Tribes & Renewables Part IV: Barriers to Tribal Renewable Development and Ownership

By Andrea Lang, Policy Analyst

Credit: Energy.gov

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.

Solar Foundation Job Census Report Provides Strong Support for the Economic Benefits of Solar

By Andrea Lang, Energy Fellow

Credit: BLS.gov

Last week, the Solar Foundation released a report on trends in employment in the U.S. solar industry, concluding that solar industry jobs have grown 123% since 2010. According to the report, the solar industry “continues to outpace most other sectors of the economy, adding  workers at  a  rate  nearly 12 times  faster  than  the  overall economy  and  accounting  for 1.2%  of  all  jobs  created  in  the  U.S.  over the  past  year.” 

In conducting the census, the Solar Foundation sent and received surveys from thousands of businesses to determine which areas of the solar industry are growing, in which states, and which policies are responsible for encouraging that growth.

 

With respect to growth areas, the report noted that almost two-thirds of the new solar jobs last year were created in the installation sector, and that sector now represents 57% of total solar industry employment.  And given that this statistic does not even include utility-scale installers, the findings show the important role that distributed generation plays in the solar industry. In fact, the report also found that 78% of solar jobs are either in the residential or commercial market, compared to only 22% in the utility-scale market. These are the kind of statistics that all levels of government should keep in mind when considering whether to shrink or expand various tax credits, renewable portfolio standards, net metering, and other policies aimed at encouraging investment in renewables. 

In fact, the states that are experiencing the most solar growth seem to be ones that have strongly incentivized distributed generation at the state level. California (75,598 jobs), Massachusetts (15,095 jobs) and Nevada (8,764 jobs) lead the county in the number of solar jobs. At least in the past, these states had in common a commitment to policies that strongly encourage renewable development. California, for example, has host of policies in place to advance renewables, including rebates, grants, tax credits, and a net-metering policy that allows owners of offsite solar installations to benefit as well (via so-called “virtual” net metering). Massachusetts has similar incentives in place, and has also recently raised its cap on net metering.

Nevada, which also has lots of policies in place to encourage renewables, provides a great example of the effect state policies have on the renewable industry. When Nevada recently gutted the state’s net-metering policy, SolarCity (the state’s largest solar job provider) cut 550 jobs. The connection between job availability and policies encouraging solar investment seems fairly clear from the facts. 

According to the report, the solar industry acknowledges the importance of state and federal policies that advance renewables. When asked about the importance of various policies to business prospects, 78% of solar businesses responded that the federal investment tax credit, recently extended by Congress, was “considerably or somewhat important,” and 57% responded that state-level policies were as important. Again, these responses especially make sense with respect to small-scale distributed generation. Even with the falling cost of installing solar PV, it’s still a large up-front investment. By providing customers with incentives, the number of residential and commercial owners willing to invest in solar increases, adding to the demand for people to manufacture and install those panels. 

Overall, the report offers strong support for the economic argument that President Obama made in favor of advancing renewables in his last State of the Union address: a growing renewable industry is good for the economy. And in light the political difficulty of using climate change as an argument to advance renewables, perhaps advocates should be touting the economic benefits of a growing renewable industry more often.