To’Hajilee Economic Development, Inc. - 2012 Project

Project Overview
Tribe/Awardee: To’Hajilee Economic Development, Inc.
Location: Albuquerque, NM
Project Title: To’Hajiilee Economic Development Inc. (TEDI)
Type of Application: Development
DOE Grant Number: DE-EE0005639
Project Amounts:
DOE: $301,778
Awardee: $363,780
Total: $665,558
Project Status: See project status
Project Period
of Performance:
Start: September 2012
End: December 2013

Summary

The To'Hajiilee Chapter of the Navajo Nation (previously called and occasionally referred to as the Cañoncito Band of Navajos) is engaged in the development of a solar electricity generation facility (solar project). The project is located on Chapter lands 20 miles west of Albuquerque, New Mexico, and will consist of approximately 200 acres of solar photovoltaic (PV) panels and other equipment with a name plate capacity of 30 megawatts (MW). This project has recently been incorporated under the name Shándíín Solar, LLC. The goal of this project is to provide a vehicle for Chapter economic development.

Specifically, this U.S. Department of Energy (DOE)-funded aspect of the project will be to conduct development activities for the 30-MW Shándíín Solar projects, including: completing the environmental assessment, completing final engineering and design, obtaining an interconnect agreement, obtaining lease agreement, finalizing financing, completing business agreements, and obtaining a power purchase agreement (PPA).

Project Description

Background

The Chapter has created an economic development organization called To'Hajiilee Economic Development Inc. (TEDI) charged with pursuing economic development and job creation initiatives. The long-term energy vision of the Chapter is to reduce dependence on fossil fuels and to use a set-aside portion of its land for environmentally friendly power production. The objective of the project is to provide jobs and a revenue stream to the Chapter for infrastructure and social improvements.

In early 2010, TEDI was the recipient of a DOE grant to study the feasibility of developing a solar PV electrical generation facility, or solar project. TEDI has formed a Delaware limited liability company named Shándíín Solar (Shá ńdíín is the Navajo word for sunlight). The conclusion of the study recommends moving forward with this project. The only issues qualifying feasibility are completing final interconnection studies, securing the PPA, and securing final financing based upon having purchasers for the PV energy.

TEDI has been working diligently for years on the launch of this project. A list of TEDI accomplishments prior to the creation of Sháńdíín include:

  • TEDI has secured a formal To'Hajiilee Chapter Resolution designating TEDI as the energy and economic development entity for the Chapter and allocating approximately 500 acres of Chapter Trust land for development of the solar project.

  • TEDI has applied for and received a Pre-Feasibility Assessment of Renewable Energy Generationfrom Western States Energy Solutions (WSES), which study was funded by DOE in cooperation with the Western Area Power Administration (WAPA). WSES believes that 42 MW of available capacity exists on the adjacent PNM 115-kVA transmission line providing power to Albuquerque via the West Mesa substation. This substation is less than 20 miles away from the solar project site.

  • Land lease and sublease agreements for TEDI to control the subject property for 50 years are largely completed and submitted to the Bureau of Indian Affairs (BIA).

  • On behalf of the project, Rural Community Innovations engaged the nationally recognized environmental consulting firm, SWCA of Albuquerque to conduct an environmental assessment (EA) on the site. The EA has been completed and BIA has issued a Finding of No Significant Environmental Impact (FONSI).

  • Of a dozen potential technology partners evaluated, a technology service provider was selected for the project. TEDI has entered into a nondisclosure agreement and executed a term sheet with the technology service provider to participate in development of the project. The technology service provider is a 25-year- old, $2 billion company with more than 1,500 MW of installed projects and 5,000 MW of projects in the pipeline.

  • The technology service provider contracted with a professional hydrology engineering firm to study drainage on the proposed development site prior to designing the proposed facility.

  • The technology service provider has completed various iterations of site engineering and completed site design and facility costing to be included in the EA and for financial modeling for negotiations with the selected financing partner. Donated services from the technology service provider to date have a value of approximately $200,000.

  • TEDI has selected a financing partner for the project, which has completed financial modeling. This modeling indicates an all-in equivalent cost of less than $.10 per kilowatt hour (kWh) for PV power sales based upon estimated construction costs.

  • Four potential PPA partners have been identified. Active negotiations with these potential partners for sales of power are under way with TEDI.

