FEATURE ARTICLE, JUNE 2009

SHEDDING LIGHT ON SOLAR ENERGY & REAL ESTATE
Sophie Akins, Jason Ackerman and Robert Hargreaves

1. Renewable Energy Development - Renewable energy is the hottest development opportunity in many areas of the West. The crash of traditional real estate development opportunities coupled with increased federal incentives for renewable energy and state renewable energy requirements for utilities have pushed this development segment to the forefront. Meeting California’s mandate that 33 percent of the generation servicing California’s customers be renewable by 2020 will require developing 100 to 150 large-scale solar and wind projects, each covering multiple square miles and collectively covering hundreds of thousands of acres. More than 100 applications for large-scale projects are pending on federal lands in California alone.

2. Transmission Lines - The majority of the new large-scale renewable energy projects will require construction of new transmission lines to deliver power to urban markets. Transmission lines are the highways of energy development; proximity to these to a large extent determines the developability of remote sites. The California Energy Commission has instituted the Renewable Energy Transmission Initiative (RETI) to identify priority transmission projects. RETI issued a preliminary report of the state’s competitive renewable energy zones in January, and a draft report of a conceptual transmission plan is due out this month. Identification of priority renewable energy zones and transmission projects will focus attention on the most developable renewable energy sites.

3. Federal Stimulus Funds - Solar energy developers are learning that by accepting federal stimulus funds, a sufficient federal nexus may be created such that projects will be required to comply with federal environmental laws including the National Environmental Policy Act and Section 7 of the Federal Endangered Species Act. Complying with the federal laws and regulations add complexity to the environmental review process, but failing to comply may result in far worse consequences, including substantial penalties and delay.

4. Financial Incentives for Renewable Upgrades - Recent legislation, such as California’s A.B. 811, is giving cities and counties the authority to create special assessment districts in which property owners can finance energy upgrades. Under the program, real property owners enter into loan contracts with the local government that are paid back in 10 to 20 years as a line item on the owner’s property tax bill. The creation of such special districts provides target markets for residential and commercial rooftop solar companies.

5. Solar Energy Development Programmatic Environmental Impact Statement - The United States Bureau of Land Management and United States Department of Energy are preparing a Programmatic Environmental Impact Statement (EIS) that would streamline certain aspects of utility-scale solar developments throughout the southwest United States. It is anticipated that the Draft EIS will be released for public comment in fall 2009.

At Best Best & Krieger LLP, Sophie Akins is a senior associate and “Green Team” member in the San Diego office’s Special District Practice Group; Jason Ackerman is an associate in the firm’s Riverside office, where he is a member of the Environmental & Natural Resources Practice Group; and Robert Hargreaves is a partner in the Municipal Law Practice Group in the firm’s Indian Wells office.

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