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What the US Government Shutdown Means for Renewable Energy

So here we are: the U.S. federal government is in shutdown mode after Congress failed to pass the budget. We've seen this several times in the past couple of decades, usually ranging from a few hours to a few days, though the most recent one lasted nearly a month from late 1995 into early January 1996.

First things first: this shutdown hits home for roughly 800,000 government workers. The Department of the Interior (DOI) would furlough about 58,000 employees out of its 72,000+ employees, and the Bureau of Land Management (BLM) expects to furlough all but around 600 of its approximately 10,800 employees. Ninety-four percent of EPA staff are impacted, as are 97 percent of NASA employees. Federal housing loans halt, as do processing of visas and passports. National parks, zoos, and museums close down.

On top of that, the timing of this shutdown couldn't be much worse. The U.S. budget "debt ceiling" arrives on Oct. 17, and unless Congress agrees to hike the spending limit, the planet's biggest economy risks defaulting on its nearly $17 trillion debt.

Here's how the U.S. federal government shutdown could directly impact the renewable energy sector:

Project permitting and approval: The Interior Department is working to approve up to 20 GW of renewable energy production on public lands by 2020. For a sense of the types of renewable energy projects that are now at risk of delay, here are some examples of recently-approved renewable energy projects on public lands, showing how active the DOI has been in the past couple of years.

At the BLM, "processing of applications and any kinds of NEPA analysis will be suspended," according to an agency representative. Construction on projects that don't need BLM field monitoring or oversight can continue, providing they're not operating on sites that themselves are closed because of the federal shutdown. One example of an approval in the queue: the BLM has been directed to prioritize more than 64,000 acres of land in California's Imperial Valley to develop several gigawatts' worth of solar and geothermal energy.

The Bureau of Ocean Energy Management (BOEM) will stop its work involving renewable energy, its five-year plan, environmental impact statements, and reviews on exploration and development plans. The BOEM has been particularly active this summer and fall, conducting offshore wind energy leases in federal waters of New England and Virginia; ironically just this week it issued another call for interest in offshore wind energy development, this time off the Oregon coastline.

Note that permitting and related processes take a year or more to be completed, usually requiring several rounds of back-and-forth e.g. to mitigate environmental impacts. Developers, particularly those with larger-scale project, will soon have to start beginning work so they can keep on track to qualify for solar federal tax credits (ITC) which expire in 2016. And any delays in a project's permitting and approval which threaten its viability reverberate as uncertainty and extra risk on the finance side. Potential investors dislike few things more than uncertainty.

We asked several solar and energy project developers with extensive pipelines of large-scale projects at various stages of progress and approvals how they think the shutdown will affect those projects and their business. All of them declined to comment.

1603 grants stop. Echoing warnings from this spring's sequestration, federal 1603 grants likely won't be issued during the shutdown. "That's a big deal for those folks with Safe Harbored deals," points out Lee Peterson, senior manager with CohnReznick.

Renewable energy R&D. The Department of Energy's Office of Energy Efficiency and Renewable Energy (EERE), which oversees investments in clean energy technologies and 10 energy programs, including NREL, will reduce its staff to "the protection of property." (NREL itself won't be affected by the government shutdown, according to an NREL rep, as its managing contractor the Alliance for Sustainable Energy will use carryover funds to operate.) Some university research projects might be at risk if they depend on monetary or technological contributions from federal entities. The U. of Wisconsin-Madison, for example, a DoE-established center for bioenergy research, won't itself shut down but some of its partner agencies and labs might, which could delay its research progress by days or weeks.

Education and information. The Energy Information Administration (EIA), which collects and disseminates energy information, similarly will reduce its small staff to just protecting property. The Maine Ocean & Wind Industry Initiative (MOWII) had a Webinar scheduled this week in which BOEM's Maureen Bornholdt was to discuss the agency's offshore renewable energy program; it's now been rescheduled for November 6.

Power grids. The Bonneville Power Administration (BPA) operates with funding from permanent indefinite appropriation and will continue to operate normally. As such, it has various operations that will stay open and operating, but nonetheless effected if "unexpended balances are exhausted." The Southeastern Power Administration (SEPA), Southwestern Power Administration (SWPA), and Western Area Power Administration (WAPA) would "operate on a skeletal staff for the first week or so," and then personnel would be recalled to maintain the grid under the "protection of life" clause.

Lead image: Iron Chain with one link about to break, via Shutterstock

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