Geothermal faces big policy battles
August 14, 2014
Nevada's geothermal energy producers need to act quickly to influence policy makers and ensure the industry keeps growing in the state, experts told participants at last week's National Geothermal Summit in Reno.
A number of policy issues which could significantly impact the industry are being decided in the next few months, including NV Energy's required plan to up its renewable energy capacity, a sage grouse bill being introduced by Sens. Harry Reid and Dean Heller and the state Public Utility Commission's decision whether to allow the power company to join a western energy imbalance market.
Further ahead, the Nevada Legislature is expected to reassess the state's renewables portfolio standard during its 2015 legislative session starting in February.
"You need to get out in front of this curve. You have a great story to tell about the value of your resource," said Fred Schmidt, a partner with the law firm of Holland & Hart LLP to a roomful of attendees at the summit. "I'm talking about the next month or two. You need to talk this up."
Schmidt was referring to the emissions reduction and capacity replacement (ERCR) plan filed by NV Energy with the PUC. The plan is mandated by a 2013 law, Senate Bill 123, and maps out how the electric utility will retire 800 megawatts of coal-fired electric generating capacity and replace it with 350 MW of renewable energy capacity.
After that, the power company will issue a request for proposal by the end of the year for the first 100 MW of capacity. The company is required to issue two more similar RFPs by the end of 2015 and 2016.
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Right now, the plan calls for 300 MW of solar power and 50 MW of geothermal, but Schmidt said that could change.
"The ERCR is not written in stone," said Schmidt. "That's why this group needs to get more vocal. The window of opportunity is in the next two or three months."
The new law requires that several criteria be used when evaluating renewable projects, some of which could give geothermal a boost.
"The goal of the legislation is to encourage jobs and geothermal fares well in that," said Jack McGinley, director of regulatory and legislative strategy for NV Energy.
"It takes longer to build a geothermal plant and requires more people to operate than solar."
Also key to the future of all renewables in the state is the fate of the sage grouse. The U.S. Fish and Wildlife Service is considering placing the bird on the endangered species list and restricting activity on its habitat, which covers much of northern Nevada.
"If the sage grouse is listed as endangered next year it will be bad, bad news for the industry," said Assemblyman David Bobzien, who was one of the sponsors of SB 123. "The medicine might taste bad but it's better than the disease."
Bobzien was referring to the Nevada Sagebrush Landscape Conservation and Economic Development Act now being drafted by Senators Reid and Heller. The bill is designed to stave off listing of the sage grouse by preserving its habitat while still allowing for other uses of the land.
"You should get up to speed on the bill and comment on it," said Bobzien. "It will look different when it's introduced in October."
On Aug. 27, the PUC is supposed to release its decision whether to let NV Energy join the energy imbalance market being formed by the California Independent System Operator and PacifiCorp., the Portland, Ore., utility.
The purpose of the market is to allow utilities throughout the west to more efficiently and quickly exchange power to smooth out swings in supply and demand.
If NV Energy is allowed to join it is expected to be a boost for renewable energy production here.
The industry has likely missed its chance to influence that decision, if it hasn't done so already, but it can lobby the upcoming Nevada Legislature.
In 2013, the legislature cleaned up the renewable portfolio standard by reducing and phasing out energy efficiency as a way to meet the standard and taking away the carve out for solar which advantaged the technology.
Now, the Legislature may look at modifying or even eliminating the standard altogether since the state is already using more renewables than even the RPS stipulates.
"Is it time to retire it? I'm reluctant to commit to phasing it out now," said Bobzien. "I'd be ready to jump in if the federal trajectory was a good one."
The Legislative Committee on Energy, which meets in the interim, has already submitted three of its allowed 10 bill draft requests. At least one will likely concern the RPS.
"In the interim committee the RPS is a constant topic of conversation, whether we need to make changes to it or modify it," said Nevada Sen. Kelvin Atkinson, who chairs the committee. "These things are a moving target."