SPECIAL REPORT: Proposed solar facility produces questions, few answers

Nov 30, 2012 by


Editor’s note: This report was generously funded by the Fund for Investigative Journalism. We would like to thank them for their support of independent, investigative reporting around the world and are honored to be among their recipients. We would also like to thank NPR’s Daniel Zwerdling for his support.

LAUGHLIN, Nev. — Nearly a year after being approved by the Clark County Commission, a 9,000-acre power plant and solar panel manufacturing facility planned for Laughlin is nowhere near being ready to break ground.

The ENN Group, a Langfang, China-based alternative energy company, has made inroads in the political and economic environment in Laughlin to try and set up a high tech solar panel manufacturing plant and power generating station. Records show, however, that the process is slow going and the company remains a long way from being able to generate power.

The Deal

As an economic development incentive, the 9,000 acres where the proposed plant will be built were optioned to ENN far below market value, begging the question why Clark County, in an economic doldrums for several years, would sell land so cheaply.  Even though the law says it’s legal to do so, the question remains why Clark County officials are so quick to dispose of the land for a fraction of the market value.

According to public records obtained from Clark County, as of Dec. 13, 2011, the land appraised for $2,750 per acre, or $24.7 million. The land option agreed to between the county and ENN puts the purchase price at $4.5 million, or $500 per acre. ENN has, however, given Clark County a down payment of $100,000 for the option to buy the land, and records indicate an escrow account has been established for the down payment.

Dan Kulin, public information officer for Clark County, said: “This land has not been sold. There is an option agreement that has been approved. This agreement allows for the transfer of the land for the purposes of economic development. This is an exciting project that, if successful, will bring more than 2,000 new jobs and $5 billion in new spending to Southern Nevada. The project would also spur development of the surrounding area, as the increased economic activity there would create additional business opportunities that also would create more jobs. The project would also increase the tax revenue.”

Kulin added: “If ENN takes ownership of the property, there would be significant increases in property tax revenue. The land is currently owned by the county and so it does not generate any property tax revenue right now.”

He said the proposed property tax generation should range from about $200,000 in the first year and increase commensurate with the investment by the developer to more than $12 million per year by the year 2030. During its first 18 years, the project could create in excess of $100 million in new property tax.

ENN proposes to purchase the Property from Clark County pursuant to NRS Chapter 244, the Fort Mohave Development Law. In most cases, Chapter 244 requires real property to be disposed of by sale or lease through sealed bids followed by oral offers. However, in cases where redevelopment or economic development is at issue, NRS 244.2815 gives the county the power to dispose of real property through an alternative method, without first offering the property to the public. For purposes of the foregoing provision “economic development” means “. . . the establishment of new commercial enterprises or facilities within the county …, ”  according to documents held by Clark County.

More than 9,000 acres in Laughlin on the banks of the Colorado River, known as the Fort Mohave Valley, were held and administered by the Colorado River Commission of Nevada of an original 15,000 acres purchased from the United States government under both federal and state laws intended for the development of the Fort Mohave Valley.

In 2007, the Nevada Legislature transferred legal ownership and responsibility for administering the property from the Colorado River Commission to the Clark County Commission through the passage of amendments to NRS Chapter 427, a law that has become known as the Fort Mohave Development Law.

The Fort Mohave Development Law was created as a way to appease the people of Laughlin after the state swept nearly $5 million in funds that was to go to improving Laughlin. The FMDL’s purpose is to set aside lands – nearly 9,000 acres —  for the town of Laughlin to use in order to replace the money swept away.

Under the FMDL, proceeds from the sale of Clark County lands accrue to a development fund. The FMDL authorizes Clark County to administer the Property for the purpose of developing the Laughlin area. Currently, there is $11.4 million in the account which, according to the law, can only be used for “the purposes of developing the Fort Mohave Valley and any general improvement district, special district, town or city whose territory contains all or a part of the land in the Fort Mohave Valley.”

Prior to the land being held by the state, the parcel was the property of the United States government, according to records with the Clark County Assessor’s Office; in 1989, the land was transferred to the state.

Efforts to contact a spokesman at ENN were unsuccessful, although Clark County Commissioner Steve Sisolak, whose district includes Laughlin, said he is in regular contact with the company. Sisolak said the company is still working on obtaining its power purchase agreement, which is needed before the land can transfer, according to the contract signed by Clark County Commissoners in December, 2011. (Read the agreement:  http://www.scribd.com/doc/114714217/ENN-Land-Purchase-Agreement)

Requests for comment from ENN were referred to Ogilvy Public Relations Worldwide; however, Rachel Ufer, media relations coordinator for Ogilvy, said that while the company did represent ENN on another project, that relationship ended in December. She declined to state specifics of the split.

