Power Hour

President Obama's energy plans depend on tapping the country's sun-drenched, windswept public lands.

These are heady days for proponents of renewable energy. The Interior Department, the nation's largest landlord with responsibility for managing one-fifth of country's land mass and 1.7 billion acres offshore, has made power generation from renewable sources a top priority. At the same time, the American Recovery and Reinvestment Act is pumping billions of dollars into wind, solar, geothermal and other green projects across the country while the White House has assembled a Cabinet-level working group to develop a strategy for moving electricity generated from renewable sources around the country.

Interior Secretary Ken Salazar, a member of that working group, told an audience at the National Press Club in late September, "In large measure, the vast deserts, plains, forests and oceans that belong to every American have, until now, been largely un-explored for the vast renewable energy potential."

The wind potential off the Atlantic coast alone exceeds the nation's demand for electricity, he said. But capturing the energy potential of the sun and wind is only a small part of the challenge. "We need to get that power from where it's produced to where it's used," he said.

By all accounts, the nation's electricity-transmission grid is inefficient, insecure and in danger of failing. Salazar likens the electric grid to the transportation equivalent of traveling from North Dakota to New York City on dirt roads: "It's unthinkable today."

About 8 percent of electricity now is generated from renewable sources, and the Energy Information Administration projects that percentage will double by 2030. But the White House has set a national target for producing 10 percent of electricity from renewable sources by 2010, increasing to 25 percent by 2025. Whether the administration meets those goals will depend in large part on what happens at the Interior Department, where agency officials are working to expedite the permitting process for large-scale renewable energy production and transmission projects.

To date, Interior's Bureau of Land Management, which oversees more land than any other federal agency, has identified more than 5,000 miles of energy transport corridors in the West, where the greatest potential for renewable energy exists. It also has designated 24 tracts of land in six Western states as solar energy study areas. The tracts, which do not include wilderness areas or lands considered to be of high value in conservation terms, encompass 670,000 acres. They were selected for their geographic suitability to solar power production and access to roads and transmission lines or designated transmission corridors.

But turning the proposed transmission corridors into actual electric-generation projects and transmission lines is another matter. BLM is working with the Western Renewable Energy Zone project, a joint endeavor of the Energy Department and the Western Governors' Association launched in May 2008, to identify and align federal, state, local and tribal interests, all while protecting natural resources.

"The major hurdle for permitting transmission in the West has been securing permits from federal agencies," Utah's then-Gov. Jon Huntsman and Montana's Gov. Brian Schweitzer wrote in a May 2009 letter to Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) on behalf of the Western Governors' Association. The Interior secretary has pledged improve this process.

"We need to get the federal house in order," Salazar said. "A permit applicant with a project that would cross, for example, Forest Service and Bureau of Land Management lands, should have the benefit of a coordinated federal review of the proposal. I am confident that under existing authorities we can dramatically improve the federal permitting process."

To expedite the permitting process for both transmission and energy production projects, BLM is in the process of staffing four new renewable energy coordination offices in Nevada, California, Arizona and Wyoming. Tom Gorey, an agency spokesman, said the bureau created 106 full-time positions to staff the offices after seeking and receiving approval from Congress to reprogram about $11 million from other areas earlier this year.

"Clearly, a great deal is being asked of BLM staff in connection with the overall effort," says Steven Kline, vice president and chief sustainability officer at California's Pacific Gas and Electric Corp. Kline told the House Select Committee on Energy Independence and Global Warming in September that it is critical that BLM receive the resources it needs. "Across the West, thousands of miles of transmission lines will be needed to significantly expand renewable energy production," Kline said. "It would be no exaggeration to say that only with increased transmission capability can the benefits of renewable resources be fully realized."

Moving power to the population centers where it's needed is only one of the challenges the Obama administration faces, however. Utilities are under pressure to keep customers' bills low, and renewable power projects are expensive.

"Financing mechanisms that are efficient and can lower the cost of capital to renewable projects will be the biggest drivers to their development," says Frank De Rosa, chief executive officer of Next-Light Renewable Power, a San Francisco energy company focused on large-scale solar development. NextLight does not advocate adoption of any particular solar products, but rather tailors technologies to specific projects.

"Because the cost of carbon emissions has not been incorporated into the price of fossil generation, [electricity generated from coal] appears cheaper than renewable energy," De Rosa says. The upfront costs of developing commercial-scale solar facilities are akin to pre-payments for fuel, he adds.

Until 2008, large-scale renewable projects were financed primarily through private lending markets.

Recognizing the insufficiency of that model during the economic crisis, Congress and the administration included billions of dollars in funding for renewable energy development projects in the Recovery Act. Among the investments was $6 billion in loan guarantees, administered by the Energy Department. But in August, Congress transferred $2 billion of that money to what lawmakers decided was a more immediate need: the Cash-for-Clunkers program aimed at stimulating car sales.

De Rosa estimates that restoring those funds would spur $20 billion in private investment and create thousands of jobs. "The biggest obstacle to the development of large volumes of renewable energy is the upfront cost of these capital-intensive projects," he says.