Ann-Kristina Trottnow by HC11112322953




 This collection of reports was developed in Economics 425 during the Spring 2001
semester. These are student term papers as they were turned in, and they have not been
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       Chapter 17: Financing of Alternative Energy on Indian Reservations
                            Ann-Kristina Trottnow

       Alternative energies increase in importance in our modern society. They help to

prevent and cure environmental problems. Some of alternative energies can be used

flexible. They do not rely on an expensive cable and maintenance system and can be

applied in small numbers. They also can be adjusted individually. In addition, poorer

people or people who live in remote areas will have the chance to receive energy

(Ricketts, 1999).

       Many countries have already started huge alternative energy projects. China, e.g.

has recognized, that it can no longer depend on its traditional oil supplies.

For almost every country exists a large cost-effective savings potential in the

implementation of renewable energy.

       There are several ways to finance the purchase of the new energy solutions:

Government subsidies, including tax exemptions, loans, grants, incentives, and rebates,

subsidies for Tribal Government, and industry subsidies.

Government Subsidies

       Under President Bush’s proposed fiscal 2002 budget, there will be a slashing of

more than $200 million from federal renewable energy and efficiency research programs.

The Energy Department’s core solar, wind and other renewable energy programs will be

cut by more than half to $186 million from current spending levels of $376 million.

But he also proposed a new tax credit of up to $2,000 for individuals purchasing solar

energy equipment to generate electricity or heat water in homes (

Subsidies for Companies

Personal Tax

       The Arizona Solar Center offers an exemption of sales tax for retailers, that means

that the customers are not charged for state sales tax. County and city sales tax still apply

for these retailers who collect their own sales tax.

       Eligible Technologies are Passive Solar Space Heat, Active Solar Water Heat,

Active Solar Space Heat, Solar Thermal Electricity, Photovoltaic, and Wind. There is

also another provision of the sales tax for the basic power generating part of the system.

This exemption is without a value limit. The sales tax exemption does not apply to

batteries, controls etc. There is a guide available to acceptable devices under the law.

The exemption is allowed on equipment up to $5,000.

       Before a dealer can utilize the tax, he must be registered as a solar device dealer

with the Arizona Department of Revenue. This is a precaution.

It is also possible to receive a sales tax exemption for the basic power generating part of

the system (

Investment Tax

        There is a 10 percent investment tax credit possible for commercial entities,

which invests or purchases qualified solar energy property. It is not possible for property

used outside the U.S., used by the government, foreign persons, or by tax-exempt


        Qualified solar energy property is equipment that uses solar energy to generate

electricity, including storage devices, related parts, and transfer equipment. Dual use

equipment (equipment that uses both solar and non-solar energy) does also qualify. The

equipment must be completely installed in the year in which the credit is first taken



        The Department of Commerce offers a Revolving Energy Loans for the Arizona

Program. Companies that either manufacture renewable energy, alternative energy, or

energy conserving equipment or acquire such equipment for use in their own process can

qualify for the loan. They must have at least two years of operating experience in

Arizona. Loans may range from $10,000 to $500,000, up to a maximum of 75% of the

total project. There is an interest rate of 5% to this program. The projects must be set for

seven years for payback or less.

        Eligible Technologies are comparably to the above: Passive Solar Space Heat,

Active Solar Water Heat, Active Solar Space Heat, Solar Thermal Electricity,

Photovoltaic, Wind, Biomass, Hydro, Alternative Fuels, Geothermal, and Waste


Interest subsidies on loans

        Alabama’s Science, Technology, and Energy Division, which is located in the

Department of Economic and Community Affairs offers interest subsidies on loans.

Eligible technologies are biomass, fuel cells, and alternative Fuels. The projects must

include the installation of equipment for the production of hot water, steam or hot air

from biomass. Also eligible is equipment for biomass fuel storage, preparation, and

transport, as well as equipment for the production of biomass fuels. The loan is only for

commercial, industrial, agricultural, or institutional facilities.

        The maximum interest subsidy is $75,000. Assistance is only given for loans with

interest rates no greater than 2%. A loan must be obtained from a commercial institution.

Afterwards the interest subsidy can be applied (

        The Department of Energy initiated a million Solar Roofs project, which enables

businesses and communities to install solar systems on one million rooftops by 2010.

