Which Comes First?

Everyone has heard the age-old rhetorical question: “Which came first, the chicken or the egg?”

Landscape design and the age-old question.

Have you ever wondered how this question could be considered relevant in our industry?

As most of you loyal readers know, I work as an environmental planner in Phoenix, Arizona. Earlier this week, I was talking to my brother and he asked me to explain what exactly it is that I do for a living. Over the next several minutes, I explained what it is that I do and the process by which my projects come to fruition.

I also explained that there are additional steps that must be completed before these projects can be built.

As I was explaining this process, I was searching for an analogy to help him understand and that is when I thought of “the chicken and the egg”.

To illustrate this point, I’d like to share with you the process of developing a renewable energy project–a solar field. (I’m going to key in on some of the main concerns, but obviously any project is more complicated than can be adequately explained here.)

There are many factors that must be considered when choosing the location of the site for our project. Land availability and cost are the main concerns. We also must consider the process for approval through any governing municipality or state regulatory agency.

Another key factor is the transmission of this newly generated electricity and how we move it from the location of the project to eventually reach the customer.

Once all regulating agencies and state and local municipalities approve our project, the environmental studies will be completed.

If the project is located on federally owned land, then the guidelines set forth by the National Environmental Policy Act must be followed. If the project is located on privately owned land, then, depending on the state, there may or may not be a need for additional environmental studies.

For the sake of argument, let us assume that our project is planned to be located on privately owned land and all regulatory requirements and environmental studies have been fulfilled or completed.

Let us also assume that the project is fully funded and ready for construction.

Before construction can begin, a couple of factors need to be considered, and this is where our “chicken and the egg” analogy takes effect.

One thing that must be considered when looking for an adequate site to build our project is the availability of nearby transmission lines to carry the electricity to a substation so that it can then enter the “electric grid” and be dispersed to customers based on demand.

If there are no available existing transmission lines, then one must be constructed. The transmission line would have to be approved in much the same way as our solar facility.

Think of the transmission line as an interstate highway: Cars get on the highway at one exit, our solar facility, then drive on the interstate and exit at their intended destination, the electrical substation.

Although it might not be apparent at first, there is still one missing link to our scenario that must be completed before construction can begin. The developer must obtain what is known as a Power Purchase Agreement (PPA) from a local utility company.

A PPA is simply an agreement between the utility company and the developer that says the utility will purchase a predetermined amount of power from the developer at a set price.

Once a PPA has been signed, construction will generally begin on the project.

As you can see, there can be a large amount of risk involved in developing a project like the one in our example.

The developer doesn’t want to start construction on a project until he knows he can transmit the power somewhere and that there is a buyer who will purchase the electricity generated from the project.

Likewise, a utility company will want to be sure there is adequate demand to ensure the need for the additional electricity before it signs a PPA.

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