Massive Solar Potential on Native American Lands in the United States

Dive into the weekend with a fascinating read on energy sovereignty! Native American territories hold incredible solar power potential in the US. While launching projects has posed challenges, various tribes are now seizing control of their power generation destiny. Excitingly, a change is underway, spurred by funding from initiatives like the US Inflation Reduction Act (IRA) and other key programs.

 

In December 2020, the Navajo Generating Station (NGS), a coal-fired powerhouse generating 2.25 GW, ceased operations. This marked the end of a 40-year era, leaving Arizona, Nevada, and California in the dark and hundreds unemployed.

 

The closure exposed a stark reality – despite the coal mined on the largest Native American reservation, around 14,000 homes in Navajo Nation lacked electricity. Acknowledging this disparity, the White House, through the IRA flagship industrial policy, recognized that tribal nations had been "left behind for too long."

 

Enter the game-changer: the IRA has the potential to revolutionize Native American solar initiatives. Although Native American lands make up just 2% of the US, they hold over 5% of the nation's solar potential. Yet, installing solar faced obstacles. Before the IRA, tribal solar projects struggled financially, missing out on the attractive 30% Investment Tax Credits (ITCs) for solar projects. The sovereign status of Native American tribes meant they weren't subject to federal income tax, making accessing tax incentives a creative challenge.

 

In the journey towards sustainable energy, the Navajo Tribal Utility Authority (NTUA) took a unique approach when developing the Kayenta solar plant. Nestled near the former Kayenta coalmine, the NTUA set up NTUA Generation Inc., a for-profit, limited-purpose company. This strategic move allowed them to access tax credits and share the benefits with project finance partners.

 

Enter the IRA, making things even simpler. Non-profit organizations can now directly receive tax credits as payment, a game-changer for renewable energy projects on tribal land. The IRA introduces a range of incentives, notably the ability to stack investment tax incentives. This means the credits can add up, potentially reaching a whopping 70% of the project cost.

 

Let's break it down: a solar project on tribal land could enjoy a 30% base tax credit, plus an extra 10% for being on tribal land. Meeting criteria for domestic content and energy community bonuses could double the ITC value to 60% of the project cost. While exact details on the criteria for these bonuses are still pending, the potential for a 70% project cost coverage is a beacon of hope for sustainable development.

 

The Rise of Tribally Owned Energy

 

A seismic shift is underway in the world of energy, breaking from tradition to support tribal ownership. Within Native American communities, strong sentiments surround this issue, fueled by decades of contribution to the US energy mix without reaping fair benefits.

 

Arash Moalemi, deputy general manager at NTUA Generation Inc., reflects on the origins of change: “The NTUA was born out of being ignored. The United States wasn't providing basic utilities on Navajo Nation, and our leadership said, ‘Enough. We'll create our own utility because external forces aren't safeguarding us.’”

 

Established in 1959, the NTUA's core mission is to provide essential services like electricity, water, internet, and cellphone coverage to Navajo Nation residents. In recent years, their pursuit of this mission led them to take ownership of utility-scale solar plants on their land, starting with the groundbreaking Kayenta site. The journey towards self-reliance and control over resources is now a beacon for positive change in tribal energy initiatives.

In the heart of Navajo Nation lies the Kayenta Solar Farm, a 55 MW powerhouse developed in collaboration with local utility Salt River Project (SRP). Divided into two phases, the first completed in 2017 and the second in 2019, this 148-hectare project in the El Capitan area signifies a stride toward sustainable energy.

 

Beyond the $12.8 million in tax revenue projected over its lifetime, Kayenta has been a catalyst for economic growth, generating 434 construction jobs during development. While these roles are vital, Arash Moalemi of NTUA recognizes they can't fully replace those lost with the closure of coal-fired plants and associated mines. This is where solar manufacturing steps in, with the potential for significant impact.

 

In addressing the employment challenge, Moalemi reveals, “We aim to open up opportunities in solar manufacturing on the Navajo Nation.” Conversations with PV manufacturers are ongoing, and he hints at potential building conversions, signaling a strategic move towards a brighter, more sustainable future.

 

While the vision for solar manufacturing takes its early steps, the momentum in utility-scale PV development is palpable. In August 2023, the NTUA celebrated the completion of its 94 MW Red Mesa solar plant, marking a significant leap forward. Just four months earlier, a partnership had been inked with Avangrid, a local generator affiliated with the Spanish multinational utility Iberdrola. This alliance committed to exploring the development of a whopping 1 GW of green energy projects within Navajo Nation.

 

Fast forward to December 6, 2023, when Navajo Nation's tribal government, in collaboration with the U.S. Department of Energy and eight federal agencies, signed a groundbreaking memorandum of understanding. This document outlines the government's commitment to streamlining tribal access to funding opportunities from initiatives like the Creating Helpful Incentives to Produce Semiconductors and Science Act, the IRA, the Bipartisan Infrastructure Law, and various annual agency programs. The stage is set for a promising era of sustainable growth and energy self-sufficiency.