growing interest in potential for navajo utility-scale...

Karl Cates, IEEFA research editor October 2018

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Growing Interest in Developing Navajo Utility-Scale Solar Industry Policy Momentum and Grassroots Support; Vast Tribal Natural Resource Remains Largely Untapped

Introduction VariousinterestsacrosstheNavajoNationareshowingagrowingappreciationforthecommercialpossibilitiesinsolargenerationoveranareathathaslongbeendependentonincreasinglyoutdatedcoal-firedelectricitygenerationandimportedelectricity.

Thisemerginginterestinutility-scalesolarisdriveninnosmallpartbythelarge-scaledeploymentofsolargenerationthroughouttheSouthwest,whichcontinuestogrowrapidlyasutilities“stopthinkingofsolarasaproblemtobemanaged,andstartthinkingofitasanassettobemaximized,”asoneprominentindustryresearcherhasrecentlynoted.1

FewlocalesintheU.S.arericherinsolarpotentialthentheNavajoNation,asisclearonthemapbelow,borrowedfromresearchersattheNationalRenewableEnergyLaboratoryandrepurposedherebyIEEFAtohighlighthowNavajotriballandsaresituatedinthemiddleofthemostsun-richregionofthecountry.

1S&PGlobalMarketIntelligence:“Solarcanbeflexiblydispatchedwithotherplants,researchconcludes”(October2018)

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Nascent,homegrownmomentumforutility-scaleNavajosolar-generationdevelopmentappearstobedevelopingonthreefronts:

• Inanevolvingtribalutilitypolicytowardmoreutility-scalesolar,ashiftdriveninpartbythesuccessoftheKayentaSolarFacility,a27.3MW,200-acreprojectthatcameonlinein2017andisnowfeedingintotheregionalgrid.Kayenta,seenasapilotforsimilarinitiatives,isalsoservingasatraininggroundforlargescalesolar-installation-and-constructionexpertise.

• Incentraltribalgovernmentsupportformoresolarinfrastructureingeneral,includingforcommunity-ownedsolarfarmsthatallowforrevenuestreamstobesharedwithlocaltribalchaptersandlandowners.Ofnoteonthisfront:ThecreationinrecentweeksoftheOfficeofEnergyResourcesandDevelopment.

• Incampaignstobringcommunity-ownedsolarprojectsintolocalesthathaveaccesstokeytransmissionlinesandwhereownershipmodelsareexpectedtoincluderevenuestreamsfortheNavajoNationandlocaltribalchaptersalike.2

Tobesure,challengestoutility-scalesolarproductiononNavajotriballandspersist.Manyarerelatedtolandacquisitionforsolarfarms,whichtypicallyrequiresizeableacreage.Full-scalesolararraysareseenasincompatibleincertainlocaleswherelandsaretraditionallydedicatedtograzing,forinstance.

Fewmodelsforutility-scalesolargenerationexistontriballands,andindeedsuchlandsrepresentsomethingofanislandinaregionalseaofutility-scalesolarthatisspreadingwestfromtheFrontRangeofColoradoandAlbuquerqueandeastfromArizona,California,andNevada,asshowninthescreenshotherefromanEnergyInformationAdministrationdatabase(sunburstsindicateutility-scalesolarplants).

2IEEFA:WindowofOpportunity:NavajoSolar:AFast-TrackCommunity-DrivenDevelopmentApproach(December2017)

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Thatsaid,theKayentaproject,rolledoutalittleoverayearagoasautility-scaledemonstrationprojectbytheNavajoTribalUtilityAuthorityontheoutskirtsofthenortheasternArizonacommunityofKayenta,hasprovensosuccessfulthattheutilitybeganworkonasecondphaseinAugust.DueforcompletioninJune2019,theexpansionwilldoublethesizeoftheexistingKayentafacility.3

Thatproject,alongwithpolicydevelopmentsattheNavajoNationcentralgovernmentlevelandinearly-stagecommunity-developmentinitiativesontriballandsindicateagrowinginterestinsolarinitiatives.

