The Irish Independent reports that Anglo Irish Bank has extended its financial year by three months from September 30 to December 31, in a move which will allow its next annual report to reflect the impact of the transfer of loans to the National Asset Management Agency (NAMA).
In a brief statement issued yesterday, the group's board said it had changed the bank's financial reporting period and, as a result, its next annual report and accounts would cover a 15-month period from October 1, 2008, to December 31, 2009.
A spokesman for the bank said the hope was that the change would allow it to reflect the impact on its accounts of moving €28bn in loans to the new state bad bank, NAMA.
Anglo will be the biggest of NAMA's clients, accounting for almost half of the expected €54bn in loans to be taken off the balance sheets of the nation's banks.
While each loan would have to be individually assessed, the spokesman said the bank hoped to have transferred a major portion of the loans by the end of the year. This would allow it to reflect the impact of the transfers in its next annual report, now set to be published in late February or early March 2010. Banks transferring loans to the new agency will have to write off the difference between the value of that loan in their accounts and the amount which NAMA is willing to pay for them.
Anglo, along with other major lenders, has already taken some provisions to cover the cost of its deteriorating loan book -- the interim figures published on May 29 last showed loan "impairment" charge of €4.1bn.
However, the losses in the next report look set to be substantially greater. Apart from being NAMA's biggest single client, Anglo is also the bank with the most exposure to the troubled commercial and development property sector.
If it had stuck to its original year-end, September 30, then the accounts would have been unable to reflect the impact of NAMA, a fact which would have rendered them almost meaningless, the spokesman said.
Apart from allowing Anglo to reflect the impact of NAMA on its loan book, the change to its year-end also brings the bank into line with other semi-states who operate on a calendar year. The December 31 year-end also coincides with the tax year.
Since coming into state ownership at the start of the year, Anglo has adopted other practices normal to state companies and has already, for instance, reduced the number of executive directors on its board to just one.
Meanwhile, reports indicate that Finance Minister Brian Lenihan has taken ultimate control over dealings between Anglo Irish and its former chairman Sean FitzPatrick.
An agreement between the bank and the Mr Lenihan means that the bank's board must defer to the minister on matters relating to Mr FitzPatrick or to the appointment of senior executives.
The Irish Independent also reports that the eurozone economy has steadied after the plunge of the global economic crisis, the chairman of the euro group of nations, Jean-Claude Juncker, (above) said yesterday.
Mr Juncker, who chairs the group of eurozone finance ministers, said that the economy has "broadly stabilised", suggesting that the worst of the crisis was over.
"The situation has broadly stabilised" and we can express "moderate optimism for the second semester", concerning growth in the eurozone, he told members of the European parliament in Brussels.
But he warned that the "situation remains fragile and flaky" and that an economic upturn could be very limited in Europe, with a long period of weak growth unlikely to provide nations with much budgetary room for manoeuvre.
Mr Juncker, who is also premier of Luxembourg, warned that the growth potential of the 16-nation eurozone -- that is, the maximum possible growth without sparking excessive inflation -- "is going to seriously decelerate".
He said: "We already had growth potential that was quite low before the crisis, in the order of 2.5pc (a year), and it seems that the growth potential will hover around 1.5pc (a year) between 2010 and 2020," he said.
European retail sales fell the least in 16 months in September, adding to signs the region's economy may be emerging from recession.
The measure of euro-area sales rose to 48.6 from 47.1 in August when adjusted for seasonal swings, London-based Markit Economics said yesterday. The index, which is based on a survey of more than 1,000 executives, has remained below the 50 mark that indicates a contraction since June of last year.
The Irish Times reports that the executive council of the Irish Congress of Trade Unions (Ictu) is to meet today to discuss the nature of a sustained campaign of opposition to cuts in pay and public services.
It is understood Congress is considering a major day of protest – along the lines of that conducted during the Irish Ferries dispute – in the first week of November and a reactivation of Ictu’s 10-point plan for an agreed economic recovery programme.
Members of the executive are to take part in the national march of community workers, employers and activists in Dublin this afternoon.
The 'Communities against Cuts' march is being held in protest against the current, and proposed, cuts to community projects across the country.
The campaign represents workers providing services to children, the elderly, disabled, recovering drug addicts, travellers, young people and women in the country’s most disadvantaged areas.
