In Part III of this blog
series on tribes and renewable energy resources, I explored
the convoluted process for obtaining the Bureau of Indian Affairs’ approval
before American Indian tribes can develop renewable energy on tribal land. Even
if that process were remedied, tribes still face numerous other barriers to
enjoying the full benefits
that renewable development on tribal land would afford. According to a
Sandia National Laboratory survey of tribal and federal Indian energy experts,
lack of financing or funding and lack of
customers are two of the most significant barriers to renewable energy
development on tribal land. This fourth post in the Tribes and Renewables
series briefly explains each of these barriers and suggestions for overcoming
them.
Lack of Financing or Funding
One of the major barriers
to tribal renewable energy development is lack of access to funding or
financing. Even without the financing difficulties raised by the need for
Bureau of Indian Affairs approval, tribes face considerable and inequitable
barriers to financing their projects. Many renewable energy project owners are
able to offset some of their tax liability by qualifying for the federal production tax credit or the investment tax credit, making the energy more valuable to them. However,
since tribal governments have no tax liability, the credits do not provide any
benefit to tribes directly. Tribes can attempt to find a third-party tax
investor willing to finance their project in exchange for the tax credits, but
it requires giving that investor ownership of the project for a time. This adds
an extra step to the process and robs the tribe of the ability to fully own
renewable energy projects, which is inequitable and raises concerns among some
tribes with regard to sovereignty. Regardless, the federal government is
currently phasing out the renewable tax credits over the next five years.
However, even if tribes could use the benefit of tax credits to save money and make renewable
projects more financially beneficial, it would not solve the problem of being
able to finance tribal renewable projects. Fortunately, the federal government
is trying to overcome this particular barrier. Last March, the U.S. Department
of Energy (DOE) announced
a $9 million dollar investment in Native American “clean energy and energy
efficiency programs,” including 12 solar photovoltaic projects, one wind energy
project, and one tidal energy project. While this program will likely lead to
additional renewable energy development on some tribal lands, such direct
funding from the federal government should only be part of the solution.
Lack of Customers
The Sandia National
Laboratories survey also found that a perceived lack of customers hinders
tribal development of renewable energy resources. Prospective Native American renewable
project developers could build projects to provide power to tribal residents,
helping the tribe become more self-sufficient and reducing its need to purchase
power from elsewhere. But the fact that the survey identified lack of customers
as a significant barrier to development suggests that tribes are looking to
also sell their electricity elsewhere.
The best way to ensure
adequate demand for the output of renewable projects is to ensure that state renewable portfolio standards (RPSs) are sufficiently strong to create a market
for renewable energy. RPSs are state mandates to obtain a certain amount of
electricity from renewable resources. In states with high RPSs, utilities will
be looking to buy more renewable electricity to meet their requirement,
creating more customers for tribes. This is one of many reasons states should
consider enacting ambitious RPSs.
As I’ve explained in the
last few posts in this series, there are certainly some barriers to tribal
development of renewable resources, but there are also lots of reasons for
hope. Plenty of policy options are available to overcome these barriers, and
the fact that the Government Accountability Office and the Sandia National Laboratories are looking
into the reasons for underdevelopment of tribal renewable resources is
promising. The next post in this series will begin looking at a completely different
aspect of tribes and renewables: how to develop renewable energy projects on non-indian land without destroying
tribal cultural resources.