Shadow over solar

Congressional stalemate over extending tax credit threatens to delay utility-scale solar energy development in New Mexico and nationwide.

From left: Gary Nelson of PNM chats before the hearing with Sens. Jeff Bingaman, Bernie Sanders and Pete Domenici. (©2008 Photo by Denise Tessier)

ALBUQUERQUE -- Large-scale solar power plants -- ideally suited for states like New Mexico -- are "straining to burst onto the Southwest utility scene," in the words of one expert testifying at a U.S. Senate hearing on solar energy Wednesday.

But without an immediate eight-year extension of the 30 percent federal investment tax credit, the concentrating solar power industry, or CSP, will be "stopped dead in its tracks."

That warning from Frederick H. Morse was echoed by experts testifying before three Senate Energy and Natural Resources Committee members -- Democrat Jeff Bingaman, Republican Pete Domenici of New Mexico and independent Bernard Sanders of Vermont -- at a hearing convened in Albuquerque on the subject of concentrated solar power.

"The solar-rich Southwest can look forward to the day when a solar-powered plant, not natural-gas fired or coal-fired generation, will be a utility's first choice," Morse said. That is, if the credits are extended and a few other barriers are eliminated.

Morse is senior adviser for U.S. operations of Abengoa Solar Inc., a Spanish firm that develops and operates CSP plants around the world. If the investment tax credit is extended, he said, Abengoa Solar will build the 280-megawatt Solana CSP plant now under contract with Arizona Public Service.

He said CSP energy is "carbon-free and forever" and brings with it "jobs that cannot be exported."

Tax credits are essential because CSP plants are highly capital intensive at the outset, "essentially buying 20 to 30 years of fuel up front in the form of collection equipment," according to testimony by Charles E. Andraka of the Sandia National Laboratories technical staff. Conversely, CSP plants have no ongoing fuel costs once running, and the up-front cost is paid back over long periods of successful operation.

Failure to extend the credits, which expire at the end of this year, could also jeopardize growth projections of SCHOTT North America, which is investing $500 million in a solar technology production facility in Albuquerque, said Alex Marker of that firm. Marker said that SCHOTT's economic impact is forecast at more than $1 billion and that the plant will employ 1,500 people in the production of photovoltaics and receivers for CSP power plants. "That's just what one company is doing in one community," he said.

The absence of a tax credit could also affect the joint solar venture announced by New Mexico's four largest electricity providers this week, according to PNM's Greg Nelson, another hearing witness. The request for proposals  for developing concentrating solar power generators in New Mexico was announced by PNM, El Paso Electric Co., Xcel Energy and Tri-State Generation and Transmission Association.

In response to questions from Sanders, Nelson said the utilities hope to have a New Mexico plant built and fully commercial as early as 2011. "One of the exciting aspects (of this technology) is the speed ... at which one can move," Nelson said.

"A lot of solar firms have done solar prospecting in the state," Nelson added. "We believe the 2011 time frame is reasonable."

Rights of way for transmission lines, however, were mentioned as a potential barrier to large-scale solar development. While research has shown that the public supports solar energy, support wanes when transmission lines cross sensitive areas, and more lines will be needed because CSP plants tend to be out in the middle of nowhere, Andraka said.

Domenici jumped on that issue, decrying a news report that a California plant is being held up because of public objections over a power line crossing a park. Addressing "those who think Republicans should be against eminent domain," Domenici said he was "heavily in favor of rights of way. The more you complain, the more I'm for changing it -- to make it more strong. We're in crisis."

He urged Americans "to act like Americans on some of these issues and get rid of the parochialization of their 'cause'."

Another barrier, Andraka said, is the "codes and standards need development" with regard to solar.

Before the hearing was over, one barrier mentioned by industry experts and senators alike was resolved when the U.S. Bureau of Land Management reversed its announced moratorium on solar leases on federal land.

In addition to creation of local jobs and the unlimited nature of the sun as an energy source, several other benefits of the technology were also recited, including the inherent "low tech" nature of the materials involved -- basically steel or aluminum with glass reflector surfaces, which could be provided by Detroit-area automotive companies, according  to Andraka.

With storage capabilities, CSP could be even more reliable than wind, which Bingaman said has been the "fastest growing source of new generation" over the last two years.

"Concentrating solar power has been pointed to as the next inheritor of the mantle that wind now wears," he said.

Wind has made greater headway than other renewables because it costs about 8 or 9 cents per kilowatt hour, about the same as natural gas. "Many in the industry believe that concentrating solar power could reach that price range within five to 10 years simply from the economies of scale that would come from installing a lot of it," Bingaman said.

"We have been having a hard time this year getting the tax credit passed," he said in a reference to the problems the extension has found in the House. Still, he said he believes Congress will extend the credit for this year "and in the new Congress for a longer period."

He also said the federal government should enact a renewable electricity standard that would require utilities to acquire a set percentage of their electricity from renewables, a standard already adopted in the absence of federal policy by states, including New Mexico.

Domenici said he was "aghast" that it was taking six to eight years to get from permit to groundbreaking, as described in Morse's testimony on behalf of Abengoa. "That's almost as long as a nuclear power plant and not as complicated, or perhaps I'm missing something."

He noted that Sandia was working on CSP 30 years ago (with its Solar Tower) and added,  "I continue to be amazed ... at how long it takes from research and development to actual application." We can't afford to "sit by and let these proposals take six eight, 10 years to reach fruition," he said.

Bingaman is chairman of the Senate Energy and Natural Resources Committee, while Domenici (a former chairman) is the ranking Republican on the panel. Bingaman said the hearing was held in Albuquerque at the urging of Sanders, whom Bingaman described as "a great advocate for all renewable energy sources."

Sanders said that he believes "global warming is real" and that if we don't get our act together, our children and grandchildren will face a greatly degraded world.

"We have no alternative but to be more aggressive" about energy efficiency and "we are right in the middle of the area -- New Mexico -- that has the capacity to do this.
 

"I believe there is enormous economic potential, not just in New Mexico, but all over this country," in solar jobs, Sanders said.

Andraka said his colleagues at Sandia Labs like to call New Mexico "the Saudi Arabia of solar energy."

In a bit of poignancy at the hearing's outset, Domenici alluded to his impending departure from the Senate by saying he hoped Sanders would take the opportunity to get to know New Mexico during his visit so that "in years to come, when I'm not there, you'll be voting aye" on measures that benefit the state.

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