They fear the McCarthy report proposals, if implemented, will result in the loss of a further 6,500 jobs in the sector. The march has been organised by a coalition of community sector groups with the Siptu and Impact trade unions.
The protest will assemble at Parnell Square, Dublin at 1.00 pm on Wednesday September 30th and march to Dáil Eireann.
The march comes a day after Siptu lodged a claim for a 3.5 per cent pay increase for about 34,000 staff in the health service.
Siptu said the increase represented the first phase of the rise due under the national pay deal negotiated last autumn. The Government subsequently froze these increases for staff in the public sector.
Siptu has warned of industrial action if the Health Service Executive (HSE) refuses to engage on the implementation of the rise.
The Irish Times also reports that it will be at least 2011 before there is a “significant recovery” in Ireland’s economic fortunes, Prof John Fitzgerald of the Economic and Social Research Institute (ESRI) said yesterday.
However, a new report by stockbrokers Davy forecast a more positive picture, claiming that the economy would return to growth in the first three months of 2010.
In what is the most optimistic assessment of the economic outlook yet, Davy economist Rossa White said the sooner-than-expected improvement in the global economy was already boosting exports, while he forecast that consumer spending would bounce back after the biggest slump in decades.
The Davy report forecasts that Ireland will emerge from recession with growth of 0.5 per cent in Gross National Product (GNP) in 2010, with the economy growing by 4 per cent in 2011.
Most other forecasters are currently predicting a slight annual decline in the economy over the course of 2010, with quarterly growth only predicted to return in the second half of the year.
Paul Robinson, a currency strategist at Barclays Capital, said yesterday that the Irish economy would “take some time” to bounce back, because growth in its largest trading partner, the UK, was likely to remain “more muted than in the past”.
However, Mr Robinson added that sterling would strengthen slightly against the euro in the months ahead, which would help Irish exporters.
Although economists disagree about the timing of the Irish economic recovery, they are agreed that the turnaround here is likely to lag behind the rest of Europe and that the recovery, when it does happen, is likely to be driven by exports.
Speaking at the Small Firms Association’s annual conference, Prof Fitzgerald said the recovery was also contingent on the Irish economy reducing its cost base.
“We need to ask ourselves if we can price ourselves back into the market rapidly . . . If we do we will see a very robust recovery by 2012, unemployment will come down gradually from 2011 onwards, and we might get back to full employment by 2015.”
He questioned whether costs had actually come down in the private sector. “In our modelling we felt that wage rates, for example, would fall by 7 per cent over two years in the private sector. However, the latest data suggests that, in spite of what people are saying, costs are not coming down significantly. They are still rising, according to CSO data.”
He said there had been a 7 per cent wage cut in the public sector, and many of his European colleagues were “staggered” this had been accepted by Irish public sector workers.
“In terms of where we go from here, it will be important that it is seen that here is some reaction from the private sector and so far the data suggests that there has been no significant cuts in labour costs or wage rates in the private sector . . . Until we see the data from the CSO, there cannot really be further cuts in the public sector.”
His claims were refuted by a representative of employers’ group Ibec, who said payroll costs had fallen by 12 or 13 per cent in the private sector, although this was not attributable solely to reductions in pay.
“Pay reductions account for around 2 per cent of falling costs, but we’re seeing it in reduced bonuses, reduced working time and unemployment increase,” he said.
Although Davy expects the economy to start growing again in the new year, Mr White warned that it would not “feel” like conditions were improving that quickly, as unemployment would not peak until the third quarter of 2010.
Rates of precautionary saving – where consumers hoard their disposable income in fear of future tax hikes, pay cuts or job losses – are likely to ease next year, he said.
“I don’t think December’s tax increases [in the Budget] will do any damage to consumer spending, because people have already factored them in.”
Mr White said Davy’s bullish forecasts on the economy were based on a Yes vote in Friday’s Lisbon referendum.
The Irish Examiner reports that the Government has announced new measures which will enable county and city enterprise boards (CEBs) to broaden their financial support structures to SMEs.
Addressing this year’s Small Firms Association (SFA) annual conference at Dublin Castle, yesterday, the Tánaiste and Minister for Enterprise, Trade and Employment Mary Coughlan announced the initiatives aimed at broadening the scope of start-up and development costs that can be assisted by local enterprise boards around the country.
The changes will effectively align CEBs more closely with supports from the other enterprise support agencies and ensure a more consistent approach of SME aid.