        The grants will be limited to $50,000 each and will be distributed among the six

DOE regions (

The Office of Energy Efficiency and Renewable Energy (Department of Energy) is

making grants available to States for Special Projects in 2001. These grants are awarded

on a competitive basis (

Subsidies for Homeowners

        There are subsidies available, which are not only for companies, but also for



       Citizens Utility Company offers financial incentives for the installation of

qualified solar hot water and photovoltaic systems. The terms are $1,38 per AC watt, but

$2,250 maximum; this program is for residents only (


       Southwestern Public Service Company introduced a solar leasing program in

1998. The only eligible technology is Photovoltaic. The lease is for an undetermined

period. The photovoltaic must be used in livestock water pumping and stand-alone power

supplies. All customers are eligible; there is no requirement for a minimum distance from

the grid. The utility handles all equipment maintenance; each program is fitted to the

customers’ needs (

       Arizona Public Service created the Remote Solar Electric Service in 1997. Off-

grid Customers are able to lease self-contained solar units. Eligible Technologies are only

Photovoltaic (

Industry rebates

       The California Energy Commission offers a program called the Emerging

Renewables Buy-Down Program, which includes cash rebates on eligible renewable

energy systems. It is possible to get a rebate of up to $3,000 per kilowatt, or 50% off the

system purchase price. The generating systems, which are eligible, are Photovoltaic (solar

cells that convert sunlight directly to electricity), Small Wind Turbines (with an output of

10 kilowatts or less), Fuel Cells (devices which use a chemical process to convert

renewable fuels into electricity), and Solar Thermal Systems (systems that use solar heat

to generate electricity). The electricity production of the system should not exceed 125 %

of the site’s current electricity needs. There also must be a minimum five-year warranty

on the system.

       All types of electricity customers are eligible, but the proposed site must be within

the electric utility service area of: Pacific Gas and Electric, San Diego Gas and Electric,

or Bear Valley Electric Company. The system must be installed within 9 months of the

rebate-confirmation date of the systems that are 10 kilowatts or less, and within 18

months for larger systems (

Green Pricing Program

       Arizona Public Service developed 400 kW of centralized, connected photovoltaic

systems. The program is for commercial and residential customers.

Current facilities are in Flagstaff, Tempe, Glendale, Scottsdale, Gilbert, Prescott, and

Yuma. The solar power is sold in 15-KWh increments, the premium will be $2.46 per

month per 15 KWh block (

Subsidies for Tribal Governments

       It is not possible for tribes to receive incentives. The energy bills for some

buildings on Tribal lands, e.g. schools are paid by federal agencies and so the tribes can’t

operate the buildings efficiently by themselves. There are subsidies available, which are

exclusively designed for Tribal Government. They are created to give the residents of the

reservations the opportunity to enjoy what most of the consumers take for granted-

electricity (Council of Energy Resource Tribes and E source, 2001).

   The Department of Housing and Urban Development sponsors the Alaska/Native

Hawaiian institutions Assisting Communities Program. Universities and Minority

institutions can apply for it, if they meet the statutory definition of either an Alaska

Native institution of higher education or a Native Hawaiian institution of higher

education. The maximum amount of funding is $400,000 for Alaska Native institutions

and $2 million for a Hawaiian institution (

       The Navajo Tribal Utility Authority has a program, called Navajo Solar Power

Initiative. With the help of the Department of Energy’s Sandia National Laboratories,

they bring electricity to the homes of people living in remote areas. They buy 200

photovoltaic systems at once and install them on individual units at private residences


   The Navajo Electrification Demonstration Program provides electric power to the

18,000 occupied structures on the Navajo Nation that lack electric power. The goal is,

that every household on the Navajo Nation has access to electricity by the year 2006.

Every year there are $15 million authorized, beginning in 2002


   The National Tribal Energy Network has proposed a program with different

components. One part of it is grants, which tribes can use to support their energy policy,

for planning and management activities, and for investments in energy infrastructure

improvements. There are also tax credits available. The annual funding of these programs

is $40 million (Council of Energy Resource Tribes and E source, 2001).

Industry Subsidies

       Nearly all of the industry suppliers offer leasing contracts to finance renewable

energy. Besides this, there are other offers like grants, rebates, and cash incentives.

