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April 24, 2014

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ENERGY:

State faces obstacles to cashing in on the sun

Some see energy exports to California as revenue source for Nevada

Solar advocates call Nevada “a doughnut shop next to a police station.”

The reference is to neighboring California’s voracious appetite for renewable energy and Nevada’s prime ability to provide it.

In fact, according to the Energy Department, a 100-mile-long stretch of solar panels in the Nevada desert could power the entire country — and never run out of resources.

Regardless of the logistical implications of such a task, it’s an attractive thought, and often repeated.

But now some state lawmakers are asking whether Nevada gets enough in that equation.

Senate Energy Committee chairman Mike Schneider, D-Las Vegas, first raised the idea publicly last week that the state ought to find a way to derive revenue from renewable energy exported from the state.

To do that, lawmakers would have to overcome legal barriers.

The commerce clause in the U.S. Constitution has been interpreted to bar states from creating barriers to interstate commerce, including taxes on goods.

In addition, interstate transmission of energy is overseen by the Federal Energy Regulatory Commission.

Still, those in favor of the so-called sun energy extraction fee say they are seeking ways to get around expected hurdles.

Charles Benjamin, Nevada coordinator for Western Resource Advocates, has some theories.

Among them are to create an authority that would issue bonds to pay for transmission lines specifically for the purpose of exporting energy, and then charge users in other states to use the lines.

“That would not only pay off the bonds but create an income stream for the state,” Benjamin said.

Another idea Benjamin has discussed with lawmakers is to create an impact fee for using certain lands in the state.

“You could make the argument that the people in Nevada are getting energy from renewables and benefitting from the impacts on the land and aesthetic concerns,” Benjamin said. “But with exporting energy, what benefit are they getting?”

The answer to that question centers on job creation: Benjamin and others argue that solar energy plants don’t employ enough people to have a significant enough economic impact on the state without an added fee. Others disagree.

Photovoltaic solar arrays, which convert sunlight to energy, need minimal manpower to operate. The 10 megawatt Sempra plant that opened recently in Boulder City, exporting energy to a Northern California utility, has one permanent employee.

Solar thermal plants, which use the heat from the sun to power turbines, require more employees — the 64 megawatt Acciona plant in Boulder City has about two dozen full-time employees.

Solar plants of both types do create many temporary construction jobs, however. The Sempra plant had more than 100 employees during construction, 65 percent of whom were Nevada residents.

In fact, solar developers and advocates say the economic impact of job creation from solar plants should not be underestimated.

Jim Baak, a policy director for large-scale solar projects at the San Francisco-based solar advocacy organization Vote Solar, is working on a study that he says will show that solar plants built from 2010 to 2015 and generating a total of 2,000 megawatts would directly and indirectly add

$10 billion in economic benefits. The plants would create 6,000 construction jobs a year and would provide 1,200 full-time jobs at the plants once they are complete.

“That’s pretty significant employment numbers,” Baak said.

Baak and other solar advocates and developers say Nevada must carefully nurture a still nascent industry that is a natural fit for a state full of flat lands and sunny skies. As they gain a foothold, manufacturing plants could then be lured here, creating a greater number of permanent jobs.

Another source of permanent jobs is found in the manufacture of components for solar energy plants.

Already Nevada has attracted Ausra, a plant that develops reflectors and other parts for utility-scale solar thermal projects. Ausra plans to employ 50 workers when it reaches peak production in 2010.

But the state has also missed out on some opportunities for attracting similar ventures, including a $100 million plant that the Germany-based Schott recently announced it is building in Albuquerque. Schott plans to employ 350 initially and 1,500 eventually.

“Neighboring states are being much more aggressive” in offering incentives for solar manufacturing, Baak said.

Some economists are not convinced manufacturing will necessarily follow solar plants and believe Nevada will not benefit much from exporting solar energy unless it can derive direct revenue from the exports.

By way of comparison, “we have lots of cars but we don’t manufacture them here,” said Keith Schwer, director of the Center for Business and Economic Development at UNLV, who completed a study of economic benefits of renewable energy five years ago.

“We have a comparative advantage of the solar hitting the earth because the desert is great for that,” Schwer said. “But there’s no gain for the state if it is generated here and sold off elsewhere because there are not that many jobs created.”

Benjamin believes such a tax could inspire more enthusiasm in the state for solar plants.

“The golden state could be a gold mine for Nevada,” Benjamin said. “What I’m trying to do is promote the idea that renewable energy could provide a revenue stream to the state from California.”

Just relying on construction jobs for building the plants is “too short term,” he said. “Nevada needs a revenue stream that is steady, and renewable energy is never going to run out. It could stabilize funding for schools and infrastructure in Nevada and help pay for the transmission infrastructure that we need to develop renewable energy for the state.”

But other solar advocates, developers and analysts say Nevada would be shooting itself in the foot if it does anything to make solar power harnessed in Nevada potentially more costly than that from other Southwestern states.

“I think anything that makes it more costly for these plants to produce and export power is going to be detrimental,” Baak said. “The whole concept here is we’re looking for incentives and abatements in the early years of solar projects, when they don’t have the economies of scale and the efficiencies that a more established technology would have.

“Once they start getting more and more of them, the production costs go down.”

Sun reporter David McGrath Schwartz contributed to this story.

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