"As a result of these changes, supports will now be available for all legitimate business costs directly attributable to starting a new business, or growing and developing a business, rather than being restricted to asset acquisition," the Tánaiste said.
She also announced plans to bring forward a national entrepreneurship strategy soon — aimed at introducing more initiatives to encourage further entrepreneurial activity; particularly among female entrepreneurs and the country’s immigrant community.
Meanwhile, delegates also heard from SFA chairman, Dr Aidan O’Boyle who took the opportunity to call for a Government- backed loan guarantee scheme to ensure the flow of fresh credit to Ireland’s small business network.
"NAMA of itself will not, in our view, produce this result. Unless the lending risk to the banks is reduced by the introduction of such a loan guarantee scheme, many small businesses are going to continue to struggle.
"We, small business, are the lifeblood of this country and it is time this was recognised.
"We need action and not further reports," he said.
In the SFA’s most recent credit survey — published earlier this month — 25% of respondents reported a decrease in the availability of working capital in the last three months, while 21% reported a decrease in investment finance.
The Financial Times reports that French companies are to get a €10bn ($15.5bn, £9bn) tax cut in one of the biggest structural reforms since Nicolas Sarkozy came to power two years ago.
The French government will announce on Wednesday the partial scrapping of the taxe professionnelle, a local business tax levied on fixed investment that has become a heavy burden, particularly for manufacturing companies, as part of next year’s budget.
The move has been welcomed by industry, which says it penalises investment. But scrapping the tax means delaying serious efforts to reduce France's spiralling public deficit even as the economy recovers.
The reform – described as a “competitiveness shock” by François Fillon, the prime minister, earlier this week – will cost €12bn next year and will be partially offset by the introduction of a carbon tax on road fuel and energy use that will cost companies €2bn.
In an extension of the stimulus package that shows the government is in no rush to withdraw its discretionary support for the economy, very small companies will, for a second year, benefit from reductions in social charges in return for hiring new staff.
a bigger-than-expected drop in corporate tax revenues, Mr Fillon revised up the government’s forecast for the public deficit from 7-7.5 per cent to 8.2 per cent. Mr Fillon said he hoped to stabilise it at that level in 2010, in part by scrapping 33,000 civil service jobs.
The budget is expected to give no indication of how the government intends to reduce the deficit in coming years beyond relying on the return of growth and of receipts, leaving it with a rapidly rising debt burden.
“Unless there are strong measures in 2011, we are going to be playing in the same schoolyard as Italy, Greece, Spain and Portugal,” said Laurence Boone, chief economist at Barclays Capital France.
Analysts said that whereas Germany had inserted a balanced budget commitment into its constitution and Spain had announced tax rises, France had provided no such reassurances.
Mr Sarkozy has, on the contrary, focused on further spending and borrowing. On Tuesday, the president earmarked a further €500m a year for young people. The under-25s will become eligible for a welfare-to-work benefit worth €450 a month, although only if they have already held a job for two years.
Mr Sarkozy’s latest flagship project is a national bond to finance long-term projects, such as a national optic fibre network for high-speed internet connections. But the lack of detail on the size and purposes of the bond scheme has added to perceptions that the president is no longer interested in fiscal discipline.
“If beyond this budget we have many billions of euros dedicated to so-called strategic expenditure, then I’ll be worried,” said Gilles Moëc, an economist at Deutsche Bank.
France’s projected deficit of 8.2 per cent in 2009 may not be as bad as that of some other countries, notably the UK, but its recession has also been less serious. The French economy is expected to contract by only 2.25 per cent this year – significantly less than most of its neighbours.
This situation reflects both the strengths of the French model and its weaknesses. On the one hand, it is a reflection of how well the so-called automatic stabilisers – lower revenues and higher welfare spending in a downturn – have cushioned the shock of the recession.
On the other, it is a reminder that France entered the crisis with one of the highest structural deficits in the eurozone, the result of years of fiscal ill-discipline and lack of reform.
Ms Boone pointed out that France had not run a primary surplus (after interest payments) since 1975 and that it would take a herculean effort for France now to comply with its European Union obligations of cutting its deficit to below 3 per cent by 2012.
The FT also reports that China on Wednesday announced details of plans to curb severe overcapacity in industrial production that has been made worse by the country’s Rmb4,000bn ($585bn) stimulus package.
The State Council, China’s cabinet, said in a strongly worded statement that highly polluting sectors including steel, coke, cement and plate glass must cut capacity, while silicon and wind power producers should pursue more orderly development.
