‘Smart from the Start’ – Choosing the Right Renewable Sites

By Blake

In the Brightsource case, we discussed the construction of the Ivanpah solar-thermal power plant in the Mojave Desert. Brightsource faced a number of technical and economic challenges in launching the facility, but one of the most significant hurdles faced was actually from environmentalists over the impact to the desert tortoises living on the site.

While wanting to mitigate the dangers posed to the threatened tortoises was fully justified, the fact that environmentalists presented one of the biggest obstacles to the ambitious renewable energy project was painfully ironic. The ambitious effort to build renewable energy facilities has largely because of environmental reasons, and yet immense hurdles were created despite the fact that the land was explicitly sought out as “boring” land.

This irony was not lost on the Sierra Club, whose the executive director commented in the case on what the ideal scenario should look like. In the future, “we should literally start to mark areas on the map,” he says, “so that these projects can be ‘smart from the start’ and are located in ways that minimize the disruption to wildlife or aesthetic values…and are still viable economically” [[i]]. I found this an interesting idea and wanted to explore it further in this post to consider whether it could be feasible and made sense.

To start, what would this kind of mapping look like? Presumably, the Sierra Club does not have the resources to map everywhere, so they would need to prioritize which areas to look at. This suggests the need for partnership with generators who can identify the top areas they would like to be examined. In addition, because the Sierra Club is not the only organization with a strong opinions on building sites, it would be important to partner with the other organizations whose upfront input is valued, including the U.S. Fish and Wildlife Service and the Defenders of Wildlife. Finally, because the mapping results presumably would not be given exclusively to a single generator, there would presumably be some industry consortium providing input on the sites to map. Finally, after conducting the studies, the output of this work might be a type of ranking, such as “high environmental risk”, “moderate risk”, and “no contest expected”.

The business case for this type of model would be strong. From a qualitative perspective, if environmental rankings were known beforehand, generator constructors could think more intelligently about where to site projects, and would have far less uncertainty upfront about how the process would play out—knowledge that would be immensely valued by their investors and contractors as well.

On the cost avoidance side, generators could avoid sites that turn out to have extensive wildlife challenges, and the commensurate mitigation efforts required, as well as construction delays, litigation battles, brand damage (from being viewed as destroying wildlife), and the uncertainty over how a project will proceed. In the case of Ivanpah (where Brightsource did not know about the extent of tortoises at the outset [[ii]]) the cost of moving the tortoises alone exceeded $56 million and the work of over 100 biologists [[iii]], not including all of the other costs borne by the various organizations. This cost avoidance alone could fund an enormous amount of mapping and would justify the effort very rapidly with this size of risk.

There could be challenges to this approach, of course. Generators might not like to have the top sites clearly mapped because of the impact on land prices and competition. If the areas that are ideal for power generation are clearly published, landowners would have that much more bargaining power when selling parcels. In addition, builders might also become concerned that if there is only a limited number of “ideal” sites identified, there will be costly competition for a small number of spots. These are reasonable concerns, and would be very real if only a small number of sites are identified. The way to avoid this therefore, would be for the evaluators to ensure they are not overly conservative in their assessments, so that they do not defeat the entire purpose of the exercise.

Ultimately, if we want to bring a meaningful amount of renewable energy in our electricity system, clean power plants will need to be built quickly and efficiently in the coming decades to match growing energy demand, or else the shortfall will be filled with conventional energy sources. Designing a system that encourages the plants we want is critical, and this model could be an important part of that process.

References:

[i] “Brightsource: Challenges and Prospects for a Concentrated Solar Plant”, p 13.

[ii] “Desert Tortoise Care at the Ivanpah Solar Project | BrightSource Ivanpah,” accessed October 28, 2014, http://www.ivanpahsolar.com/desert-tortoise-care-at-the-ivanpah-solar-project.

[iii] Julie Cart, “Saving Desert Tortoises Is a Costly Hurdle for Solar Projects,” Los Angeles Times, March 4, 2012, http://articles.latimes.com/2012/mar/04/local/la-me-solar-tortoise-20120304.

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About macomberjohnd

HBS Finance faculty interested in sustainability in the built environment including devices, structures, townships, and cities.

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