As growing numbers of tribes pursue wind energy projects, tribal energy advocates are cautiously hoping that new developments in Congress could eventually lead to tax credits and incentives to aid tribal economies.
”We’re not really holding our breath for Congress to step in with funding,” said Bruce Renville, a wind energy planner with the Sisseton-Wahpeton Sioux Tribe. ”But certainly, grants or other incentives would be helpful.”
In recent weeks, Sen. John Thune, R-S.D., co-sponsored the bipartisan Clean Energy Tax Stimulus Act of 2008, which would extend the renewable energy production tax credit for one year. The current production tax credit incentive of 2 cents per kilowatt-hour is scheduled to expire in December.
Thune’s proposed production tax credit would only benefit entities that already have profits from wind energy production, but the legislation also includes bond funding that tribes could apply for to help establish wind energy projects.
Thune and other wind energy proponents in the Senate say they want to extend the production tax credit so that wind energy developers have certainty when it comes to future projects.
Whether their mission includes certainty for tribal entities remains to be seen.
Few, if any, tribes have been able to take advantage of the production tax credits offered to date because many tribes that have been able to create wind energy projects have relied on non-Native developers to help them get projects off the ground.
Under current law, tribes are not entitled to the tax credits provided to non-Native developers for renewable energy production because tribes have a tax-exempt status.
Tribal energy experts say it’s important for tribes to be reaching out to Congress regarding the tax-exempt issue, since it likely discourages non-Native developers from wanting to work with tribes.
Thune’s office seems amenable.
”As a general matter, we know tribes are very supportive of wind energy,” said Jon Lauck, a senior adviser to Thune. ”They know this is an area that could jump-start their economies, and we’d like to help them.”
Recent legislative developments have also made it challenging for tribes to obtain federal wind energy seed funding. In 2007, Thune proposed the Wind Energy Development Act, which included $2.25 billion in funding for Clean Renewable Energy Bonds that tribes could have used to fund pilot wind energy programs. Under Thune’s plan, 20 percent of this bonding would have been specifically set aside for tribes; however, the set-aside did not make it into the current version of the wind energy tax credit legislation, and it was not in the energy bill that passed last December.
Some tribal energy advocates believe supporting new legislation that promotes Clean Renewable Energy Bonds may be the best hope for tribes that want to receive federal funding to begin wind energy development. Thune’s current legislation proposes $400 million in funding for the bonds, which energy experts say tribes should be eligible to apply for via the IRS.
”Seed monies would be helpful,” Renville said. ”But we haven’t factored those into our current projects.”
As the Senate and House consider extensions of the renewable energy tax credit, the Intertribal Council on Utility Policy, which represents 10 tribes, is pushing for legislation that would support tribal wind projects. Officials with the group note that none of the federal incentives currently in place involving wind energy were designed expressly for tribes, which they say is ironic since tribes are the only group that the federal government has an explicit trust responsibility to assist in economic development.
”The federal renewable energy incentives, as designed, are problematic for tribes, in that they are both insufficient and inappropriate as drivers of tribal development as presently configured,” the group noted in a recent policy paper. ”The presently formulated federal incentives have actually worked as disincentives in the unique context of tribal renewable energy development.”
Sen. Tim Johnson, D-S.D., and Rep. Raul Grijalva, D-Ariz., have both introduced bills that would allow tribes to be principal owners of renewable energy projects and would provide their non-Indian partners with full tax credits.
The wind energy setbacks in Congress have been especially disappointing to some tribes, since their lands often have some of the highest wind resource potential in the nation.
Research from the National Renewable Energy Laboratory indicates that many of the windiest areas in the U.S. are located close to and on reservations. The laboratory has estimated that the total tribal wind generation potential is about 535 billion kwh per year, or 14 percent of the total U.S. electric generation in 2004.
South Dakota alone is capable of producing 566 gigawatts of electrical power from wind, which is the equivalent of 52 percent of the nation’s electricity demand. Wind energy potential is also great in tribe-rich states including Montana, Minnesota and Wyoming.
”We have always known that we have some of the best wind energy resources in the country,” said Renville, and recent wind measurement assessments have confirmed that assumption. His tribe is currently preparing to find a partner to help them harness wind energy and ultimately sell it to electric companies.
Renville expects that the Sisseton-Wahpeton Sioux Tribe will soon be in the position to install up to 50 wind turbines in an effort to diversify its economy. Thus far, the tribe has funded all of its wind energy efforts on its own.
By: Rob Capriccioso
11 April 2008
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