Thoseimpulsesaredrivenapparentlyinpartbymarketchangesduetotheelectricity-generationtransitionoccurringnationallyandinpartbyhowthatshiftislikelytoputtheNavajoGeneratingStationoutofbusiness.

ItshouldbenotedthatonemandateoftheNavajoTribalUtilityAuthorityistobringelectricitytotheentiretyoftheNavajoNation,wheresome15,000householdsstilllackelectricity.Servingthatvoidmaywellrequiremoreoff-gridfree-standingsolargeneration,wheretechnologyadvancesandfallingcostsaremakingthatanincreasinglyviablesolution.Thosepossibilitiesarebeyondtheimmediatescopeofthisresearchbrief.

Evolving Tribal Utility Policy

TheNavajoTribalUtilityAuthority(NTUA),establishedin1959tomanageelectrificationacrossNavajolands,providespowertoabout41,000homes4overasprawlingareathatincludespartsoffourstates(Arizona,Colorado,NewMexico,andUtah).NTUA,basedinFortDefiance,Ariz.,isoverseenbytheNavajoNationgovernmentinnearbyWindowRock,whichappointstheutility’sseven-memberboard.5

NTUAhasmovethan700peopleonitspayroll,makingitoneofthelargestemployersintheregion.

NavajoNationjurisdiction—andbyassociation,NTUAjurisdiction—coversabout27,000squaremiles,anareabiggerthansomestates,amongthemConnecticut,Massachusetts,NewJerseyandWestVirginia.

Likemostutilities,NTUAhasbeenhistoricallyreliantoncoal-firedpowergeneration,anincreasinglyexpensivepropositionandonethatisfalteringasmorenatural-gas-firedandrenewablesgenerationcomesontothegridthattiesNavajolandswithmuchoftherestoftheSouthwest.

Inamovetowardpower-generationmodernization,NTUAlastyearbuilttheKayentaSolarFacilityandbroughtitonlineinJune2017.NTUAestimatesthatthe$60million,27.3-megawattprojecthasthecapacitytoproduceenoughelectricitytopower13,000homes.

BecausepropertyrightsaresoprizedbycommunitiesandfamiliesacrosstheNavajoNation,landacquisitionwasoneofthemainhurdlesinbringingtheprojecttofruition.6Anagreementwiththe

3SRP:NTUA,SRPandNavajoNationLeadersCelebrateGroundbreakingCeremonyforKayentaIItoCelebrateCommitmenttoDevelopRenewableEnergyProjectsonNavajoNation(August2018)4NavajoTribalUtilityAuthority5NTUAboardofdirectors6KayentaSolarProjectOperational,SendingPowertotheGrid(June2017)

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KayentaChapteroftheNavajoNationallowedittoproceed,however,andthesolarfarmtodayisconsideredsuchasuccessthatitisbeingexpandedwithasecondphasetodoubleitssizebymid-2019.

“ThesecondphaseoftheKayentaSolarProjectdemonstratestheNavajoNation’scommitmenttoaresponsibletransitiontorenewableenergysources,”saidSpeakeroftheNavajoNationCouncilLoRenzoBateswhentheprojectexpansionwasannouncedinlateAugust.7“Wearecreatingjobsandrevenuefromanemergingmarket,whileremainingmindfuloftheassociatedcosts,thetimethatitwilltaketotransition,andothersourcesofenergydevelopment.”

NTUAofficialstoutKayentaasamodelinitiativethat—whileofferinglimitedlong-termjobopportunities—createdalmost300constructionjobs,providedbuilt-injob-training,andsetoffsignificantlocaleconomicripples.

TheutilitywillhostajobfairinlateNovembertofill100openingsforKayentaIIconstruction,whichisscheduledtobeginthisyearandcomeonlinebyJune,Solar-installationworkerstrainedatKayentahavebeenhiredtoworkonsimilarprojectsintheregion,includingonesnearGallupandAlbuquerque,N.M.andexpectationsarethatdemandforsolar-trainedworkerswillcontinueacrosstheregion.

