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Karl Cates, IEEFA research editor October 2018 1 Growing Interest in Developing Navajo Utility-Scale Solar Industry Policy Momentum and Grassroots Support; Vast Tribal Natural Resource Remains Largely Untapped Introduction Various interests across the Navajo Nation are showing a growing appreciation for the commercial possibilities in solar generation over an area that has long been dependent on increasingly outdated coal- fired electricity generation and imported electricity. This emerging interest in utility-scale solar is driven in no small part by the large-scale deployment of solar generation throughout the Southwest, which continues to grow rapidly as utilities “stop thinking of solar as a problem to be managed, and start thinking of it as an asset to be maximized,” as one prominent industry researcher has recently noted. 1 Few locales in the U.S. are richer in solar potential then the Navajo Nation, as is clear on the map below, borrowed from researchers at the National Renewable Energy Laboratory and repurposed here by IEEFA to highlight how Navajo tribal lands are situated in the middle of the most sun-rich region of the country. 1 S&P Global Market Intelligence: “Solar can be flexibly dispatched with other plants, research concludes” (October 2018)

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Page 1: Growing Interest in Potential for Navajo Utility-Scale ...ieefa.org/wp-content/uploads/2018/10/Growing... · Growing Interest in Potential for Navajo Utility-Scale Solar Industry

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.


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