Simultaneously, they must meet milestones during the permitting, or they risk forfeiting utility contracts. So what happens to permitting progress when the federal government that keeps these agencies open shuts down?

By Susan Kraemer

In 2011, the US government narrowly averted being shut down by political brinksmanship. In October of 2013, it did not - and wound up closing for half the month, with no funds to continue routine operation. The executive branch was able to juggle to some extent to keep parts of the government operational, but federal permitting by the Bureau of Land Management (BLM) was affected.

Sources close to congress believe that yet another government shutdown is all but inevitable in early 2014. If so, CSP permitting by federal agencies is one of the government functions that could be potentially impacted.

Solar Reserve's 150MW Rice CSP power tower project with storage had already completed its state and federal permitting in January, so it wasn’t affected by any delays in October.

“I don’t know about the other guys, but for us, it’s probably not a big deal,” says Kevin Smith, CEO of SolarReserve. “We are fully permitted on Rice.”

Abengoa’s 280MW Mojave project is very close to commercial operation, as is BrightSource’s 390MW Ivanpah project, so their permitting is also unaffected.

However, the joint BrightSource-Abengoa 500MW Palen Solar Electric Generating System (PSEGS) project may have been tripped up, simply by being at an earlier stage in its permitting process.

Once hearings resumed after the October shutdown, Palen Solar Holdings - the joint venture of BrightSource and Abengoa - told regulators at the California Energy Commission that the delay could threaten financing support, and that it still needed to win approval by January in order to complete construction on time, in order to win that financing support.

No biggie

But energy law and regulatory policy attorney Larry Chaset, founder of Sustainable Energy Futures is not concerned.

“I really don’t see it as a biggie,” says Chaset. “The fact is that these companies... everyone is at the mercy of government. So the government shuts down. What can I say?” he adds, laughing. “You hope it doesn’t happen. But in California, I would suspect that there would be a reasonable accommodation if necessary.”

“You know, there’s a legal principle called - Act of God - circumstances beyond your reasonable control. I can’t believe a utility’s going to ding someone because they are three weeks late due to some failure of the government.”

As a former California Public Utility Commissioner commissioner himself, Chaset’s comment is reassuring.

“They are going to have to be reasonable," he says. "And the utility commissions will encourage them to be reasonable.”

PG&E holds the PPA contracts for Ivanpah, Rice and Palen.

But what if this sort of brinksmanship becomes a regular part of the US political landscape? The next shutdown is almost inevitable in the first half of 2014, because the two parties are as diametrically opposed as ever on the budget, and have left town for Thanksgiving.

They return for a mere four days afterwards, which is too little time for both to come to an agreement, and sell it to each of their caucuses, before the December 13th holiday recess forming the deadline. Congress reconvenes in late January, and routine government functioning is only funded until a few months after that, so there is likely to be a repeat of the October situation at that point.

Federal financing could be affected

If there were to be an extended shutdown in early 2014, construction disbursements could be an issue at the near complete 110MW Crescent Dunes project in Nevada.

“The only real risk to the projects are that a lot of the projects have loan guarantees issued by the Department of Energy and the financing goes through the federal financing bank,” Smith points out.

“For us particularly, if there was a shutdown that was longer than say, 60 days, then we might have problems processing payments and disbursements, because there’s an approval process that goes through the DOE.”

But their next project has been unaffected by either permitting or financing blowback. Unlike the Palen project, Rice has private financing with commercial debt and equity, and its permitting was completed in January. “There was some BLM permitting required for that project, because we crossed BLM land for the transmission line, but that’s all fully permitted, so we are in pretty good shape,” he says.

The Ivanpah project is almost complete, so it is less exposed to slowed payment processing. While the proposed Palen project has yet to put its own financing together, to some extent that will depend on how well Ivanpah performs.

The Ivanpah project, owned and operated by the Solar Power Partners (investors NRG Energy, Google, and BrightSource) is nearing its final completion. So is NRG Energy, which holds the majority stake, phased by the possibility of shutdown delays in 2014?"

“I can’t really speak to the hypotheticals,” responds NRG spokesman Jeff Holland. “But I can tell you that we are very happy with the decisions we have made relative to the Ivanpah project.”

That’s encouraging, as an example of investors staying the course. Ivanpah is close to commercial operation now, but it has certainly had its share of permitting detours along the way.

Funding uncertainty has always been part of life at the energy department, according to CSP Alliance founder Tex Wilkins, who was responsible for the development of CSP at the DOE through many changes in political priorities with regard to energy over the years.

“With the Department of Energy you don’t know from one year to the next what your funding is going to be,” he says. “It’s always been a question of the difference between what you ask for and what congress decides to give you.”

To comment on this article write to Susan Kraemer,
Or contact the editor, Jennifer Muirhead