growing interest in potential for navajo utility-scale...
TRANSCRIPT
Karl Cates, IEEFA research editor October 2018
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Growing Interest in Developing Navajo Utility-Scale Solar Industry Policy Momentum and Grassroots Support; Vast Tribal Natural Resource Remains Largely Untapped
Introduction VariousinterestsacrosstheNavajoNationareshowingagrowingappreciationforthecommercialpossibilitiesinsolargenerationoveranareathathaslongbeendependentonincreasinglyoutdatedcoal-firedelectricitygenerationandimportedelectricity.
Thisemerginginterestinutility-scalesolarisdriveninnosmallpartbythelarge-scaledeploymentofsolargenerationthroughouttheSouthwest,whichcontinuestogrowrapidlyasutilities“stopthinkingofsolarasaproblemtobemanaged,andstartthinkingofitasanassettobemaximized,”asoneprominentindustryresearcherhasrecentlynoted.1
FewlocalesintheU.S.arericherinsolarpotentialthentheNavajoNation,asisclearonthemapbelow,borrowedfromresearchersattheNationalRenewableEnergyLaboratoryandrepurposedherebyIEEFAtohighlighthowNavajotriballandsaresituatedinthemiddleofthemostsun-richregionofthecountry.
1S&PGlobalMarketIntelligence:“Solarcanbeflexiblydispatchedwithotherplants,researchconcludes”(October2018)
Growing Interest in Potential for Navajo Utility-Scale Solar Industry
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Nascent,homegrownmomentumforutility-scaleNavajosolar-generationdevelopmentappearstobedevelopingonthreefronts:
• Inanevolvingtribalutilitypolicytowardmoreutility-scalesolar,ashiftdriveninpartbythesuccessoftheKayentaSolarFacility,a27.3MW,200-acreprojectthatcameonlinein2017andisnowfeedingintotheregionalgrid.Kayenta,seenasapilotforsimilarinitiatives,isalsoservingasatraininggroundforlargescalesolar-installation-and-constructionexpertise.
• Incentraltribalgovernmentsupportformoresolarinfrastructureingeneral,includingforcommunity-ownedsolarfarmsthatallowforrevenuestreamstobesharedwithlocaltribalchaptersandlandowners.Ofnoteonthisfront:ThecreationinrecentweeksoftheOfficeofEnergyResourcesandDevelopment.
• Incampaignstobringcommunity-ownedsolarprojectsintolocalesthathaveaccesstokeytransmissionlinesandwhereownershipmodelsareexpectedtoincluderevenuestreamsfortheNavajoNationandlocaltribalchaptersalike.2
Tobesure,challengestoutility-scalesolarproductiononNavajotriballandspersist.Manyarerelatedtolandacquisitionforsolarfarms,whichtypicallyrequiresizeableacreage.Full-scalesolararraysareseenasincompatibleincertainlocaleswherelandsaretraditionallydedicatedtograzing,forinstance.
Fewmodelsforutility-scalesolargenerationexistontriballands,andindeedsuchlandsrepresentsomethingofanislandinaregionalseaofutility-scalesolarthatisspreadingwestfromtheFrontRangeofColoradoandAlbuquerqueandeastfromArizona,California,andNevada,asshowninthescreenshotherefromanEnergyInformationAdministrationdatabase(sunburstsindicateutility-scalesolarplants).
2IEEFA:WindowofOpportunity:NavajoSolar:AFast-TrackCommunity-DrivenDevelopmentApproach(December2017)
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Thatsaid,theKayentaproject,rolledoutalittleoverayearagoasautility-scaledemonstrationprojectbytheNavajoTribalUtilityAuthorityontheoutskirtsofthenortheasternArizonacommunityofKayenta,hasprovensosuccessfulthattheutilitybeganworkonasecondphaseinAugust.DueforcompletioninJune2019,theexpansionwilldoublethesizeoftheexistingKayentafacility.3
Thatproject,alongwithpolicydevelopmentsattheNavajoNationcentralgovernmentlevelandinearly-stagecommunity-developmentinitiativesontriballandsindicateagrowinginterestinsolarinitiatives.
