Development of such lands has the potential to turn idle properties into valuable, income-generating assets, says Paul A. DeCotis.
WASHINGTON, D.C. – The U.S. Department of Energy should place a higher priority on developing an accurate and actionable inventory of agency-owned or managed properties that can be leased or sold for energy development, says a new report from the National Academies of Sciences, Engineering, and Medicine. The report recommends a sequence of activities DOE can follow to manage its lands and identify properties that have promising profiles for energy resource development.
While other governmental agencies, such as the Department of the Interior, have examined and marketed opportunities to promote renewable resource development on public lands, DOE appears to have done much less, the report says. But with DOE’s depth and breadth of skills and technical capabilities with energy resources, it too could leverage such opportunities and play a major role in forging private-public partnerships in land development serving the national interest. The agency has varying degrees of responsibility over 164 sites in 32 states.
“The intersection of public benefit and private interest is strong on these lands, and their development can further the national objective of energy independence and greater national security,” said Paul DeCotis, chair of the committee that wrote the report, and senior director of energy and utilities at West Monroe Partners, New York, N.Y. “Development of such lands has the potential to turn idle properties into valuable income-generating assets. With the most cost-effective resources developed at the most appropriate sites, DOE lands can serve as a commercial and research hub for innovative energy technologies.”
The committee was tasked with reviewing analyses, commissioned by DOE from the National Renewable Energy Laboratory (NREL) and the Colorado School of Mines (CSM), of the potential for energy resource development on DOE-managed lands. The analyses themselves were constrained by limited data and budgets. To the extent that site-specific information was developed for the highest-scoring sites, the analysis provided insights on the energy resource types that have potential to be developed at those sites. Overall, the analyses did not settle the question of which sites have the greatest potential or which additional sites can be cost-effectively developed, the report says.
The report concludes that the use of Levelized Cost of Electricity as the main determinant of the potential for energy resource development on DOE lands – as the NREL portion of the analyses did -- is a flawed approach. Site-specific analyses for individual technologies and resources are needed, because the unique circumstances of each individual project will determine an investor’s decision to develop the project. The NREL analysis does identify sites for development and provides an indication of the resource(s) that might have development potential, but with limited confidence, the report notes.
The report recommends that DOE develop an accurate and actionable inventory of properties that can be leased or sold for energy development. One option for implementing this would be to establish a program management office tasked with developing and executing a plan to work with developers on property planning, development, and leasing of DOE-managed lands.
The report lays out a sequence of activities DOE can follow in managing its lands, the first phase of which would include engaging developers of energy projects and infrastructure to internalize commercial best-practices into DOE’s management of the disposition or use of its lands. In a second phase, DOE should put in place the administrative procedures needed to make these lands available to developers and for generating revenue, modeled after the method used by the Department of the Interior. Third, DOE should use the information gathered during prior phases to improve its estimates of the costs and benefits of developing its properties for energy projects and should conduct use-cases for select projects. And finally, having identified the properties with the most promising cost-benefit profiles, DOE should solicit commercial input to begin actual development of energy projects on the properties.
The report also offers observations and recommendations about specific energy sources, including the following:
Solar. The analytical results presented in the NREL analysis for solar are not a fair representation of potential resource development on DOE sites, the report says; the value of solar is potentially underrepresented in the Levelized Cost of Electricity. In follow-on work, DOE should conduct an expanded analysis of solar photovoltaic and solar thermal that goes beyond LCOE to consider technical, economic, and market potential.
Wind power. DOE should perform a sensitivity study that illustrates the potential for wind development on DOE-managed lands that addresses federal incentives such as investment tax credits, production tax credits, and renewable energy credits. In addition, the 100 MW limit on product size assumed in the NREL analysis should be reconsidered to more accurately assess the potential for wind development.
Geothermal. CSM performed an effective analysis on the relatively limited potential for geothermal development on the DOE sites evaluated. Given the limited number of private-sector groups involved in geothermal development, any future development can occur by direct talks between these firms and DOE.
Coal and uranium. DOE should eliminate fossil and uranium resource sites from further consideration for development when compelling factors exist related to current and foreseeable use, and the environmental, legal, or other factors that tend to be associated with developing those resources. In addition, DOE should consider site-specific geologic information when deciding which site should be included in a short list for energy resource development.
Oil and natural gas. CSM’s analysis showed limited opportunities for oil and gas development on DOE lands, due to the size of the property needed for development. Given these findings, DOE should not conduct further analysis.
Nuclear energy. Because of the advantages of continuing to use nuclear power in a low carbon future, DOE continues to fund the development of advanced reactors. Most nuclear energy R&D has been at Idaho National Laboratory (INL), and thus other possible locations for advanced reactors on DOE lands were not pursued. Given the status of DOE’s nuclear reactor development at INL, DOE should not conduct further analysis, the report says.
The report also examines prospects for development of waste-to-energy, landfill gas, and biomass energy resource development.
“The committee believes that DOE management, including at the leadership at the Secretary-level, could provide the appropriate direction and funding to pull together the full range of DOE programs and offices to help realize the potential value of energy development on DOE-managed lands”, concluded DeCotis.
The study was sponsored by the U.S. Department of Energy. The National Academies of Sciences, Engineering, and Medicine are private, nonprofit institutions that provide independent, objective analysis and advice to the nation to solve complex problems and inform public policy decisions related to science, technology, and medicine. They operate under an 1863 congressional charter to the National Academy of Sciences, signed by President Lincoln. For more information, visit http://national-academies.org.
Click here to read the press release on the National Academy of Sciences website.