For decades, the massive coal-fired Navajo Generating Station powered the great cities of the Desert Southwest: Los Angeles, Phoenix, Las Vegas. Yet the Navajo Nation that hosted it contains 75 percent of all the households in the U.S. that lack electricity, according to the American Public Power Association.
The 2,250-megawatt plant shut down in November, leaving job losses and underutilized electrical transmission infrastructure in its wake. Now, startup Navajo Power wants to fill the vacuum with massive solar power plants while channeling the proceeds into electrification and economic development for Navajo communities.
On Wednesday, Navajo Power took a big step toward that ambition by signing a co-development deal with renewables powerhouse sPower, GTM has learned. Navajo Power also announced an initial close of $4.5 million out of a planned $10 million seed round of funding.
Arizona utility Salt River Project, which operated and partially owned the coal plant, is seeking bids for 200 megawatts of solar on Navajo land by the end of 2023. Under the sPower deal, it will collaborate with Navajo Power on a project of that size, with a plan to expand up to 750 megawatts. SPower brings access to capital and a track record of developing gigawatts' worth of renewable projects around the country, while Navajo Power specializes in the unique requirements of development in Navajo territory.
Navajo Power CEO Brett Isaac is a Navajo entrepreneur who grew up on the reservation and previously spent years delivering off-grid solar to Navajo households without access to the electric grid. He teamed up with long-time friend Dan Rosen, who co-founded and still serves as chairman of Mosaic, a leading solar loan provider. Rosen met Isaac a decade ago while working on energy and water issues in the region.
The seed funding was led by the Candide Group and joined by Align Impact and the Navajo Nation’s Community Development Financial Institution. The investors had to get comfortable with the startup's public benefit commitments, which cap executive compensation relative to the lowest-paid employee, and pledge at least 80 percent of profits to solar projects or community investment.
“We deal with land, we deal with resources, we deal with politics,” Isaac said in an interview. “We’re building a network of people who understand how to do large projects out on tribal lands.”
The nature of the challenge is not technological so much as social: It requires community organizing and business-model innovation.
Standard development practices don’t necessarily work with the rules and customs of the reservation, and anyone showing up with promises of big energy projects has to grapple with a complicated history of energy extraction and unevenly distributed rewards.
Reservation land is not bought and sold like land is elsewhere in the U.S.; it’s held in trust. Unlocking it for solar development requires support from the local community, known as a chapter, which must approve it via a “chapter resolution” before it goes to the Navajo Nation for approval.
“You really need the community bought-in to make it happen,” Rosen said. “That takes a lot of on-the-ground work and figuring out how these projects economically benefit the communities."
The working model for sharing the benefits locally is to generate lease revenue from the solar plant that will feed into a trust for the local community. That can become the vehicle for electrifying homes and investing in public goods such as water and housing.
Navajo Power staff meet at a project site in the Painted Desert with community members and leaders, including President of the Navajo Nation Jonathan Nez. (Image credit: Navajo Power)
That's all the more needed in the vicinity of the 200-megawatt development: The federal government banned any development in that section of the western Navajo Nation for decades under a policy known as the Bennett Freeze.
Navajo Power spends considerable time working with communities around its development sites to build consensus for the projects. When asked how they define their values, residents often see the land as a source of survival, rather than a commodity to be measured in dollars per acre.
“What we say is that we’re bringing value back to land that has kind of started to degrade because of things like climate change,” Isaac said. “It’s not exhaustive. We’re not going to extract everything and move. We’re setting things up with the expectation that these things will catalyze new opportunities.”
The 200-megawatt project is first on the docket, but Navajo Power has grand ambitions for massive clean energy capacity in the region. Longer-term, the founders want to augment solar production with 5 gigawatts of long-duration storage, which would unlock clean energy on demand, instead of just when the sun is shining.
That will require tapping a set of up-and-coming technologies that promise to deliver many more hours of storage duration than the lithium-ion batteries on the market today. Such tools remain niche but have attracted significant investment in the past year as market applications come into view.
“Navajo Generating Station has been the battery of the West,” delivering the electricity the region needed to grow, Rosen said. “Let’s continue powering the West but figure out how to maximize the economics for communities and for the Nation.”
That’s something that hasn't always followed from the history of energy development on and around the reservation.
Navajo lands absorbed coal plant pollution as the power it generated supported booming economies in the Sun Belt. The wealth never seemed to trickle down to the Navajo community, even though the Nation’s finances became tangled up in the continued operations of the power plant. The Navajo Transitional Energy Co. tried to buy the plant to keep the economic engine running when its owners planned to shut it down, but the deal fell through.
Navajo Power addresses this history by rooting its operations firmly in the community it aims to serve. Members of the company include Clara Pratte, former chief of staff of the Navajo Nation, and Chris Deschene, who led the tribal program for the Department of Energy under President Barack Obama.
“They're so used to rhetoric and getting pitched on various different things that it's difficult to believe these things could happen to them,” Isaac said of the communities he works with. “That’s what we’re trying to show with these projects.”