Thoseimpulsesaredrivenapparentlyinpartbymarketchangesduetotheelectricity-generationtransitionoccurringnationallyandinpartbyhowthatshiftislikelytoputtheNavajoGeneratingStationoutofbusiness.
ItshouldbenotedthatonemandateoftheNavajoTribalUtilityAuthorityistobringelectricitytotheentiretyoftheNavajoNation,wheresome15,000householdsstilllackelectricity.Servingthatvoidmaywellrequiremoreoff-gridfree-standingsolargeneration,wheretechnologyadvancesandfallingcostsaremakingthatanincreasinglyviablesolution.Thosepossibilitiesarebeyondtheimmediatescopeofthisresearchbrief.
Evolving Tribal Utility Policy
TheNavajoTribalUtilityAuthority(NTUA),establishedin1959tomanageelectrificationacrossNavajolands,providespowertoabout41,000homes4overasprawlingareathatincludespartsoffourstates(Arizona,Colorado,NewMexico,andUtah).NTUA,basedinFortDefiance,Ariz.,isoverseenbytheNavajoNationgovernmentinnearbyWindowRock,whichappointstheutility’sseven-memberboard.5
NTUAhasmovethan700peopleonitspayroll,makingitoneofthelargestemployersintheregion.
NavajoNationjurisdiction—andbyassociation,NTUAjurisdiction—coversabout27,000squaremiles,anareabiggerthansomestates,amongthemConnecticut,Massachusetts,NewJerseyandWestVirginia.
Likemostutilities,NTUAhasbeenhistoricallyreliantoncoal-firedpowergeneration,anincreasinglyexpensivepropositionandonethatisfalteringasmorenatural-gas-firedandrenewablesgenerationcomesontothegridthattiesNavajolandswithmuchoftherestoftheSouthwest.
Inamovetowardpower-generationmodernization,NTUAlastyearbuilttheKayentaSolarFacilityandbroughtitonlineinJune2017.NTUAestimatesthatthe$60million,27.3-megawattprojecthasthecapacitytoproduceenoughelectricitytopower13,000homes.
BecausepropertyrightsaresoprizedbycommunitiesandfamiliesacrosstheNavajoNation,landacquisitionwasoneofthemainhurdlesinbringingtheprojecttofruition.6Anagreementwiththe
3SRP:NTUA,SRPandNavajoNationLeadersCelebrateGroundbreakingCeremonyforKayentaIItoCelebrateCommitmenttoDevelopRenewableEnergyProjectsonNavajoNation(August2018)4NavajoTribalUtilityAuthority5NTUAboardofdirectors6KayentaSolarProjectOperational,SendingPowertotheGrid(June2017)
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KayentaChapteroftheNavajoNationallowedittoproceed,however,andthesolarfarmtodayisconsideredsuchasuccessthatitisbeingexpandedwithasecondphasetodoubleitssizebymid-2019.
“ThesecondphaseoftheKayentaSolarProjectdemonstratestheNavajoNation’scommitmenttoaresponsibletransitiontorenewableenergysources,”saidSpeakeroftheNavajoNationCouncilLoRenzoBateswhentheprojectexpansionwasannouncedinlateAugust.7“Wearecreatingjobsandrevenuefromanemergingmarket,whileremainingmindfuloftheassociatedcosts,thetimethatitwilltaketotransition,andothersourcesofenergydevelopment.”
NTUAofficialstoutKayentaasamodelinitiativethat—whileofferinglimitedlong-termjobopportunities—createdalmost300constructionjobs,providedbuilt-injob-training,andsetoffsignificantlocaleconomicripples.
TheutilitywillhostajobfairinlateNovembertofill100openingsforKayentaIIconstruction,whichisscheduledtobeginthisyearandcomeonlinebyJune,Solar-installationworkerstrainedatKayentahavebeenhiredtoworkonsimilarprojectsintheregion,includingonesnearGallupandAlbuquerque,N.M.andexpectationsarethatdemandforsolar-trainedworkerswillcontinueacrosstheregion.
