the development of renewable energy. It boasts an average of 270 days of sunshine annually, allowing the majority of the state to generate between four and six kilowatt hours of solar power per square meter everyday. The state also is blessed with some of the richest geothermal resources in the world, with hot springs capable of producing geothermal power sprinkled all across its northern half. In addition, a number of areas in the state have been identified and/or developed for their capacity to generate wind power to meet large utility-scale standards. “It certainly is realistic that Nevada will continue to be a leader in the development of renewable energy and the evolution of innovative solutions that make sense for our customers,” says Michael Yackira, NV Energy president and CEO. “Considering the size of our state, there is none other that can match it in terms of additional development per capita.”

Renewable Portfolio Standard

    Along with its abundant natural resources, Nevada also enjoys a position of leadership in the sustainable energy race by virtue of its renewable portfolio standard (RPS). Initially passed in 1997 as part of the Electric Restructuring Legislation (AB 366), the law mandated electric providers to provide one percent of total consumption in renewable energy. Since then, subsequent legislation has phased in the commitment to renewables to 15 percent by 2013, 20 percent by 2015 and 25 percent by 2025. “The most important regulation has been the RPS standard,” says Fred Schmidt a partner at Holland & Hart law firm who specializes in energy projects. “That law has stimulated a resurgence in geothermal development.”

    In addition to the RPS, Nevada has also encouraged the development and use of renewable energy through its net-metering law and through various incentive programs. Net-metering allows utility customers to obtain credit if they generate more power than they use. Customers can also obtain rebates and loans for alternative energy projects they install on their homes and businesses.

    Far from dragging its feet in renewable development, Nevada has been systematically increasing its production over the past several decades. With 86 planned or developing geothermal power plants adding up to 3.68 gigawatts to the state’s energy production, it’s expected that Nevada will become the world’s leading geothermal producer in the coming years, according to the Geothermal Energy Association (GEA). Considered the ninth largest producer today, Nevada could enjoy revenues of as much as $22.5 billion over the next 30 years if the present rate of growth continues.

    As Nevada’s undisputed geothermal hotspot, Churchill County boasts six plants in operation, three under construction and another 14 in the planning stages. For the past several years Churchill has made more money from geothermal leases (around ten percent of its annual revenues) than any other county in the nation. Built by well-known geothermal developers, Churchill County projects include:

• Enel North America’s Salt Wells and Stillwater plants.
• Ormat Technoligies’ Brady Complex and Desert Peak facilities.
• Magma Energy’s Soda Lake project.
• Terra Gen Power LLC’s Dixie Valley operation.

    Although Churchill County is the steamiest, other counties such as Humboldt, Nye, Mineral, White Pine, Lander, Washoe, Esmeralda, Pershing and Elko are also in the hunt. The Bureau of Land Management (BLM) recently auctioned for geothermal development around 500 square miles comprised in 114 parcels of land spread over these counties.

Solar Energy Projects

    Concentrated mainly in the southern part of the state, a number of solar energy projects have given Nevada the distinction of being the number one state in the country in solar watts produced per capita. As the third largest solar thermal plant in the world, Nevada Solar One uses around 180,000 mirrors in the desert near Boulder City to produce enough energy to power more than 14,000 homes every year. In nearby Nellis Air Force Base, one of the largest solar photovoltaic systems in the West supplies the base with 30 million kilowatt-hours a year with its field of 72,000 solar panels containing around six million solar cells. Expected to come online in 2014, the Crescent Dunes Solar Energy facility near Tonopah will employ an innovative molten salt storage system to enable the plant to generate electricity even when the sun isn’t shining. Other notable solar projects include RVApex Solar Power near Apex, Searchlight 1 near Searchlight and Silver State Solar near Primm. “These projects show that it can be done and it can be done successfully,” says Neal Tomlinson, a partner at Snell & Wilmer law firm.  Tomlinson specializes in resolving utility issues. “It highlights that Nevada is very well placed for solar,” he added.

    Although solar and geothermal are better developed in Nevada, efforts have been underway to harness the wind for power as well. Planned wind generation facilities include the 200-megawatt China Mountain Wind Project near Jackpot and the 150-megawatt Spring Valley Wind Project near Ely. Nevada is also poised to benefit by wind power generated in Texas when China’s A-Power Energy Generation Systems builds its planned wind turbine factory in the Silver State.