Without giving a specific timeframe, it placed a ban on the building of new steel plants and any projects to expand steelmaking capacity. In the coke sector, certain expansion projects would not be allowed to proceed for the next three years and outdated facilities would be eliminated.
In the cement sector, the State Council said it would suspend and review all new projects in the pipeline. Proposals for new plate glass projects have been banned and all ongoing construction plans put under review. Plate glass and silicon manufacturers, as well as wind power producers, would be placed under stricter environmental guidelines.
In addition, no new aluminum smelters and docks will be built in China for the next three years, according to the statement.
The details came after the State Council first said in late August that it would ask local authorities to “resolutely [curb] overcapacity and redundant construction”, after the country’s massive stimulus measures and excess bank lending led to unbridled expansions.
It said industrial overcapacity could cause intense competition and derail the country’s economic recovery if no action was taken.
According to the State Council, investment in steel production, which hit Rmb140.5bn in the first half, was expected to lift capacity to more than 700m tonnes this year, compared with domestic demand of about 500m tonnes last year.
In cement, demand is forecast to reach 1.6bn tonnes this year, less than 60 per cent of expected production capacity.
The New York Times reports that acknowledging that they had greatly underestimated the problems plaguing the nation’s banks, federal officials on Tuesday proposed a $45 billion plan financed by the industry to rescue the ailing insurance fund that protects bank depositors.
They also announced that the fund, which had more than $50 billion before the crisis began last year, had been so battered by bank collapses that it would be in the red this week.
The plan proposed by the Federal Deposit Insurance Corporation would, in effect, have the industry lend money to the insurance fund by ordering banks to prepay their annual assessments that would otherwise have been due through 2012.
If adopted, the proposal, the agency’s third restoration plan for the fund in a year, would raise $45 billion from the banks to replenish the fund.
That would almost certainly wipe out the industry’s earnings for this year — in the first half of the year the banking industry reported $1.8 billion in income.
Regulators have told the banks that they will not have to record the prepayments as an expense until the fees would ordinarily have been due, postponing the hit to balance sheets until a time when officials believe the industry will be better able to weather the costs.
Senior officials emphasized that the plight of the fund would have no impact on insurance for bank deposits. Accounts are protected up to $250,000.
With nearly 100 bank failures so far this year, the fund has encountered its greatest crisis since the savings and loan debacle of the 1980s and ’90s. In May, officials projected $70 billion in losses to the fund to rescue failed banks. That estimate was a $5 billion increase from earlier in the year.
On Tuesday the F.D.I.C. increased that estimate by more than 40 percent, to $100 billion in total losses — mostly over this year and next. That would be on top of the nearly $20 billion in losses to the fund last year, when the crisis began and 25 banks failed.
Officials said that as of this week, the fund, which began the year at more than $30 billion and had about $10 billion over the summer, would have a negative net worth.
The officials said that if nothing was done, the fund would be holding almost exclusively hard-to-sell real estate and other unmarketable assets by early next year. At its last report this summer, the fund had about $22 billion in cash and other marketable securities. As more banks have collapsed, most of its liquid assets have been exchanged for less marketable assets seized from the failed institutions, like foreclosed property.
Officials said that the plan disclosed Tuesday was less expensive than a direct loan from the banks, an idea that many banks supported, because no interest would have to be paid and the plan would not be voluntary. And it was preferable to a loan from the Treasury, which some lawmakers and industry executives supported, because even though it would be paid back by the industry, such a loan could be seen as yet another taxpayer bailout.
“It’s clear that the American people would prefer to see an end to policies that look to the federal balance sheet as a remedy for every problem,” said Sheila C. Bair, chairwoman of the F.D.I.C. “In choosing this path, it should be clear to the public that the industry will not simply tap the shoulder of the increasingly weary taxpayer.”
Regulators are permitting the banks to record the prepayments as an asset known as a “prepaid expense” until the time that the payments would ordinarily have been due.
In addition, beginning in 2011, the banks will face an increase in their annual assessments of 3 cents for every $100 in deposits. The healthiest banks now pay 12 to 16 cents on every $100 in deposits.
Created in 1933 to restore confidence and arrest a wave of bank runs that contributed to the Great Depression, the insurance fund now stands behind some $4.8 trillion in deposits. The insurance fund is financed by the industry and is backed by the United States. Officials have the ability to borrow $100 billion from the Treasury immediately, and up to $500 billion with the approval of the Treasury secretary and the Federal Reserve.