The proposed facility will take more than 20 years to be fully operational. A benchmark of having the project 75 percent complete by November, 2030, was cited in papers obtained from Ogilvy Public Relations. (http://www.scribd.com/doc/114714092/Enn-Numbers-Fact-Sheet)

Failure to secure a power purchase agreement with a qualified buyer could make the deal null and void. ENN officials were given 18 months to secure the agreement in December, 2011. To date, the PPA has not been secured. Western Area Power Administration, a division of the U.S. Department of Energy, markets and delivers power within 15 states in the West and Midwest. WAPA officials said ENN had not requested to interconnect with their grid, and said they did not have any records on ENN at all.

A PPA might be in the works, although details are scant. Steven Greenlee, communications writer/editor with the California Independent System Operator, said, “The ISO is prevented by its tariff from talking or speculating about entities that may be participating in our generator interconnection procedures study process.”

The ISO provides open access to the bulk of California’s wholesale transmission grid. Greenlee said if ENN has inquired about the PPA, his agency wouldn’t know the specifics.

“The ISO does not know the particulars of business arrangements between power buyers and sellers.  The power contracts are bilateral, between the seller and the buyer, and are not available for review by the ISO.  We do not have any visibility at all into power contracts. The jurisdictional body in California that does review energy contracts of public load-serving entities is the California Public Utilities Commission,” he said.

Repeated inquiries with Southern California Edison, who manages a Colorado River Substation for power transmission near Blythe, Calif., were not returned. Documents provided by the ISO do indicate a potential client of Edison has applied to tap into the substation. Four other applications with Edison are also pending, all for photovoltaic power generation plants in Clark County, although details about the potential vendors of the power are not available on the report.

According to a June 21, report published in the Las Vegas Review-Journal, NV Energy, Nevada’s largest public utility, is “is exceeding its renewable energy benchmarks and is not in the market for new solar power contracts,” so ENN tapping into their grids seems unlikely, for now.

Sisolak, however, is confident the PPA is in the works.

“They’re still trying to get the PPA, but there’s nothing the county can do (to speed it up),” he said. “That’s a private business transaction. I don’t know where they are in the process.”

Economic Development

The ENN plant in Laughlin is said to be an economic stimulator for the Tri-state. More than 2,000 jobs are proposed to be brought to the area, with a caveat that a majority of the jobs will go to Nevada residents. Kulin, the Clark County spokesman, said the county cannot be “100 percent sure” that the jobs will go to Nevadans, “but we have received public assurances from company officials that every effort will be made to put Nevadans back to work.”

Kulin could not say what type of incentives or assurances ENN has offered the county as to how ENN will control or otherwise monitor applicants to ensure they will be Nevada residents.

Sisolak said he believes potential employees will come from the Henderson-Las Vegas area for the jobs, particularly during the construction phase.

“If you’re out of work, it’s worth it to drive to Laughlin and stay in a hotel, then drive home on the weekends,” he said.

Sisolak acknowledged that ENN will have to hire workers from outside of Nevada in order to fill the more technical, industry-specific jobs.

Gov. Brian Sandoval’s spokeswoman, Mary-Sarah Kinner, said “the Governor hopes the project will hire Nevada workers and he’s met with representatives from ENN both in Nevada and while on his trade mission in China. Benefits of the ENN project include economic investment and job creation for Nevadans.”

Justine Lisser, an attorney with the Equal Employment Opportunity Commission, said hiring by location – in this case, Nevada residents only – would not fall under their jurisdiction unless the Arizona or California residents who were not hired in favor of a Nevada resident were from another protected group of people.

Laughlin Economic Development Corporation President David Floodman said his group believes the plant will be a boon to Laughlin’s economy by adding construction jobs to build housing for all of the potential employees of the ENN plant. Currently, Laughlin has about 7,500 residents; however, most employees in Laughlin’s casinos live in nearby Bullhead City, Ariz.

The plant will have a self contained living facility. Under the provisions of the US Customs and Immigration Service, a limited number of EB-5 visas would be available to Chinese investors for investing in a rural economy. However, it is unknown whether ENN would take advantage of that provision, or if any of the jobs will go to Chinese workers. Public records indicate that county administrators have discussed the EB-5 visa and the possibility that ENN will offer then to Chinese investors, although the records released do not reveal whether officials believe the visas will be offered.

In addition to the solar panel and solar energy fields, ENN also operates other entities, including a timeshare-type vacation real estate division. Clark County officials said they are not concerned that ENN will decide to switch the project to another business venture if the PPA fails to go through.