NTUAhasincreasinglypromotedthetribalbenefitsofsolardevelopmentonseveralpoints,includingjobcreation,taxrevenuesanditspotentialinhelpingmeetitsmandatetoelectrifyallNavajoNationhomes.
Central Tribal Government Support WhilemostpublicityoflatearoundNavajoenergypolicyhascenteredonthefateofNavajoGeneratingStation(NGS),anagingcoal-firedpowerplantthatincombinationwithitssourceminehasbeenamainstayoftheeconomy8alongthenorthernreachesoftheNavajoNation,discussionsarounddiversifyingthetribe’sresourcedevelopmenthaveintensified.AsuncertaintyhasgrownastowhetherNGSwillsurvive,9thegovernmentinrecentweekshasmovedtoestablishtheOfficeofEnergyResourcesandDevelopmentwithaneyetowardfostering“acompetitivebusinessenvironmenttoattractinvestors,toengagekeygovernmentalandcommunityrepresentatives,toserveasanapoliticalinformationalresourcefortriballeadership,todeveloppoliciesandplansregardingenergyuseandcorridors,andtosupersedealldirectionandcontrolofenergydevelopmentontheNavajoNation.”10Theideabehindthenewoffice,whichistobeoperatedundertheauspicesoftheNavajoNationDivisionofNaturalResources,istobuildonpreviouspolicymodernization11whosecorepublicly-statedgoalsseemlikelytoremainintact:
7NTUA,SRPandNavajoNationLeadersCelebrateGroundbreakingCeremonyforKayentaIItoCelebrateCommitmenttoDevelopRenewableEnergyProjectsonNavajoNation(August2017)8JustTransitionFund:“LetterFromWindowRock”(October2018)9IEEFAupdate:“ThehurdlestoaneconomicallyviableNavajoGeneratingStationremain”(July2018)10Navajo-HopiObserver:“NavajocommitteereviewsestablishmentofNavajoenergyoffice”(October2018)11NavajoNationalEnergyPolicyof2013:NavajoLandSummit
A market-driven urgency for energy
policy modernization.
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• “GaincontroloftheNation’senergyresourcemanagementanddevelopment.”• “Optimalreturnsandequityfromenergydevelopment.”• “Eventuallybecomeself-sustaininginenergymarkets.”
Theinitiativeisrootedincommonaspirationssometimesovershadowedbythepoliticsofthemomentandthatrevolvearoundtransparency,ensuringthatnaturalresourcesare“usedforthebenefitoftheNavajopeople,”thattheybe“self-sustaining”andtheyguarantee“totalresourcesovereignty.”ThepushforamoremodernizedtribalenergypolicyissurfacinganewnotsolelybecauseofthelikelylossofNGS.Otherforcesatworkincludethemainstreamriseofutility-scalesolarelectricitygenerationandthefactthattheNavajoNationisinthemiddleofaregiondubbed“theSaudiArabiaofsolar.”12AlsodrivinginterestinNavajosolar:A2017agreement13betweentheNavajoNationandthecurrentownersofNGSthatguaranteesthetribeleaseaccessto“atleast500megawatts(MW)”ofcapacityontwomajortransmissionlinesacrossNavajolands.Collectively,thesedynamics—theriseofsolar-poweredelectricitygeneration,theuniquegeographyoftheregion,thetransitionoccurringinpowerproductionregionallyandnationally,andlocalinterestinenergyindependenceandsecurity—arecreatingagrowingurgencyforpolicymodernization.