NTUAhasincreasinglypromotedthetribalbenefitsofsolardevelopmentonseveralpoints,includingjobcreation,taxrevenuesanditspotentialinhelpingmeetitsmandatetoelectrifyallNavajoNationhomes.

Central Tribal Government Support WhilemostpublicityoflatearoundNavajoenergypolicyhascenteredonthefateofNavajoGeneratingStation(NGS),anagingcoal-firedpowerplantthatincombinationwithitssourceminehasbeenamainstayoftheeconomy8alongthenorthernreachesoftheNavajoNation,discussionsarounddiversifyingthetribe’sresourcedevelopmenthaveintensified.AsuncertaintyhasgrownastowhetherNGSwillsurvive,9thegovernmentinrecentweekshasmovedtoestablishtheOfficeofEnergyResourcesandDevelopmentwithaneyetowardfostering“acompetitivebusinessenvironmenttoattractinvestors,toengagekeygovernmentalandcommunityrepresentatives,toserveasanapoliticalinformationalresourcefortriballeadership,todeveloppoliciesandplansregardingenergyuseandcorridors,andtosupersedealldirectionandcontrolofenergydevelopmentontheNavajoNation.”10Theideabehindthenewoffice,whichistobeoperatedundertheauspicesoftheNavajoNationDivisionofNaturalResources,istobuildonpreviouspolicymodernization11whosecorepublicly-statedgoalsseemlikelytoremainintact:

7NTUA,SRPandNavajoNationLeadersCelebrateGroundbreakingCeremonyforKayentaIItoCelebrateCommitmenttoDevelopRenewableEnergyProjectsonNavajoNation(August2017)8JustTransitionFund:“LetterFromWindowRock”(October2018)9IEEFAupdate:“ThehurdlestoaneconomicallyviableNavajoGeneratingStationremain”(July2018)10Navajo-HopiObserver:“NavajocommitteereviewsestablishmentofNavajoenergyoffice”(October2018)11NavajoNationalEnergyPolicyof2013:NavajoLandSummit

A market-driven urgency for energy

policy modernization.

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• “GaincontroloftheNation’senergyresourcemanagementanddevelopment.”• “Optimalreturnsandequityfromenergydevelopment.”• “Eventuallybecomeself-sustaininginenergymarkets.”

Theinitiativeisrootedincommonaspirationssometimesovershadowedbythepoliticsofthemomentandthatrevolvearoundtransparency,ensuringthatnaturalresourcesare“usedforthebenefitoftheNavajopeople,”thattheybe“self-sustaining”andtheyguarantee“totalresourcesovereignty.”ThepushforamoremodernizedtribalenergypolicyissurfacinganewnotsolelybecauseofthelikelylossofNGS.Otherforcesatworkincludethemainstreamriseofutility-scalesolarelectricitygenerationandthefactthattheNavajoNationisinthemiddleofaregiondubbed“theSaudiArabiaofsolar.”12AlsodrivinginterestinNavajosolar:A2017agreement13betweentheNavajoNationandthecurrentownersofNGSthatguaranteesthetribeleaseaccessto“atleast500megawatts(MW)”ofcapacityontwomajortransmissionlinesacrossNavajolands.Collectively,thesedynamics—theriseofsolar-poweredelectricitygeneration,theuniquegeographyoftheregion,thetransitionoccurringinpowerproductionregionallyandnationally,andlocalinterestinenergyindependenceandsecurity—arecreatingagrowingurgencyforpolicymodernization.