Politics of the deal

Despite the proposed economic benefits to the area, several unanswered questions remain about whether the project will truly be an economic boon, or whether a few corporate and political agendas will be the ones that win out.

For example, ENN Group North America is represented in Las Vegas by Richard Bryan, of the law firm Lionel, Sawyer and Collins. Bryan, a former U.S. Senator from Nevada from 1989-2001, as well as the Nevada Governor from 1983-1989, is a partner in the firm, where Rory Reid is an associate.

Rory Reid, son of US Sen. Harry Reid, was on the Clark County Commission from 2002-2010, shortly before  the ENN deal was being devised, although Kulin said Reid was no longer on the commission when ENN approached the county with an offer to purchase the land, through Bryan, on June 6, 2011.

In April, 2011, months before ENN approached Clark County with their offer, Harry Reid visited ENN’s manufacturing facility in Langfang, China. Reid’s spokeswoman, Kristen Orthman, issued a statement in response to several questions asked about Reid’s interest in the Laughlin plant.

“No state has more to gain from a clean energy future than Nevada and the proposed ENN solar power complex could be an important part of that future.  Developing homegrown alternative energy sources will create jobs, limit pollution and reduce our dependence on oil.  Nevada is prepared to be a leader in this effort,” her emailed statement said.

Orthman didn’t answer what was the purpose of Reid’s trip to China or who paid for the trip, or whether ENN or any of its subsidiaries have ever donated money to Reid.

The Department of Defense also refused to process a Freedom of Information Act request on Reid’s travel, and requests for comment have not been returned.

In addition to representing ENN, Bryan also serves as the chairman of the Nevada Commission on Nuclear Projects, a group tasked with advising the state legislature on disposal of radioactive waste. Bryan specializes in energy law. Requests for comments from his office were directed to Ogilvy Public Relations.

Environmental Impact

In addition to the unanswered questions about the perceived economic benefit of the plant, there also are many unanswered questions about the environmental aspect of the project, and the answers to those questions are also few and far between.

Neither the Department of Energy nor the Environmental Protection Agency has any records of ENN or any of their projects in their databases, despite ENN having recently converted a landfill into a power plant in New Jersey, ENN’s only U.S.-based project to date.

Bob Considine, spokesman for the New Jersey department of Environmental Protection, said “ENN was in full compliance with their permits. No red flags were raised and everything checked out.”

In Nevada, officials from the Nevada Department of Environmental Protection said they did not have any records of ENN applying for any environmental permits and referred comments to the BLM. BLM officials said they had no records pertaining to ENN or their environmental records.

Kinner, Sandoval’s spokeswoman, said: “the Governor’s office is confident that ENN will work in conjunction with state and federal regulators regarding the permitting of their plant.”

In the New Jersey project, ENN, partnering with the National Energy Renewable Corp., LLC, reconstituted a landfill in order to build a solar power generation facility. The local project is expected to be not only a generation facility, but also a photovoltaic panel production location.

Chemicals including cadmium are emitted during the production of PV panels, according to academic studies provided by the EPA, but studies show that crystalline silica, used in the manufacturing of the panels, is perhaps the most volatile substance used in the process. Authorities from the Occupational Health and Safety Administration cite silicosis as a serious health threat to more than 2 million Americans.

Researchers from Carnegie Mellon University have been developing alternatives to current photovoltaic panels using plastic. Dr. Richard McCullough’s design using a plastic coating on the PV cell. According to documents released by the EPA, McCullough’s research shows: “The potential for low cost solar cells via ink jet printing makes $1/watt and broad commercialization a viable target for organic photovoltaics, with a much greener process than currently dominant crystalline silicon. Crystalline silicon-based technology is too costly ($5-10/watt), with more disadvantages due to (approximately) 105 gallons of water used per day, energy-intensive clean rooms, and hazardous chemicals such as Hydrogen Fluoride. If the costs are competitive, organic solar cells thus may be favored even when inorganic thin film technologies have higher efficiencies.”

The Nevada Department of Business and Industry, Division of Industrial Relations, recently approved changes to the reporting requirements for industrial businesses in Nevada, reducing the reporting requirements for employee accidents and loosening the record keeping requirements on industrial injuries and illnesses. Sandoval’s office had no response when asked if the governor supported the changes or whether ENN officials had any opinion of the proposed changes.

ENN Energy Holdings, Ltd, incorporated in the Cayman Islands, is traded on the Hong Kong market. It boasts a market share of $35.87 billion in Hong Kong ($4.6 billion USD).  ENN has 21,575 employees worldwide.

Repeated requests for comment from ENN were not returned.

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