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Long tied to fossil fuels, Native American tribes seek renewable future

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Long tied to fossil fuels, Native American tribes seek renewable future

SNL Image

The Standing Rock Sioux Tribe's 300-kW solar system is one of the largest in North Dakota.

Source: GivePower

In the past three months, Public Service Co. of New Mexico has asked state regulators to approve power purchase agreements for 100-MW worth of solar projects that a Chicago company plans to build on the Jicarilla Apache Nation Reservation in northern New Mexico. The Jicarilla development will be one of the largest renewable energy projects on Native American land in the U.S., and it highlights an emerging movement on tribal lands: The nation's largest tribes, long dependent on revenue, jobs and power provided by fossil fuels extraction and generation, are seeking to create a new energy economy based on renewable resources.

A generation of young tribal leaders, such as Cody Two Bears, a member of the Standing Rock Sioux Tribe, see in renewable energy the potential for new jobs, lower electricity costs and energy independence, as well as a path away from the fossil fuel industry they say exploits tribes and their land. Two Bears helped coordinate the construction of the largest solar array in North Dakota — a project germinated from a solar-powered trailer demonstrators used during protests against the Dakota Access pipeline on the Standing Rock Reservation.

"The more and more we do it the more and more we're helping preserve our land for future generations," he said of the transition to renewable energy.

Tribal land provides big potential for renewable projects. According to a 2018 study by the National Renewable Energy Laboratory, or NREL, tribal lands have the potential for 6,035 GW of utility scale solar power generating capacity, 5% of the total national potential in the U.S., and 891 GW of wind power, 8.8% of the national potential. Many tribes, especially in the Midwest and the West, occupy areas with some of the best wind and solar resources in the nation, according to the Department of Energy's Office of Indian Energy. Tribal lands compose about 5.8% of the land area in the contiguous U.S., the NREL report notes.

To date, however, there are few utility-scale renewable energy projects on tribal land in the U.S. According to NREL, there are just over 400 MW of installed capacity of renewable energy projects on land belonging to federally recognized tribes, including 297 MW of solar, 67 MW of wind, 31 MW of biomass, 6 MW of geothermal and 0.5 MW of hydropower.

Slowly, that is changing. Other significant renewable-energy projects on Native lands include the Arrow Canyon Solar Project, on the Moapa Band of Paiutes Indian Reservation in Nevada. Under development by EDF Group subsidiary EDF Renewables Inc., Arrow Canyon will combine 200 MW of solar generation capacity with a 75-MW, five-hour battery storage system. NV Energy Inc. has contracted for 200 MW from the project under an agreement that begins in Dec. 2022. In May, Terra-Gen LLC proposed a 252-MW wind energy project on the Campo Indian Reservation near San Diego.

Potential and obstacles

Still, Native Americans have long been reliant on fossil fuels for their energy and, in many cases, their livelihoods. That was emphasized in August, when the Navajo Transitional Energy Co. LLC bought Cloud Peak Energy Inc.'s assets in a bankruptcy auction, making it the third-largest U.S. coal producer by volume. Energy transitions are long and hard, especially given the unique nature of tribal property and tribal economies.

Financing is one big obstacle, along with a lack of infrastructure, such as transmission lines to link remote tribal areas to load centers, said Robert Lawrence, a partner at the San Francisco-based law firm Orrick Herrington & Sutcliffe LLP who works on tribal renewable energy projects.

Members of sovereign tribes do not pay federal taxes, and so do not qualify for tax breaks, which makes financing less attractive for outside developers, Lawrence said: "Ownership is one thing tribes always want but cannot get because it adversely affects [project] economics."

Historically, tribes have had little political representation to change tax laws. That's slowly changing; Democratic U.S. Rep. Deb Haaland, a member of New Mexico's Laguna Pueblo and the vice chair of the House Natural Resources Committee, is one of four Native Americans in the 116th Congress, a record number, according to the Congressional Research Service. "It's not lost on me that tribes are left behind when new technology and economic opportunities come around, and I want to make sure they don't get left behind in the renewable energy revolution that we're working to make happen," Haaland said.

The challenge is two-fold, Haaland explained: "Expanding opportunities for tribal governments to invest in new energy infrastructure," and "ensuring we're moving past harmful oil and gas production."

The shift to renewables follows decades of fossil fuel extraction on tribal lands — and millions of dollars of revenue that flow into tribal governments as a result. In 2018, tribes received $75 million in royalties from coal, $107 million from gas and $780 million from oil, according to the Interior Department. The federal government supports some of these operations through tax subsidies, such as the Indian Coal Production Tax credit, which provided tax credits for each ton of coal produced on tribal land. Members of Congress have been trying to renew the credit, which expired in 2016; in June, Montana Sen. Steve Daines introduced legislation that would extend it to provide a $4 credit for each ton of coal produced on tribal land.

