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In Eastern Washington,
Big Plans for Solar Power

by Leah Beth Ward
The Yakima Herald-Republic, November 1, 2009

CLE ELUM, Wash. -- Coal - one of the dirtiest sources of energy around - was once king in this Upper Kittitas County town.

Now the vision is cleaner and greener because of a massive solar installation proposed for 580 acres of logged timberland about four miles northeast of the city limits.

The Teanaway Solar Reserve, proposed by Kirkland, Wash., businessman Howard Trott, is seeking approval from the county to install 400,000 photovoltaic panels in a large array that will convert sunlight into enough power for 45,000 households.

Local residents and businesses are greeting the project with a mix of excitement and caution.

Because of the housing slowdown, everyone's eager for an estimated 225 construction jobs over a three-year period. The city of Cle Elum and Kittitas County are likewise eyeing close to $2 million a year in new property tax revenue. And businesses suffering in the recession are hoping to win contracts to make parts.

Some residents worry the panels will disrupt elk migration while others worry their views will be obstructed, although the solar modules will sit amid vegetation below the ridge lines. Some trees will have to be cut, but for each one felled, three will be planted.

But by far the biggest question about the $300 million-plus project - which would be one of the largest in the world - is this: Will it ever get built? After all, the promise of solar energy has always exceeded the reality.

Trott, the boyish, 49-year-old financial whiz behind the vision, waves away any skepticism that his is a pipe dream. He points to his experience with another technology once thought to be all sizzle: cellular telecommunications.

For 22 years, Trott was the investment manager for telecom giant Craig McCaw of Seattle, a pioneer in the wireless industry.

"That was something people didn't think would last either," Trott said in an interview last week after giving a presentation on the project to members of the Cle Elum City Council.

For Trott to make a planned construction start date of April next year he's going to need commitments from buyers - namely big utility companies.

As someone who says he's always been fascinated by electricity and its applications to renewable energy, Trott hopes the project will sell itself to customers who share the same commitment.

Favorable pricing on solar panels, state and federal tax incentives and the green agenda of the Obama administration are the primary reasons why the Teanaway Solar Reserve will pencil out and come to fruition, according to Trott.

"We've seen an opportunity and have moved quickly to take advantage of it," he said.

Prices paid by solar developers for the rectangular panels that collect the sun's energy have been declining for the last several years. This year alone the price has dropped 17 percent, according to research published in October by the Lawrence Berkeley National Laboratory at the University of California.

While wind power projects have dominated the renewable landscape in the state of Washington, large-scale solar farms have been springing up throughout the sunny Southwest and in California because of the increasingly favorable economics.

The same researchers also said the average cost of going solar in the United States fell by more than 30 percent from 1998 to 2008, "a trend that can be largely attributed to the success of market-building policies at the state and local level."

Those policies include state and federal tax credits and, in the state of Washington, a voter-approved renewable energy mandate.

The state Renewable Electricity Standard mandates that by 2020 the state's largest electric utilities meet 15 percent of their retail supply with renewable electricity. The requirement will be phased in beginning in 2012 with a 3 percent renewable standard.

Wind power has a big head start and is expected to continue to provide the bulk of the green energy under the mandate because of its cost advantage over solar, said Robert Kahn, executive director of the Northwest and Intermountain Power Producers Coalition.

This year the Legislature also passed a retail sales tax exemption for equipment used in renewable energy production. The 100 percent exemption is good through June 2011.

For a photovoltaic project like Teanaway, where the solar panels are at least half the total project cost, the sales tax exemption is worth an estimated $12 million a year.

The federal investment tax credit of 30 percent provides an immediate write-off of costs, upping the project's return on investment in the first year, Trott said.

Trott won't name the investors he's attracted to the project, citing the private nature of the deal, but he said he's "looked them in the eye" regarding the numbers.

Al Aldrich is a seasoned government affairs adviser formerly with the Snohomish County Public Utility District and now a communications adviser to Teanaway Solar as a principal of Strategies 360, a national firm with headquarters in Seattle. Even though Trott is a newcomer to the energy business, Aldrich said his business track record is well established and recognized by the utility companies that will ultimately sign contracts to buy Teanaway's power.

As Aldrich put it: "They don't waste time on flakes."

Indeed, signing a long-term power supply agreement with a major utility is the key to Teanaway's success because it would generate the revenue to pay back investors.

What utilities are willing to pay for that power and how much it covers Teanaway's costs to produce it amount to the proverbial devil in the details, according to Jonathan Lesser, president of Continental Economics, an energy consulting firm based near Albuquerque.

"It's going to come down to pricing. He's going to need those long-term contracts with somebody," Lesser said. Still, Lesser added, the economics have been running in solar's favor.

Negotiations haven't started yet with Puget Sound Energy, which owns a transmission line in the area in addition to the Wild Horse Wind Farm, also in Kittitas County. But the utility "is certainly interested in developing a relationship" with the project, said spokesman Andy Wappler.

Aldrich said the solar project's viability is not dependent on producing energy at the lowest possible cost. Renewable energy, he said, has a certain cachet.

"You're going to have buyers for whom price is clearly not their primary consideration," he said. As a hypothetical example he cited Google, the Mountain View, Calif.-based Internet company that has a corporate commitment to renewable sources.

Trott has hired engineers to puzzle out such questions as whether Bonneville Power Administration has enough room on its transmission grid to accept the solar electricity.

"We think they are going to determine there is room," said Aldrich, "but Puget Sound is a back-up if Bonneville doesn't work."

The Cle Elum site was chosen in part because of its proximity to existing transmission lines as well as its high latitude, which yields long, sunny summer days.

But there's another potential reason for the location: The solar project will be leasing the land from Ellensburg-based American Forest Land Holdings, which recently announced a real estate project on adjacent land it owns in the Teanaway area. American Forest officials are touting their plan to use green energy to power what they are calling a "fully contained community." No details on the size of the community have been released.

But Aldrich said there is no relationship between the solar project and the real estate development. "We continue to plan on selling the solar output to utilities and perhaps some businesses," he said.

One problem the solar project doesn't have to worry about is water. Photovoltaic projects, unlike thermal solar projects, don't heat water to drive a turbine to generate power. Thermal projects must use large amounts of water for a cooling process and are running into opposition in parts of the Southwest and California.

Renewable energy advocates around the state are rooting for the Cle Elum project, including Sen. Maria Cantwell, D-Wash., and Rep. Jay Inslee, D-Bainbridge Island.

Locally, officials who market the region to tourists and businesses are hopeful that being a solar hub will only add to the area's appeal.

"What a great plus for the environment and for it to be in our area," said Judy Tokarsyck, executive director of the Cle Elum-Roslyn Chamber of Commerce.

Trott hopes to lure a solar panel manufacturing company to the Cle Elum-Roslyn area to make panels for the project, and he has said such a company could stay in business if demand for solar panels by individual businesses and residences grows around the Northwest.

Markus Waldbaum, who runs Terra Matters, a Seattle-based renewable energy advising and consulting firm, calls himself a fan. The German-born engineer noted that the U.S. is way behind Europe and Germany in particular in the development of large-scale solar projects.

"It's long overdue. It's time to play catch up," Waldbaum said.

Information from: Yakima Herald-Republic

Leah Beth Ward
In Eastern Washington, Big Plans for Solar Power
The Yakima Herald-Republic, November 1, 2009

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