In late 2010, Barack Obama’s Administration approved the first projects to develop solar-energy plants on public lands. By this summer, it had green-lit twenty-nine such projects, capable of generating enough electricity, at full operation, to power more than a million homes. This isn’t to say that all that electricity is actually being generated. Of the twenty-nine approved projects, only six are operating; another eight are under construction. The rest have been scrapped, delayed, or are only now moving toward construction. Although the White House boasted this spring that the amount of solar power installed in the U.S. has increased nearly elevenfold since 2008, most of the new installations have been through more modest projects, on small private parcels of land, with only around fourteen per cent coming from solar projects on property owned by the Bureau of Land Management. Partly because of this, solar power remains scarce, representing less than one per cent of electricity in the U.S. last year. That’s why officials were so surprised when a bidding war erupted at their auction in June for the right to build a utility-scale solar installation—one big enough to power thousands of homes—on public land near Las Vegas. In the space of an hour, three companies spent nearly six million dollars to purchase the right to be the preferred applicant to cover thousands of acres of public land in solar panels. “It was overly successful,” Greg Helseth, renewable-energy project manager in the bureau’s Las Vegas office, said. “I don’t even know how to say what it was—it exceeded our expectations.”
The opening of public lands to solar development originated with a 2005 law, the Energy Policy Act, which set a goal of eventually permitting enough renewable energy on public lands to power four million homes—that is, ten gigawatts. In 2010, after taking several years to evaluate applications, the B.L.M. started approving solar projects on a case-by-case basis. At that time, developers could apply to build solar projects anywhere on bureau land.
But proposed projects faced opposition from environmentalists, who worried about the consequences for native animals. One developer, BrightSource Energy, received a permit to build on land that contained habitat for the desert tortoise, a threatened species. Western Watersheds Project, an environmental group, sued the bureau and other defendants for not adequately studying the environmental impacts of that decision; it ultimately lost the suit, but BrightSource has spent at least fifty-six million dollars trying to protect and relocate tortoises on the site.
Solar electricity is also still expensive: around eleven cents per kilowatt-hour, whereas natural gas and coal can cost half that amount. Henry Lee, the director of an environmental-and-natural-resources program at Harvard University, said, “You can open up the land, but the question is, can people build solar installations at a price that utilities will buy energy from it?” The cost of solar power would need to fall to six cents per kilowatt-hour to compete with traditional energy sources, and experts don’t expect that to happen until 2020. Because large solar projects can cost hundreds of millions, even billions, of dollars, some investors have walked away from projects that received approval but did not look like smart business decisions.
The B.L.M. couldn’t change the high cost of solar energy, but officials thought that they could address two other big hurdles to solar development: the potential environmental damage and the financial risk for investors. In 2012, it came up with what it called the Western Solar Plan. The bureau identified locations in six sun-drenched Western states, including California, Arizona, and Nevada, where it believed that construction could occur with minimal impact. To save developers time and expense, the bureau took the unusual step of preëmptively conducting an environmental review of all the land—about two hundred and eighty-five thousand acres divided into more than a dozen so-called Solar Energy Zones. It identified an additional nineteen million acres where developers could apply to build, though not under the same streamlined permitting process as projects in Solar Energy Zones.
The plan soon hit obstacles. In February, 2013, three environmental groups filed a federal lawsuit in California to roll back the bureau’s environmental review of the Solar Energy Zones by asking a judge to declare it invalid. They argued that the bureau should have considered whether solar power was better suited to rooftops and developed areas like vacant industrial lots rather than federally owned desert environments, which can serve as habitat for animals such as the desert tortoise. Investors proved skeptical, too, despite the bureau’s streamlined permitting process. In order to sell solar energy, developers need to know that the utility in control of the transmission lines is willing to purchase it. Otherwise, it would need to transport the energy itself, using those lines, which can be costly or even impossible, depending on how coöperative the utility is, Severin Borenstein, a business and public-policy professor at the University of California, Berkeley, said.
The B.L.M.’s success at the June auction is a drastically different outcome from its first auction, less than a year earlier. Last October, the bureau opened bidding to anyone who wanted the right to obtain a thirty-year lease and submit building plans for a solar project on land in Colorado’s San Luis Valley, close to the New Mexico border. Not a single party placed a bid, and the land remains undeveloped. This setback for solar energy was underscored by a wave of oil and natural-gas exploration on public lands throughout Colorado.