       The Shell Foundation offers grants in a Sustainable Energy Program for wind and

solar projects. Registered organizations are eligible for the grant. Research and analysis,

technical assistance, and training are also eligible. Besides grants, there are other kinds of

assistance available (

    Austin Energy offers a Green Building Program with cash incentives for commercial

new constructions and major renovations. The program has been planned for commercial

buildings and single-family houses. There is also a programming assistance available and

a technical analysis for energy efficiency (

    Austin Energy offers a utility rebate program for active solar water heaters. The

rebates can also be used for energy-efficient equipment, which include heat pump water

heaters, heat recover water heaters, and air conditioners. The rebate for a 16 square feet

collector area or less is up to $150, for a 16 to 35 square feet collector area up to $250,

and for a 36 square feed collector area and more up to $350. It is possible to choose from

a rebate as well as from a loan. This program has been designed only, for Austin Energy

customers, mainly single-family residents (


    There are many financing options available for energy-efficiency projects. It is

important to evaluate each of them to come to the best combination of the funding

projects. There are several steps to find the best solution. The first step is to define the

objectives, to identify the goals. The second step is to define the criteria that may

influence the selection e.g. mission requirements, safety, protected life of the buildings in

question etc. The third step is to define potential funding scenarios. For the various

options it is important to identify the required side resources. Finally the risks and

benefits from the different projects have to be evaluated, before a financing method is


    Each financing alternative brings with it strengths and weaknesses, there is not a

prescriptive procedure, and all projects must be evaluated on a site-by-site basis. There is

still an uncertainty of the fiscal 2002 budget. Congress will finalize a spending plan for

the federal government within the next few months. If the funding reductions pass

through, it will be a huge obstacle in the implementation of the renewable energy projects

(Ricketts, 1999).


       Alabama Department of Economic and Community Affairs
        Science, Technology & Energy Division
        P.O. Box 5690
        401 Adams Avenue
        Montgomery, AL 36103-5290
        Phone: 334-242-5290
        Fax:     334-242-0552

       Arizona Public Services
        Janet Crow
        Technology Development
        Mail Station 8378
        P.O. Box 53999
        Phoenix, AZ 85072-3999
        Phone: 602-250-4990

       Arizona Solar Center/ Arizona Energy Office
        Phone: 602-280-1402

       Austin Energy
        Jerrel Gustafson
        206 E. Ninth Street, Suite 17.102
        Austin, 78701
        Phone: 512-499-3587
        Fax: 512-499-3518

       California Energy Commission
        Phone: 916-654-4058
        Citizens Utility Company, Vermont

    Phone: 877-888-7372

   Department of Commerce
    Patty Duff
    Phone: 602-280-1340

   Department of Energy
    John B. Townsend
    Phone: 202-5806

   Department of Housing and Urban Development
    Jane Karadbil
    Office of University Partnerships
    451 Seventh Street, SW, Room 8106
    Washington, DC 20410
    Phone: 202-708-1537
    E-mail: Jane R.

   Navajo Tribal Utility Authority
    Chris Burroughs
    Phone: 505-844-0948

   Shell Foundation
    Phone: 888-468-5822
    Fax: 888-689-3041

   Solar Energy Industries Association
    Peter Lowenthal
    1616 H Street, NW 8th Floor
    Phone: 202-628-7979
    Fax: 202-7779

   Southwestern Public Service Company
    Kent Johnson
    P.O. Box 1261
    Amarillo, 79170
    Phone: 806-378-2166


                      Eligible         Kind of           Eligible         Maximum          Additional
                       People         Financing         Technology        Amount           Information

                                                                                         Registration as a
   Arizona Solar                      Exemption of
                       Companies                         Solar, Wind        $5,000        Solar Dealer is
       Center                          Sales Tax
                                                                                         Not possible for
                                     Investment Tax
       Seia            Companies                            Solar         10% of Tax   Property used by the
 Alabama's Science                                         Biomass,                       Also eligible is
                       Companies       Subsidy on                          $75,000
      Division                                        alternative Fuels                Equipment for Storage
                                                         Solar, Wind,
   Department of                                                          75% of the   Interest Rate of this
                       Companies          Loan         Biomass, Hydro,
      Commerce                                                              Project        Program is 5%
                                                      alternative Fuels

   Department of     Companies and
                                         Grant              Solar          $50,000        Valid till 2010
       Energy         Communities

 Office of Energy                                                                      Grants are awarded on
                        States           Grant        all are eligible        -
    Efficiency                                                                          a competitive Basis

 Citizens Utility                      Financial                                        Terms are $1,38 per
                       Residents                            Solar           $2,250
      Company                          Incentive                                              AC Watt

                                                                                        Utility handles all
  Public Service     All Customers      Leasing         Photovoltaic          -
                                                                                       Equipment Maintenance
                                                                                         Minimum five-year
 California Energy                                    Solar, Wind, Fuel   $3000 per
                     All Customers    Cash Rebates                                        Warranty on the
     Commission                                             Cells          Kilowatt

