Twenty-five wind turbines line the dry, rugged ridges on the Campo Kumeyaay Nation Indian reservation east of San Diego, Calif. As the first large-scale wind farm on tribal lands in the United States, the 50-megawatt array has become a model for other tribes looking to develop their renewable energy resources.
Two separate pieces of federal legislation introduced this year have advocates cautiously optimistic that there is growing will in Washington to aid tribes in developing renewable energy resources to their full potential.
The 95 million acres of tribal lands across the U.S. contain about 10 percent of the nation’s renewable energy supply, according to the National Renewable Energy Laboratory. More than a hundred tribes have been awarded grants through the U.S. Department of Energy’s Tribal Energy Program, a major source of funding for tribes looking to establish renewable energy projects. Many others are lining up to get their own projects off the ground.
The Campo tribe leases its land to EnXco, a renewable energy project developer. When the wind farm started producing power in 2005, the land lease generated about 5 percent of the small tribe’s annual revenue, according to tribal resource consultant Michael Connolly Miskwish. Now, with the recession taking a big toll on the reservation’s other industries—a casino and a sand and gravel operation—the wind farm accounts for fully half of the tribe’s revenue.
Its success has led to plans for a second, 64-turbine wind project capable of producing three times as much power. Rather than generating revenue solely from leases, the tribe will be a part-owner of this wind farm. It has also opened the door for projects on neighboring reservations.
“All of these projects benefit indirectly from the fact that Campo’s up and running,” said Connolly.
Momentum in Washington
At the federal level, “there is absolutely momentum on this issue,” said Tracey LeBeau, interim director of the Indian Country Renewable Energy Consortium. “If we practically approach how we as a nation are going to meet this country’s long-term clean energy goals, renewable resource development and critical transmission investment and development will need to incorporate Indian energy.”
One of the most significant legislative efforts this year includes measures targeted at Indian energy. The bipartisan Renewable Electricity Standard (RES) bill, authored by Sen. Jeff Bingaman (D-N.M.) and Sen. Sam Brownback (R-Kan.), which was introduced in late September following the collapse of efforts to pass comprehensive energy and climate change legislation, mandates that utilities and other electricity retailers obtain at least 15 percent of their power from renewables by 2021. That would increase demand for renewable energy across the board, including in Indian Country.
The RES bill also establishes a national renewable energy credit trading program that offers special incentives for tribes. The trading scheme would grant double credits for renewable energy generated on tribal lands and triple credits for certain small energy generation facilities. Those small facilities could serve as the gateway for tribes to develop larger-scale projects.
These incentives are a step in the right direction, according to Jose Aguto, a policy advisor on environment and natural resources for the National Congress of American Indians.
But tribes still face obstacles to developing competitive renewable energy projects. Lack of sufficient financing, limited access to transmission lines and cumbersome regulations can tie up projects for years. Projects in Indian Country are subject to the Department of the Interior approval, which can cause long delays in the permitting process and place tribes at a big competitive disadvantage.
“Land transactions, appraisals, environmental impact statments, leasing—it all requires some form of Department of Interior oversight and approval, and that degree of bureaucratic red tape, combined with an uncoordinated approach within the department, results in extreme delays,” said Aguto. “When renewable energy developers look at what they have to go through, just on a conceptual level, it’s enough of a deterrent that they’re going to look elsewhere.”
Another bill, introduced earlier this year by Sen. Byron Dorgan (D-N.D.), sought to ease some of the restrictions imposed on tribal renewable projects. The Indian Energy Promotion and Parity Act is the result of two years of hearings and discussions with tribal leaders conducted by the Senate Committee on Indian Affairs.
The legislation also sought to make it easier for tribes to take advantage of incentives in the form of tax credits, though that portion of the bill was subsequently shifted to another bill, which is still in draft form.
The lack of tax incentives is a big obstacle to securing project funding. Like counties and cities, tribal governments are not eligible for federal tax credits. That can be a big turn-off to would-be private sector partners, since federal tax incentives often constitute a significant portion of a project’s value. And unlike states and municipalities, tribes can’t, in most cases, generate revenue from property, sales and income taxes.
“To the extent that the tribe becomes a full partner in the deal, the project is penalized with credits that can’t be used,” said Bob Gough, secretary of the Intertribal Council on Utility Policy. “So the project across the street that can fully utilize the production tax credit comes into market with that advantage.”
The Dorgan bill originally would have allowed tribes who are part owners in a project, like the Campo Kumeyaay Nation, to transfer the production tax credits to a private sector partner.
“Then you could work it out,” he said. “Maybe the tribe could get 75 percent of the revenue and their partner gets 100 percent of the tax credit and 25 percent of the revenue. That way the tribe could have ownership without penalty.”
For now, though, tribes remain in limbo with regard to federal tax credits.
However slow, the attempt to bring a number of important policy initiatives together in one piece of legislation still signals increasing awareness of both the risks and potential of tribal renewable energy, according to Gough.
“You see more political support now coming from the full complement of senators on the Indian Affairs Committee rather than just one or two,” he said. “That’s progress, that a growing number of representatives and senators are supportive and understand these issues.”
Most concede it’s unlikely that the RES will pass during the lame duck session following the mid-term elections, however.
“The likelihood to getting anything to the floor is not great, but we’re going to try,” said Leon Lowery, a staff member of the Senate Energy and Natural Resources Committee.
Despite the slow pace of legislative progress, tribes like the Campo Kumeyaay Nation continue to pursue projects that give them more control over their energy resources.
“Tribes are saying, ‘We want sustainability, energy sovereignty, we want to operate these projects in a way that meets our needs,’” said Gough. “There are issues that might not be purely economic. Where a corporation would be looking out for shareholders and owners, a tribe might make different decisions.”