Energy Consumption and Renewable Energy Development Potential on Indian Lands
April 1, 2000
Executive Summary
Renewable energy projects are considered particularly
appropriate on Indian lands because they are generally
environmentally benign and harmonize well with
nature, consistent with Indian culture. Accordingly, the
Department of Energy (DOE) has provided financial
support each year since 1992 for developing renewable
energy projects on these lands.
In February 1999,
Secretary of Energy Bill Richardson revised and
extended DOE’s original 1992 Indian lands policy
through a $1.8 million solicitation for renewable projects.
A major focus of the current policy is to improve the quality of life on Native American lands through increased access to energy. To this end, the Secretary of Energy directed the Energy Information Administration (EIA) to undertake a study of the cost and availability of electricity to Indian households on Indian lands, as well as the feasibility of using renewable energy there. Because most tribal lands are remote and sparsely populated, they are also considered to be good sites for testing the market potential of dispersed energy sources like renewables.
This report examines electricity use, prices, and renewable energy potential for both Federally Recognized Indian Reservations, and Tribal Jurisdictional Statistical Areas (TJSAs) in Oklahoma. The principal results are:
- Indian households on reservations are disproportionately without electricity. The analysis determined that 14.2 percent of Indian households on reservations had no access to electricity, as compared to only 1.4 percent of all U.S. households.
- According to EIA’s Residential Energy Consumption Survey (RECS), electricity prices paid by Indian households in 1997 (8.7 cents per kWh) were not statistically different from prices paid by U.S. households as a whole (8.1 cents per kilowatthour (kWh)). However, Indians living on Indian lands generally pay a greater portion of their income for electricity (Figure ES1). Regional data on electricity prices for Indian households in 1998 were also estimated from an EIA survey of U.S. electric utilities (Table ES1). Ninety-two percent of the 175,000 Indian households on Indian lands are located in just four of the North American Electric Reliability Council subregions. Electric utilities servicing counties containing Indian lands in three of those four subregions have higher rates than all utilities with residential customers in the subregion. From these data, it is impossible to determine whether the higher costs are due to the cost of service for sparsely populated rural areas, including Indian lands or other factors.
- Some Indian lands appear to have potential for renewable energy development. Sixty-one reservations/TJSAs, having 50 percent of the Indian population on Indian lands, appear to have renewable resources that might be developed for central station generation for a levelized cost of less than 2 cents per kilowatthour (kWh) above regional wholesale prices (Table ES2). These premiums exclude any transmission costs required to connect the plant to the regional transmission grid. Biomass energy on the Eastern Cherokee reservation in western North Carolina has the lowest incremental cost of all fuels on Indian lands examined, at just 0.1 cents per kWh more than the wholesale price of electricity. On the same reservation, wind power is projected to cost only 0.4 cents per kWh more. In general, biomass provides the greatest potential for relatively inexpensive renewable-based central station power on 52 of the 61 reservations distributed widely across the United States. By contrast, all of the Indian lands where wind has the lowest renewable cost premium are located in New Mexico. The premium for wind electricity on New Mexico reservations is 1.8 cents per kWh.
- The Indian lands with the greatest need for electrification are generally in Arizona. On the Navajo Reservation, almost 37 percent of all households do not have access to electricity (Table ES3). This occurs despite the fact that there is an indigenous supply of coal and a large power generation station with major transmission lines on this reservation. Moreover, the Navajo Reservation accounts for 75 percent of all Indian households on tribal lands not having electricity. Other Arizona reservations with high rates of non-electric households include: Hopi Reservation (29 percent), Salt River Reservation (12 percent), and Fort Apache Reservation (9 percent). In the Dakotas, the Standing Rock Reservation also has a very high rate of households without electricity, 18 percent.
- Photovoltaic (PV) rooftop modules may be a feasible way to provide limited electric service (without backup power) to large numbers of households on the Navajo Reservation, and possibly others. The levelized cost for distributed PV generation ranges from 28.0 to 51.6 cents per kWh. While substantially higher than the average residential price of electricity, the Navajo Reservation has many households extremely remote from transmission/distribution lines. This raises distribution costs to a level far higher than average. DOE’s National Center for Photovoltaics indicates that a distance from the nearest utility line of only a quarter mile raises distribution costs sufficiently to make PVs cost-effective at 25 to 50 cents per kWh. In addition, if the cost of the PV system can be paid for through a 30-year home mortgage, its levelized cost can be reduced to 15 to 20 cents per kWh. These estimates exclude the cost of back-up power or energy storage, which could raise the cost of full-service PV rooftopbased electricity by a factor of 3 or 4.
- Biomass central station projects on the Navajo Reservation in Arizona and wind projects on the Mescalero Apache Reservation in New Mexico might also offer potential renewable resources to electrify Indian households. Those reservations have the highest and fourth-highest rates of households without electricity, 37 and 15 percent, respectively. Relatively high rates of non-electrification, however, call into question whether the necessary distribution systems are in place to provide grid-connected power to these households.
TJSAs in Oklahoma are generally characterized by high rates of electrification&the same as the Oklahoma population at large&modest renewable energy resources, and moderate electricity rates. Indians living on TJSAs in Oklahoma pay electricity rates comparable to those paid by other citizens. However, central station biomass may have a potential market there. It has a premium of only 1.8 cents per kWh over the wholesale price of electricity on the Cherokee, Choctaw, and Kiowa tribal lands.
Some of the least costly renewable applications described in this report might generate a positive cash flow for Indian lands if the power were sold into the wholesale electricity market. Several State and Federal incentives exist or have been proposed for renewable power, such as a payment of 1.2 cents per kWh from the Energy Policy Act’s (EPACT) Renewable Energy Production Incentive (REPI) program. These incentives could further increase the feasibility of renewable energy projects on Indian lands. In addition, if the Administration’s proposed electricity restructuring legislation were enacted, renewable energy projects on Indian tribal lands would be awarded double credits in the Renewable Portfolio Standard credit trading program.
In evaluating the above information, it is critical to note that renewable energy project feasibility tends to be highly site- and project-specific. Therefore, the feasibility of projects at any location, such as those mentioned above, are highly dependent upon numerous local factors (e.g., land use, terrain, electricity infrastructure, actual electric rates paid).