Community Solar Initiatives Advocatesforcommunity-basedsolarinitiativesareemergingason-the-groundagentsforlocalNavajoinitiativesthatleveragetherapidbuild-outcharacteristicsofsolarpowerwithownershipmodelsthatallowforfulllocalparticipationinsite-scaledecisions,projectscaleandrevenue.14Oneexample:TheNavajoNationtribalchapteratLeChee,justafewmilessouthoftheNGSplant,whichisindiscussionsnowaroundthepossibilityofbuildingautility-scalesolarprojectthatwouldensurerevenuestreamsforthetribalgovernmentover200milesawayatWindowRockandthelocalcommunity.WhilesolarinitiativesarenotseenasreplacementsforthetaxrevenuebaseandjobshistoricallysuppliedbyNGS,theyareconsideredasignificantcomponentinlocaleconomic-developmentplansincommunitieslikeLeChee.Similar,immediateopportunitiesareseenalsoatCameronabout70milestothesouthofLeCheeandatKayenta,roughly100milestothewest.

12IEEFA:WindowofOpportunity:NavajoSolar:AFast-TrackCommunity-DrivenDevelopmentApproach(December20171323rdNavajoNationCouncil:NGSownerstosignleaseagreementafterapprovalbytheNavajoNationCouncil(June2017)14IEEFA:WindowofOpportunity:NavajoSolar:AFast-TrackCommunity-DrivenDevelopmentApproach(December2017)

Activity at LeChee, and budding opportunities across tribal lands from

Cameron to Kayenta.

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Suchgeographicdiversityspeakstothepotentialincommunityinitiatives,whicharesaidtobeencouragedbytheNavajoNationgovernmentsinceevenwithitscentralauthorityitisinnopositiontocloselyadministersuchfar-flungprojects.CommunitysolaradvocatesaresometimesatoddswithNTUApriorities,andcommunity-solarsupporterscriticizeNTUAforwhatsomeseeasitsmonopolybehavior,butsuchstancesappearnottobekeepingcommunityinitiativesfromdeveloping.Thechallengesfacingcommunity-solarambitionsincludethesameonesfacinganyutility-scalesolarprojectontriballand.Chiefamongthemistheacquisitionofdevelopmentrightsonlandsthatarecloselyheldbyfamiliesandthathavehistoricallybeenseenasbastionsagainstexploitationbyoutsideinterests.Initialindicationsarethatviableutility-scalesolarprojectsintheregionmustbebuiltwithacapacityontheorderof500-1,000MW,arequirementthatdemandshundredsofacresofland.Thatsaid,discussionshaveoccurredaroundarraysdesignedtoaccommodatetraditionalgrazingrightswhileensuringequitableownershiparrangementsthatbenefitallparties.Openingsaredevelopingquickly,asdescribedinaresearchreportjointlypublished10monthsagobyIEEFAandDinéInnovativeNetworkEconomiesinHozho:“Asthesolar-industryfootprintexpands,Navajocommunitiesarebeingcourtedbyoutsideintereststoparticipateinfast-movingdevelopmentdeals.TheNavajoNation,only67yearsoldandbuiltfromahistoryoftrauma,isnotwell-equippedtoassesstheseopportunities,buttribal-chaptercommunitiescangetuptospeedwithproperadviceandconsultation.”

Summary Whileutility-scalesolargenerationonNavajotriballandsremainsinitsearlystages,interestinitsexpansionissupportedonseveralfronts.

• InWindowRock,theseatoftheNavajoNationgovernment.

• AttheNavajoTribalUtilityinFortDefiance.

• Inseveralexploratorycommunitytribal-chapterinitiatives.Theregionisblessedwithabundantutility-scalesolarresourcesandhasaccesstokeytransmissionlinecapacitythatwillcomeopenwiththelikelyclosureofthecoal-firedNavajoGeneratingStation.Whileutility-scalesolarisnotseenasareplacementforNGSjobandrevenuelosses,itcanbeacomponentofanewtribalenergyeconomythatcanbringdistributedeconomicbenefitsandgreaterenergyindependencetotheregion.

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About IEEFA TheInstituteforEnergyEconomicsandFinancialAnalysisconductsresearchandanalysesonfinancialandeconomicissuesrelatedtoenergyandtheenvironment.TheInstitute’smissionistoacceleratethetransitiontoadiverse,sustainableandprofitableenergy.http://ieefa.org

About the Author KarlCatesisanIEEFAresearcheditorandaformereditorforBloombergLPandtheNewYorkTimes.