Siting Renewable Electric Infrastructure in the Southwest
October 2009

I. Introduction

Renewable Energy, Why Now?

As it has in the past, renewable energy is again hailed as the future. In the 1970s, renewable energy was touted as one part of the solution for the energy crises. The movement lost momentum, however, when low oil prices reappeared in the 1980s.

Today, energy independence is again a driver for renewable energy, but it is not the only one. Concern about climate change is a second critical factor in the current renewable energy frenzy. Renewable energy development is being directly pursued through various state renewable portfolio standards, which mandate that public utilities acquire certain percentages of power from renewable sources. Given recent congressional proposals, such as the American Clean Energy and Security Act of 2009 (also known as the Waxman-Markey bill), it appears the federal government is likely to jump into the renewable portfolio standard business too. Additionally, the federal government also appears poised to facilitate renewable energy indirectly through greenhouse gas regulations and concomitant costs on conventional energy sources. The version of the Waxman-Markey bill that passed the House on June 26, 2009, mandates a reduction in greenhouse gas emissions to 17 percent below the 2005 levels by 2020 and 83 percent below the 2005 levels by 2050. As a result, renewable energy sources will look more attractive when compared to conventional sources of power and provide a hedge against the uncertainty of the true cost of greenhouse gas regulation.

Additionally, renewable energy is viewed as a key economic development strategy. The recently enacted federal stimulus bill includes billions in grants and loans for transmission grid development and billions more in tax incentives and grants to facilitate renewable energy developments. States are getting in the act as well. Using tax incentives, renewable energy portfolio standards, and other mechanisms, southwestern states are competing for the jobs and tax base that renewable plants and associated manufacturing facilities will bring. These additional factors suggest renewable energy will finally begin to fulfill its potential.


However, despite the current momentum, many obstacles remain. The focus of this article is on one of those challenges, the licensing processes that utility-scale renewable energy projects in the Southwest must navigate.

Despite the climate-friendly nature of these projects, they do have real environmental impacts given the size and location of the plants. A typical concentrated solar power plant requires at least five acres per MW, so a 200 MW plant requires 1,000 acres of land. Additionally, the transmission lines to move power from remote generation to urban areas needing the power also have environmental impacts and are frequently opposed by those who live nearby. Finally, land in the Southwest is a checkerboard of federal, state, and private lands. Each brings unique challenges and benefits and many projects will cross multiple types of lands and, therefore, require multiple, parallel approvals. This article summarizes the licensing approvals required and the considerations that come into play when deciding whether to use federal, state, or private lands.

II. Licensing Approvals

A. Federal Land Managers

In the Southwest, federal lands are managed by a number of federal agencies including the Bureau of Land Management, Forest Service, and the Fish and Wildlife Service, among others. Each of these federal land managers has its own process for processing right-of-way applications to construct and operate renewable energy facilities and the transmission lines needed to serve them.

While the processes are not identical, they share one common bond: all require compliance with the National Environmental Policy Act (“NEPA”). NEPA requires the federal government to assess the environmental impact of “major Federal actions significantly affecting the quality of the human environment.” Federal licensing for utility-scale renewable projects and the transmission lines necessary to carry generation to loads certainly fit the bill of actions that significantly affect the environment and, therefore, NEPA compliance is required. Complying with NEPA's procedural requirements and obtaining federal rights-of-way is typically a multi-year process.

B. State Trust Land Departments

When the federal government established territories and states in the western United States, it reserved some lands to be held in trust, primarily for the benefit of education. These lands, commonly referred to as state trust lands, occupy a significant portion of the southwestern landscape. For example, New Mexico has approximately 13 million acres in trust. Arizona holds approximately nine million acres.

To site a plant or transmission line on state trust lands, approval must be obtained from the state land department. Each state has different processes that work in similar ways. Unlike the federal process, which focuses primarily on the environmental impact, the focus of the state land process is to maximize revenues and preserve trust assets for the trust's beneficiaries.

C. State Public Utility Commissions

In addition to the authorization needed to use federal lands and state trust lands, approvals must also be obtained from state public utility commissions.

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