Explanations for the failure immediately surfaced. The bureau had said that solar developers would need to mitigate their projects’ environmental impacts, but had not specified exactly what this would entail or cost. Ken Johnson, a spokesperson for the Solar Energy Industry Association, told the Denver Post, “Frankly, it’s not smart business to commit to something until you’ve read the fine print.” One bureau official said that developers complained that the parcels were too large, making leases more expensive. There were no assurances that any of Colorado’s power utilities would buy solar capacity right away, which meant that potential developers would have limited options to sell any solar power they generated on the land. Plus, coal and natural gas were still cheaper than solar energy. “It’s kind of like a three-legged stool,” Helseth, the renewable-energy project manager, told me. To succeed, utility-scale solar projects need a good location, a utility to buy the energy, and a developer with financing to build it. “If any one of those three legs falter, the whole thing could fail.”
In the spring, the B.L.M. announced that it would hold its second solar auction, this time for land in Nevada, where the state legislature has mandated that utilities obtain twenty-five per cent of their energy from renewable sources by 2025. This time, the bureau was better prepared. The utility NV Energy, a Las Vegas-based subsidiary of Warren Buffett’s Berkshire Hathaway Energy, had already announced that, each year through 2016, it would solicit proposals for one large renewable project of a hundred megawatts, enough solar power for tens of thousands of homes; this gave developers a way to gauge the utility’s interest in purchasing solar energy and weigh whether to make an investment. The bureau, in conjunction with local government, also specified that developers must pay a one-time fee of around twenty-six hundred dollars per acre, which would be used to offset environmental impacts from construction, including habitat restoration for desert tortoises. The B.L.M. scaled back the size of the auction, too, with the smallest parcel six times smaller than in Colorado, so that bidders would not have to acquire more land than needed.
The bureau was delivered a boon when, in June, a federal judge dismissed the environmental groups’ lawsuit seeking to block the Western Solar Plan. Helseth said the plan’s new permitting process could take as little as six months, whereas it used to take years. “That matters a lot to investors—time has value and permitting has a cost,” Derek Lemoine, a University of Arizona professor who studies energy economics, said. “Investors like speed and they like certainty.” The auction took place in North Las Vegas City Hall on June 30th, a blazingly clear morning with temperatures exceeding ninety-three degrees. The rules remained the same as in Colorado: winners would obtain the right to a thirty-year lease and the chance to submit a project under the bureau’s streamlined permitting process. More than fifty people filed into the cavernous room for the auction, representing nine bidding parties, from companies with energy projects on multiple continents to family-owned businesses looking to develop their first utility-scale solar project. A professional auctioneer hired to call the event sounded stunned at how fast things moved. “I’m going to get whiplash here,” he said, as bidding on one parcel rose from nineteen thousand dollars to more than $1.4 million. “We were prepared, if there were no opening bids, to re-run this at the end.” Some of the losing bidders gasped at prices. “I just don’t know how in the hell they’re going to make any money off of it,” Doug Barnett, the president of a renewable-energy consulting-and-development firm in Chicago, grumbled after he was outbid.
In the end, all six parcels were purchased by large companies: First Solar, an Arizona company that manufactures and operates utility-scale solar plants around the world, won rights to three parcels; NV Energy won two parcels; and Invenergy, a global company with solar, wind, and natural-gas projects, won a single parcel.
None of the winning companies have disclosed exactly how large their solar projects will be, or any other details, though B.L.M. officials said that there is enough space to provide solar power for tens of thousands of homes. Bureau officials also have been silent on the next auction’s location and timing. The success of the projects is far from guaranteed, but the June auction shows that the bureau can entice developers to invest in solar power at a time when it’s still not cost-competitive with traditional energy sources.
With the price of solar energy dropping, and more states passing laws that increase demand for renewable energy, circumstances could be changing. This year, solar power has grown faster than any other energy source except natural gas (which has experienced a fracking boom). Obama has directed the bureau to approve enough renewable-energy projects to power four million homes by 2020. The federal government recently identified around thirteen thousand additional acres of its land that could be converted quickly from desert to solar farms, the huge square-mile patches of land covered in dense arrays of photovoltaic panels.
“They think demand for solar is going up,” Henry Lee, the natural-resources-program director at Harvard, said, referring to the bidders. “They’re betting that the government is going to push this stuff and that utilities will either want it or be forced to buy it through regulation.”