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September 16, 2014

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Insiders see solar energy industry as ready for takeoff

Amateur scientists with inventions to harness the sun, earth and wind and make the lights come on poured out of the woodwork when , in 1997, Nevada ordered its electric company to buy renewable energy .

"It was a science fair for grown-ups," Kathleen Drakulich, a utilities attorney, told scientists, students and renewable-energy champions last week at a UNLV energy symposium. "There were lots of spotted bow ties ... (and) adults with science projects out of their garages."

Today the renewable energy industry - and especially Nevada's solar power industry - is a different animal, a sophisticated and competitive industry involving multinational corporations, government agencies and regulated utilities that are building revolutionary, utility-scale projects such as the solar plants near Boulder City and Nellis Air Force Base.

Despite the progress and investment, in some ways Nevada's solar industry is nascent, struggling to compete with cheaper renewable sources, still developing technologically and relying heavily on government intervention to fly.

Solar industry insiders say it is poised to take off, and could be profitable without those incentives within a decade. But most agree that its challenges are real. If government and private industry don't make the right choices now, that takeoff could be bumpy.

Many of the challenges facing Nevada's industry also face the industry nationally:

Critics and even most proponents say solar power - whether the utility-scale variety or simple rooftop panels - is still expensive.

And in some ways, the solar industry's greatest selling point is also its greatest downside. The more that utilities agree to purchase power from solar plants, the better the technology will get and the cheaper it will become.

So if the technology will be better and cheaper five years from now, why not wait?

Julie Blunden, vice president of public policy and corporate communications for SunPower, the company that installed solar panels on the Springs Preserve parking structure and is developing a 15-megawatt Solar Star project at Nellis, estimates the cost of photovoltaics will drop 50 percent in the next five years.

And Noah Kaye, spokesman for the Solar Energy Industries Association, says every time solar power output doubles , the price drops by 18 percent.

Manufacturers are also ramping up production of all kinds of solar components, which should bring the price down and clear the logjam of projects waiting for raw materials.

A recent Ernst & Young report ranks the United States as the No. 1 investment market for renewable energy in general and solar power specifically.

Sierra Pacific Resources, the parent company of the two utilities that provide power to most of Nevada, says its proposed coal-fired power plant near Ely will make a 250-mile transmission line economically feasible.

And Congress is considering legislation to extend investment tax credits for renewable energy developers for eight years, as well as create a national renewable portfolio standard. Unlike utilities nationwide, Sierra Pacific Resources is not fighting those regulations, instead hoping Congress will extend investment tax credit beyond private developers to include utilities that build renewable energy plants.

"A certain segment of the utility industry believes it doesn't have that much in the way of indigenous resources. It's not thrilled about doing more," said Tom Fair, renewable energy executive for Sierra Pacific. "We, on the other hand, are in favor of more."

Gilbert Cohen, vice president of engineering and operations for Acciona Energy, said the power coming out of solar plants is worth more than utilities like to admit because it's produced during peak consumption hours - when electricity purchased on the open market is most expensive and utilities need it most. And the technology now exists for solar thermal plants, such as Nevada Solar One near Boulder City, to add storage to extend generation into early evening, when air conditioners are still running but the sun is down.

Other challenges facing the solar industry are unique to Nevada.

Most power generation in the state is on land controlled by the Bureau of Land Management, which requires a comprehensive environmental review that can take years. And although three years might seem reasonable for the two 1,500-megawatt coal-fired power plants proposed near Ely, it's a bigger burden on a solar developer proposing 30 megawatts or 50 megawatts of clean energy.

"I think that could be an issue as we really ramp up and try to do a lot more with renewables in Nevada," Fair said.

Contracting to sell power to Nevada utilities proved a stumbling block for Acciona. The company struggled to secure $266 million in financing for Nevada Solar One, the first plant of its size and variety built in the world in more than a decade, because of Sierra Pacific Resources' poor credit rating stemming from the Western energy crisis. Eventually Acciona ponied up the cash itself and financed the plant after the fact. Sierra Pacific Resources' financial outlook has since improved, and the utility paid its first dividend in years last quarter.

But Cohen said not every developer is willing - or able - to foot the bill.

"It should be good for the industry, though, for the utilities to know that you have developers that are ready to take a huge amount of risk," he said.

Also good for the industry is Nevada's aggressive renewable portfolio standard, which requires Sierra Pacific Resources to produce or buy 20 percent of its energy from renewable resources by 2015. A quarter of that power must be solar, a requirement designed to spur the industry in Southern Nevada.

Although renewable energy development is not the utility's core competency - which is why Sierra Pacific Resources contracts with experienced renewable-energy developers to build plants in Nevada - traditional technology and cutting-edge solar can be combined at Nevada Solar One.

High-tech mirrors covering the equivalent of 300 football fields are used to heat a synthetic oil, which is used to turn water to steam. Then, as in a gas or coal-fired power plant, the steam is used to turn a turbine, power a generator and create electricity.

Although the plant was the first of its kind and size worldwide in 15 years, California's Pacific Gas & Electric has since contracted to buy power from a much larger, proposed 550-megawatt plant using similar technology.

And if natural gas and oil prices stay high, solar power will become more competitive as technology advances and its price declines.

Drakulich, who is general counsel for Sierra Pacific Resources, said there are so many market factors affecting the solar industry now that it's impossible to say how fast it will take off. But she thinks with time it will.

"Like with any technology - personal computers, cell phones - the more we do it , the better we get at it and the more there will be on the market," she said. "The thing that makes technology develop and makes it less expensive is people willing to invest in it when it's expensive."

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