Project Objectives

The long-term energy vision of the Chapter is to reduce dependence on fossil fuels and to use a set-aside portion of its land for environmentally friendly power production. The objective of the project is to provide jobs and a revenue stream to the Chapter for infrastructure and social improvements. The goal of this project is to provide a vehicle for Chapter economic development.

The specific goals and objectives of this DOE-funded aspect of the project include:

  • Conduct the PNM-required Interconnection System Impact Studyfor the solar project. TEDI will be initiating the process of obtaining a Large Generation Interconnect Agreement (LGIA). A portion of the funds TEDI is seeking under this grant application is to pay for various technical studies required by the local transmission provider—Public Service Company of New Mexico (PNM). PNM is the utility that owns the 115-kilovolt Blue Water Transmission line that will transmit the generated power. These engineering studies are necessary to obtain permission from the Federal Energy Regulatory Commission (FERC) before exporting power to the grid.

  • Complete final engineering design and development support by the technology service provider. While considerable engineering and hydrology work has been completed, detailed work needs to be completed before the project can be implemented.

  • Provide technical assistance related to negotiating the PPA, supporting the transmission and interconnection study, completing the BIA lease and sublease agreements, and coordination the project. Continue to pursue one or more PPAs. TEDI is in current negotiations with four potential off-takers for the solar power. It is also responding to a request for proposals (RFP) from the local PNM utility for the purchase of all the renewable power the project can produce. Coordination and follow-up work in securing the one or more PPAs is ongoing. As TEDI is inexperienced in these types of negotiations, it is relying on its professional advisors to estimate these costs.

  • As the project is part of a federally recognized Indian Tribe, all leases to TEDI and to Shándíín must be reviewed by BIA. There will be technical assistance and coordination of this effort. TEDI has submitted draft documentation to appropriate BIA offices. TEDI has also submitted the EA to Navajo Nation Environmental Protection Agency (EPA) for concurrence. These processes are nearing completion, and TEDI will assure final approvals, including the FONSI, through the use of its technical assistance provider.

  • Support the project work of the TEDI board through their general legal counsel, travel, board and other meetings, and accounting.

  • TEDI has secured a project financing commitment, but further communications and legal work are needed on the TEDI side of the transactions. Additional work will be needed to obtain the New Markets Tax Credits and secure other tax credits and depreciation investors.

  • Indian energy legal specialists are part of the project team. The structuring of agreements, business organizations, and other important legal issues of the project will be guided by them. TEDI ownership in the project will vary over time due to the investment opportunities being offered to qualified buyers—such as investment tax credits, New Markets Tax Credits, sale of depreciation—to assist with project financing. Thus the ownership structure may be complex and is expected to require extensive legal work for TEDI in relation to the various parties involved.

Project Scope

The tasks to be completed include:

Task 1 – Submit LGIA application to the PNM
Task 2 – Obtain a lease agreement between the CBN and TEDI
Task 3 – Obtain a sublease between TEDI and the project owner (Sháńdíín Solar LLC)
Task 4 – Complete land appraisal of the solar site
Task 5 – Structure the project company to operate and manage the solar project
Task 6 – Finalize the engineering design (EPC)
Task 7 – Find a buyer(s) for the solar power and finalize PPA
Task 8 – Finalize project financing
Task 9 – Complete legal work for all business agreements

Project Location

To'Hajiilee is located approximately 20 miles west of Albuquerque, New Mexico. The Shándíín Solar generation facility will be located on lands held in trust by the United States for the benefit of the Cañoncito Band of Navajos. The site is on tribal lands 2.5 miles northwest of the intersection of Interstate 40 and Rio Puerco Road –about 20 miles west of Albuquerque, New Mexico. The actual footprint of the solar project is approximately 200 acres in size and will consist of 20 modular power blocks of 1½ MW each. These power blocks occupy about 7 ¼ acres each and contain six trackers.

Project Status

The project was competitively selected under the Tribal Energy Program's fiscal year 2011 funding opportunity announcement "Renewable Energy Development and Deployment in Indian Country" (DE-FOA-0000422) and started in June 2012.

The August 2012, November 2012, March 2014 project status reports provide more information.

For current project status or additional information, please contact the project contact.

Project Contact

Rob Burpo
2155 Louisiana NE, Suite 10100
Albuquerque, NM 87110
505-883-8602
rob@firstamericanfa.com

Delores Apache
2155 Louisiana NE, Suite 10100
Albuquerque, NM 87110
505-352-3990
deapache@hotmail.com