Appendix (continued)

                         Eligible          Kind of         Eligible       Maximum         Additional
                          People          Financing       Technology       Amount        Information

     Arizona Public      Off-grid
                                            Leasing       Photovoltaic        -                -
         Service         Customers

                                                                         Premium is
     Arizona Public     Commercial/      Green Pricing                                 Current Facilities
                                                          Photovoltaic    $2,46 per
         Service        Residential         Program                                     are in Flagstaff
      Department of   Universities and                                                  Only for Alaska
                                                             all are
    Housing and Urban     Minority          Funding                      $2 million       and Hawaiian
       Development      Institutions                                                       Institution

      Navajo Tribal   People living in                                                   Installation at
                                            Funding       Photovoltaic        -
    Utility Authority   Remote areas                                                   Private Residences

          Navajo       Households of                                                    Goal is to Supply
                                                             all are     $15 million
     Electrification     the Navajo         Funding                                       Electricity for
                                                            eligible      every Year
         Program           Nation                                                         Every Household
                                                                                          Tribes can also
     Nationa Tribal                        Grant, Tax        all are     $40 million
                           Tribes                                                       use the Money for
     Energy Network                          Credit         eligible      every Year
                                                                                            Research and
    Shell Foundation                         Grant        Wind, Solar         -          Analysis is also
                                                                                             It is also
                        Commercial/                          all are
      Austin Energy                      Cash Incentive                       -              Assistance
                        Residential                         eligible
                                                                                       Rebate can also be
      Austin Energy    All Customers         Rebate          Solar          $350          used for Energy


Alabama Department of Economic and Community Affairs. (02/19/2001). Alabama
Renewable Fuels Program-Biomass [online]. Available:

APPA. In Support of Full Funding for the Navajo Electrification Demonstration Program
[online]. Available: (04/13/2001).

Arizona Public Services. (02/07/2001). Arizona-APS-Solar Partners [online]. Available: (03/07/2001).

Arizona Public Services. (01/24/2001). Arizona-Remote Solar Electric Service [online].
Available: (03/07/2001).

Arizona Solar Center. (01/26/2001). Arizona-Solar and Wind Equipment Sales Tax
Exemption [online]. Available: (03/07/2001).

Austin Energy. (02/29/2000). Texas-Home Energy Air Conditioning and Appliance
Rebates [online]. Available: (03/07/2001).

Austin Energy. (02/05/2001). Green Building Program [online]. Available:
www.electric.austin.tx/greenbuilder. (04/08/2001).

California Energy Commission. Emerging Renewables Buy-Down Program [online].
Available: (03/07/2001).

Citizens Utility Company. (10/03/2000). Vermont-Solar VT [online]. Available: (03/07/2001).

Council of Energy Resource Tribes and E source. 2001.”Electricity Sufficiency on Tribal
Lands: Opportunities, Barriers, and Policy Recommendations.”

Department of Commerce. (01/26/2001). Arizona-Revolving Energy Loans for Arizona
(RELA) Program [online]. Available: (03/07/2001).

Department of Energy. (05/01/2001). Department of Energy Announces Major Effort to
Help Accelerate Nation’s Use of Wind Energy [online]. Available:

Dodgett, Tom. (04/09/2001). Bush Budget Cuts Solar Renewable Energy Programs
[online]. Available: (04/13/2001).

Energy Efficiency and Renewable Energy Network. (03/29/2001). Special Projects for
Fiscal Year 2001 [online]. Available: (04/06/2001).

InfoEd (03/12/2001). HUD-Alaska Native/Native Hawaiian Institutions
Assisting Communities Program [online]. Available:

Ricketts, Jana. 1999. “Exploring Energy & Facilities Management Opportunities in a
Changing Marketplace.” Lilburn, GA: The Fairmont Press, Inc.

Sandia National Laboratories. (07/10/2000). Navajo Tribal Utility Authority brings solar
electricity to homes in remote areas [online]. Available: (04/05/2001).

Shellfoundation. Leasing [online]. Available: (04/08/2001).

Solar Energy Industries Association. (12/13/1999). Investment Tax Credit for Solar
Energy Property [online]. Available: (03/11/2001).

Southwestern Public Service Company. (02/29/2000). Texas-Solar Leasing Program
[online]. Available: (03/07/2001).

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