Small scale

Much of the renewable-energy development that has occurred on tribal land to date has been small-scale rooftop solar programs. The Department of Energy's Office of Indian Energy on July 23 announced $16 million in funding for 14 tribal energy infrastructure projects, including rooftop solar, battery storage and energy efficiency programs for tribal buildings, that will add a total of 13 MW of installed generation. The projects will save tribes a combined $7.5 million on energy costs, according to the DOE.

The nonprofit sector is also contributing. Two Bears helped found the nonprofit Indigenized Energy, which partnered with two other nonprofits to invest $470,000 into a 300-kW solar system that powers buildings on the Standing Rock Sioux Tribe reservation in North Dakota. GivePower and Empowered by Light, groups that work to provide energy infrastructure to communities in need, secured the funding; JinkoSolar (U.S.) Inc. donated 1,000 solar panels.

While many tribal clean-energy programs are funded by federal or nonprofit grants, the Jicarilla project, on Apache land, is a rare example of a tribal partnership with a utility — in this case PNM Resources Inc.'s New Mexico subsidiary — and an outside developer, Hecate Energy. Hecate, whose officials declined to comment for this story, plans to build, own and manage 100 MW worth of solar projects on the reservation, and provide the tribe fees in lieu of taxes, according to regulatory filings. (Case No. 19-00158-UT)

If the projects receive regulatory approval, an initial 50-MW phase is expected to begin commercial operations March 31, 2021, to sell power to large customers such as the city of Albuquerque under a voluntary solar program. PNM is also looking for approval for another 50-MW solar array on the tribe’s land, as a part of its plan to close the San Juan coal plant and replace it with clean power. The power from Apache land would be exported to PNM’s grid. The project is coming to fruition thanks in large part to a tribal economic development initiative, under which the Jicarilla Apache Nation used its own funds to build a substation and transmission lines to connect with PNM's system, PNM spokesman Ray Sandoval said.

Because the Jicarilla Apache Nation used its own funds to build the infrastructure, PNM does not have to ask regulators to pass those costs onto customers, Sandoval noted. Nor does PNM have to pay property taxes for the project, which should further reduce the price of the power. PNM is also asking regulators to approve power purchase agreements for 20 MW of battery storage on the tribe's land.

"The tribe was just really smart and they understood they had the opportunity to benefit from the renewable energy economy," Sandoval said.

Abandoning coal

The request is a part of Public Service Co. of New Mexico's plan to abandon the San Juan plant, which is on the nearby Navajo Nation Reservation, and replace the lost power through renewable projects to meet New Mexico's clean energy mandate, enacted in March.

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Set to close in 2022, the San Juan Generating Station in northwestern New Mexico has been providing economic benefits to the Navajo Nation for decades.

Source: Associated Press

Coal has long been king in the Navajo Nation, whose name is on both a coal mine and a large coal-fired power plant in Arizona. The San Juan plant has been providing jobs and electricity for the Navajo Nation since 1973, and the tribe's economy has been tethered to the plant and to the coal that fuels it. That's not set to change anytime soon; Navajo Transitional Energy estimates that annual production from Cloud Peak's former mines, plus its Navajo mine, will generate $1 billion in annual revenue, as well as provide increased tax revenue.

Some Navajo believe that the fading economics of coal — with the unending tide of industry bankruptcies, weakening prices and closures of coal-fired power plants — are not a good bet for the tribe's economy. In March, the Navajo Transitional Energy Company backed out of a bid to purchase the 2,250-MW coal-fired Navajo generating station in Arizona. Plant operator Salt River Project, which owns a 43% share in the plant, plans to close it by the end of 2019 after it failed to come to terms with the Navajo Nation.

The council for the Navajo Nation in July advanced a bill directing the Navajo Nation Department of Justice to rewrite its energy policy to "move the Navajo Nation beyond coal source revenues and forward to sustainable, renewable energy sources."

The Navajo Nation has the highest technical potential of any tribe for wind and solar generation, according to the 2018 NREL study. In 2016, the Navajo Tribal Utility Authority Co. broke ground on its first utility-scale solar plant, the 28-MW Kayenta Solar Facility (Navajo Community). An additional 28-MW array is under construction under a program in partnership with the American Public Power Association.

Still, the Navajo Nation's current energy policy is written in such a way as to make it dependent on coal revenue, said Percy Deal, a Navajo activist. With the coal era ending, he said, the tribe should turn its efforts to building clean power infrastructure and creating green jobs.

"We see this as a great opportunity for the Navajo Nation to join the rest of the industry and the state and energy companies to become a very important partner," Deal said.