Community Solar Initiatives Advocatesforcommunity-basedsolarinitiativesareemergingason-the-groundagentsforlocalNavajoinitiativesthatleveragetherapidbuild-outcharacteristicsofsolarpowerwithownershipmodelsthatallowforfulllocalparticipationinsite-scaledecisions,projectscaleandrevenue.14Oneexample:TheNavajoNationtribalchapteratLeChee,justafewmilessouthoftheNGSplant,whichisindiscussionsnowaroundthepossibilityofbuildingautility-scalesolarprojectthatwouldensurerevenuestreamsforthetribalgovernmentover200milesawayatWindowRockandthelocalcommunity.WhilesolarinitiativesarenotseenasreplacementsforthetaxrevenuebaseandjobshistoricallysuppliedbyNGS,theyareconsideredasignificantcomponentinlocaleconomic-developmentplansincommunitieslikeLeChee.Similar,immediateopportunitiesareseenalsoatCameronabout70milestothesouthofLeCheeandatKayenta,roughly100milestothewest.
12IEEFA:WindowofOpportunity:NavajoSolar:AFast-TrackCommunity-DrivenDevelopmentApproach(December20171323rdNavajoNationCouncil:NGSownerstosignleaseagreementafterapprovalbytheNavajoNationCouncil(June2017)14IEEFA:WindowofOpportunity:NavajoSolar:AFast-TrackCommunity-DrivenDevelopmentApproach(December2017)
Activity at LeChee, and budding opportunities across tribal lands from
Cameron to Kayenta.
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Suchgeographicdiversityspeakstothepotentialincommunityinitiatives,whicharesaidtobeencouragedbytheNavajoNationgovernmentsinceevenwithitscentralauthorityitisinnopositiontocloselyadministersuchfar-flungprojects.CommunitysolaradvocatesaresometimesatoddswithNTUApriorities,andcommunity-solarsupporterscriticizeNTUAforwhatsomeseeasitsmonopolybehavior,butsuchstancesappearnottobekeepingcommunityinitiativesfromdeveloping.Thechallengesfacingcommunity-solarambitionsincludethesameonesfacinganyutility-scalesolarprojectontriballand.Chiefamongthemistheacquisitionofdevelopmentrightsonlandsthatarecloselyheldbyfamiliesandthathavehistoricallybeenseenasbastionsagainstexploitationbyoutsideinterests.Initialindicationsarethatviableutility-scalesolarprojectsintheregionmustbebuiltwithacapacityontheorderof500-1,000MW,arequirementthatdemandshundredsofacresofland.Thatsaid,discussionshaveoccurredaroundarraysdesignedtoaccommodatetraditionalgrazingrightswhileensuringequitableownershiparrangementsthatbenefitallparties.Openingsaredevelopingquickly,asdescribedinaresearchreportjointlypublished10monthsagobyIEEFAandDinéInnovativeNetworkEconomiesinHozho:“Asthesolar-industryfootprintexpands,Navajocommunitiesarebeingcourtedbyoutsideintereststoparticipateinfast-movingdevelopmentdeals.TheNavajoNation,only67yearsoldandbuiltfromahistoryoftrauma,isnotwell-equippedtoassesstheseopportunities,buttribal-chaptercommunitiescangetuptospeedwithproperadviceandconsultation.”
Summary Whileutility-scalesolargenerationonNavajotriballandsremainsinitsearlystages,interestinitsexpansionissupportedonseveralfronts.
• InWindowRock,theseatoftheNavajoNationgovernment.
• AttheNavajoTribalUtilityinFortDefiance.
• Inseveralexploratorycommunitytribal-chapterinitiatives.Theregionisblessedwithabundantutility-scalesolarresourcesandhasaccesstokeytransmissionlinecapacitythatwillcomeopenwiththelikelyclosureofthecoal-firedNavajoGeneratingStation.Whileutility-scalesolarisnotseenasareplacementforNGSjobandrevenuelosses,itcanbeacomponentofanewtribalenergyeconomythatcanbringdistributedeconomicbenefitsandgreaterenergyindependencetotheregion.
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About IEEFA TheInstituteforEnergyEconomicsandFinancialAnalysisconductsresearchandanalysesonfinancialandeconomicissuesrelatedtoenergyandtheenvironment.TheInstitute’smissionistoacceleratethetransitiontoadiverse,sustainableandprofitableenergy.http://ieefa.org
About the Author KarlCatesisanIEEFAresearcheditorandaformereditorforBloombergLPandtheNewYorkTimes.