    When Nevada’s general business-friendly climate is added into the mix of its natural resources, renewable legislation and experience in development, it would seem that the state would have all its ducks in a row for a renewable energy boom. Many economic movers and shakers agree that the timing is right for Nevada to use its advantage in alternative energy to help facilitate an economic recovery. “Absolutely it is realistic to expect a significant positive impact on Nevada’s economic recovery through the responsible development of renewable energies, particularly if we handle the process correctly by creating an even more business-friendly environment for renewable companies, including developers, operators and especially manufacturers, to thrive within our state as well as export energy to California and other nearby regions cost effectively,” explains Patty Wade, president and owner of Wade Consulting Group.

    Schmidt is also bullish that sustainable energies can lead the way. “I’m a strong advocate. I’ve always thought that renewable energy was good for economic development in Nevada. I’ve never seen renewable as the only source, but the time is right to continue with it,” he says.

Obstacles

    Even though support for renewable energy appears to be widespread and bipartisan throughout the state, those who work in the industry point out that a number of stumbling blocks still stand in the way of timely and efficient expansion of the industry on a large scale. “The three major obstacles that need to be dealt with in order to have significant development of alternative energies in Nevada are: 1) the convoluted, unpredictable permitting process (particularly involving federal lands issues with BLM and related federal agencies) simply needs to be overhauled and substantially expedited at the highest levels; 2) the transmission challenges across the state need to be solved, such as financed and built to enable renewable energy across the state to be brought to the grid cost effectively and connect the north with the south; and 3) financing facilities need to be increased dramatically, which will happen if items one and two are accomplished,” explains Wade.

    Yackira echoes Wade’s concerns. “The lengthy and unpredictable permitting process and our nation’s general financing difficulties are probably the two most significant issues to the immediate future of renewable energy. These are then coupled with the related need for additional transmission and the siting and permitting that goes along with that,” he says. He expresses frustration at the process involved in the China Mountain Wind project where initial discussions began in 2006, but that the draft Environmental Impact Statement (EIS) has yet to be received from BLM.

    Tomlinson emphasizes the need for incentives, such as tax and development credits, along with the use of public/private partnerships. He also says that more education is needed to convince people of the values of renewable energy. “It comes back to the mentality that you’re embracing this industry and so far Nevada has done that,” he says. With around 87 percent of Nevada owned by the federal government, Goth refers to the need for congressional action to free up land needed for energy parks. “Nevada should be able to own its own lands for energy development,” he says. It’s also important to aggressively recruit manufacturers of alternative energy products and to continue with the energy incentive programs already in place, according to him.

Wisdom of Export

    As California falls further behind in its effort to meet a mandate of 30 percent RPS, many Nevadans see a golden opportunity for the Silver State to step in. “We have a hungry neighbor to the west,” Goth explains. By using existing transmission lines, exporting power to California could be perceived as picking low hanging fruit, according to some people in the industry. As Nevada rankles over an unemployment rate that over the past several years has risen from four percent to almost 15 percent, helping California fulfill its energy needs could be a win-win situation for both states.

    Although it would take 190,000 jobs to bring the rate back to four percent, creating renewable energy work would at least be a move in the right direction. “The most important thing for thousands of jobs is that we have to be an export state,” Schmidt says.

    Wade emphasizes the role of manufacturing in job creation. “In my opinion, the rubber really meets the road when Nevada is able to attract a substantial number of renewable energy manufacturers, both large and rapidly expanding, to relocate and set up major manufacturing facilities here which will create thousands of high wage, sustainable and much needed jobs for our state and are not as closely tied to housing and industrial slumps,” she says.

    Lacking the synergy of all involved, it’s unlikely that significant success can be realized, however. It comes down to people cooperating to achieve a common goal they can all commit to, according to some. “It has the possibility of being a great economic boom, but it depends upon the collective will of all the stakeholders,” Goth says. Citing Nevada’s energy accomplishments so far, other people believe it’s not essential to go for the gold, but that it’s okay to get a silver or bronze medal in the energy Olympics. “Just letting it continue to happen is the best practice. We don’t have to be number one, but can be one of the leading ones,” Schmidt says.

Jeanne Lauf Walpole
Jeanne Lauf Walpole is a freelance writer based in Reno.