Speculating on solar


When the Bureau of Land Management's Southern Nevada office sent out a letter last week rejecting Goldman Sachs' applications to develop renewable energy on public land, you had to wonder: What was an investment bank doing in the Nevada desert? And you wouldn't be the only one asking. The Associated Press reporter who broke the story, Jason Dearen, had raised questions about the firm's presence there a year ago, when he wrote about how the BLM's "first-come, first-served leasing system . . . enabled companies, regardless of solar industry experience, to squat on land without any real plans to develop it."

Dearen named a "Goldman Sachs & Co. subsidiary with no solar background" that filed 52 applications among the prime offenders. A year later, that subsidiary, Cogentrix Solar Services LLC, had not moved forward on any of the parcels of land it had put dibs on in Nevada, including two that were three or four times larger than the 4,000 acres even the a 400-megawatt plant requires. No plans had been filed, no environmental studies begun.

"We had to make way for applications that will make some progress," says BLM spokesman David Quick. "We took those applications in good faith, but when the time runs out and you haven't done anything, we have to say ‘all right, you're done.'"

People in the BLM's Nevada office didn't want to call what Goldman Sachs was up to land speculation, but it's hardly a stretch to say so. Rolling Stone's Matt Taibbi famously called the investment bank "a great vampire squid" sticking its "blood funnel into anything that smells like money" -- hyperbole, perhaps, but in those heady days after the Energy Policy Act of 2005 called for 10,000 of renewables on public land by 2015, large-scale renewables certainly fit the bill. With just $50,000 and the online filing of a standard form 299 ("Application for Transportation and Utility Systems on Federal Lands"), anyone, anywhere could cordon off a piece of the desert and hang out a shingle as a renewable energy developer. Would-be developers were marking territory without the slightest inkling that they might actually have to do something with it.

The rewards of this activity remain somewhat mysterious. You can't sell, barter or bank a right-of-way application on public land. But what you can do, one (serious and successful, but very off-record) developer admitted to me, is use that application to boost your reputation to investors.  Even if you were sincere about getting into solar or wind somehow, somewhere, but just didn't know enough about it, $50,000 (which is more like a microscopic rounding error to a place like Goldman Sachs) wasn't much to put down to hedge your bets.  And if you wanted to sell off your renewable energy sector in a few years, plans for developing the Nevada desert, already filed with the Interior Department, couldn't hurt your sale price.

The surfeit of non-serious applications, did, however, hurt the Interior Department's renewable energy ambitions. As BLM director Bob Abbey told Congress last May, land speculators who filed applications for solar or wind energy rights-of-way sometimes blocked applicants "with serious interests in the potential development of solar or wind energy resources on the public lands." Even with staffing beefed up because of stimulus funds, the BLM has always had limited resources for the tedious review process; more applications to slog through meant delays and more risk for sincere and prepared developers.

Worse, BLM has been required in the past to proceed with each application, even if the proposed project was sure to run afoul of national environmental laws, and even if, in the case of Cogentrix, the request seemed pie-in-the-sky.

The good news is that the Interior Department has made decisive strides toward improving the leasing system, not just to inhibit speculators but to encourage more environmentally responsible land use. In February 2011, BLM director Bob Abbey issued guidance instructing BLM personnel to conduct a pre-application interview with stakeholders and lease applicants. "It gives us more ability to talk with the applicant so everybody has a good understanding of what it's going to take to carry the project forward," says Nevada BLM's renewable energy project director, Greg Helseth. And officials at the Department of Energy and the BLM have also combed through thousands of comments on the solar development zones the two agencies proposed last winter, and a press release issued in July, while somewhat cryptic, seemed to suggest that the federal government had every intention of taking environmentalists' concerns about those zones seriously.

Cogentrix, meanwhile -- a mostly fossil-based energy company based in North Carolina --  does have some solar plants in development; in 2009, it acquired a 43-megawatt plant near Dagget, Calif., "and we've invested more than $10 million in capital improvements in them since then," says spokesperson Andrea Raphael. Another plant, a 30-megawatt "high-concentration photovoltaic" plant near Alamosa, Colo., is under development on private land and scheduled to be completed next year.

 "Cogentrix is committed to solar," Raphael says. We're glad to hear it.

 Judith Lewis Mernit is a contributing editor at High Country News.

Image of Nevada solar development courtesy Flickr user J.N. Stuart

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