Discussion: PV policy, lawsuits and a checklist for project development

“People are putting all this time and effort into bazillion deals without enough money and time and manpower,” said Laura Ellen Jones, a panelist and tax attorney at Hunton & Williams, which also sponsored the event in Napa, northeast of San Francisco last Friday night. “If they just focus on certain customers and figure out their spot. If you do many projects that are wildly different, then you’ll have to find a tax equity investor who has to be comfortable with” many different types of deals.

Jones’s advice comes in handy at a time when an increasing number of investors – banks or other types of institutions – are showing more willingness to put up money in exchange for tax credits than they were a year ago. Project developers and equipment manufacturers can apply for federal tax credits, and cash grants in some cases.

Jones and other panelists discussed what key elements must in place to make a project work, as well as policy and legal ramifications for some of the high-profiled projects that have grabbed headlines lately.

The industry is still the early stages of development and trying out different technologies. So it shouldn’t come as a surprise that a developer would make sizable changes to engineering plans, said Mike Lafferty, president of Blue Renewable Energy in Arizona and a long-time real estate developer. “If you engineer a job a year ago, then now we have a better technology that uses less tilt,” he said.

The recent approval of a 250-megawatt (MW) project by the California Energy Commission sparked discussions about regulatory hurdles that project developers have to overcome. Although the project, spearheaded by NextEra Energy Resources and set to materialize in the western edge of Mojave Desert, makes use of parabolic troughs instead of solar panels, its passage was a milestone for the solar industry. The project was the first such large-scale undertaking to clinch a state permit in 20 years.

“We are really seeing a process in which state and federal agencies that have not done this project before trying to work it out,” said David Lazerwitz, an attorney with Farella Braun & Martel, adding that dozens more projects are currently under development in California’s desert to take advantage of the large swaths of public land and ample sunlight.

But winning the permit isn’t the end game for developers. All along, some environmental and local community groups have strongly objected to these mega projects, particularly if they require lots of water or proposed for land that was never touched by manmade developments such as farming. Lazerwitz expects to see courts play a big role in deciding which projects could eventually rise from the ground. “I think there is a lot of political will to get [projects] done. But litigation will happen from public interest organizations. A lot has yet to be seen,” he said.

So far, many of the proposed projects require both the state and federal government approval because their developers want to lease federal land to build solar energy fields. In comparison, building on private land would enable developers to skip the federal permitting process. And if a project developer decides to go with solar panels rather than any solar thermal technologies, they could avoid the state’s scrutiny as well. In this case, the developer would typically have to contend with the county government.

But seeking a county government’s approval isn’t guaranteed to be easy, continued Lazerwitz. County officials can be more sensitive to their constituents’ opinions because they are directly elected by voters. “Kern and San Bernardino counties are shaping up to not be so bad from a developers’ perspective. San Luis Obispo County is an entirely different place,” he explained. “San Luis Obispo County is an entirely different place.” First Solar and SunPower both have projects proposed in San Luis Obispo County. “Developers don’t want to see this, but a lot of counties are going to want smaller alternatives. If you have a 500 MW project, you are going to walk away with 300 MW.”