The plan proposed by the deposit insurance agency was a partial victory for industry executives and lobbyists who fought against the idea of another special assessment. Last May the government imposed an assessment of 5 cents for every $100 in deposits, on top of the regular premiums.
But some bank executives expressed concern about the increase in premiums in two years.
The premium increase was a surprise, said Edward L. Yingling, president of the American Bankers Association. “The industry agrees that this is a better alternative to what clearly would have been several special assessments, but this prepayment will decrease the ability to lend.”
The agency agreed to accept comment on the proposal for 30 days before deciding how to proceed. Troubled banks can seek a waiver from the prepayments.
There was a split in the industry about whether to seek a loan for the fund from the Treasury, as the fund had after the savings and loan crisis.
Some viewed it as a low-cost way of replenishing the fund, while others opposed it because of the fear that it would be seen as another taxpayer bailout and come with a new round of conditions on the banks in such areas as executive pay. Some executives also expressed concern that the proposal could limit the ability of banks to expand lending.
“This prepayment will be a short-term asset, like an investment, but particularly for banks with a high percentage of loans, the prepayment will mean they have less money to lend as it will be tied up in this asset,” Mr. Yingling said.
“There will and should be a discussion of whether it makes sense to use the Treasury line. Banks will pay the whole thing one way or another, but the line will not constrict lending as much in the short term.”
Ms. Bair said that the prepayment proposal would have little impact on the ability of most banks to continue their lending businesses, since the payments were a tiny fraction of the industry’s available assets. She also said that the banks did not face a significant liquidity problem now because of the many lending programs created by the Treasury and the Federal Reserve.
The NYT reports that in a rural corner of Nevada reeling from the recession, a bit of salvation seemed to arrive last year. A German developer, Solar Millennium, announced plans to build two large solar farms here that would harness the sun to generate electricity, creating hundreds of jobs.
But then things got messy. The company revealed that its preferred method of cooling the power plants would consume 1.3 billion gallons of water a year, about 20 percent of this desert valley’s available water.
Now Solar Millennium finds itself in the midst of a new-age version of a Western water war. The public is divided, pitting some people who hope to make money selling water rights to the company against others concerned about the project’s impact on the community and the environment.
“I’m worried about my well and the wells of my neighbors,” George Tucker, a retired chemical engineer, said on a blazing afternoon.
Here is an inconvenient truth about renewable energy: It can sometimes demand a huge amount of water. Many of the proposed solutions to the nation’s energy problems, from certain types of solar farms to biofuel refineries to cleaner coal plants, could consume billions of gallons of water every year.
“When push comes to shove, water could become the real throttle on renewable energy,” said Michael E. Webber, an assistant professor at the University of Texas in Austin who studies the relationship between energy and water.
Conflicts over water could shape the future of many energy technologies. The most water-efficient renewable technologies are not necessarily the most economical, but water shortages could give them a competitive edge.
In California, solar developers have already been forced to switch to less water-intensive technologies when local officials have refused to turn on the tap. Other big solar projects are mired in disputes with state regulators over water consumption.
To date, the flashpoint for such conflicts has been the Southwest, where dozens of multibillion-dollar solar power plants are planned for thousands of acres of desert. While most forms of energy production consume water, its availability is especially limited in the sunny areas that are otherwise well suited for solar farms.
At public hearings from Albuquerque to San Luis Obispo, Calif., local residents have sounded alarms over the impact that this industrialization will have on wildlife, their desert solitude and, most of all, their water.
Joni Eastley, chairwoman of the county commission in Nye County, Nev., which includes Amargosa Valley, said at one hearing that her area had been “inundated” with requests from renewable energy developers that “far exceed the amount of available water.”
Many projects involve building solar thermal plants, which use cheaper technology than the solar panels often seen on roofs. In such plants, mirrors heat a liquid to create steam that drives an electricity-generating turbine. As in a fossil fuel power plant, that steam must be condensed back to water and cooled for reuse.
The conventional method is called wet cooling. Hot water flows through a cooling tower where the excess heat evaporates along with some of the water, which must be replenished constantly. An alternative, dry cooling, uses fans and heat exchangers, much like a car’s radiator. Far less water is consumed, but dry cooling adds costs and reduces efficiency — and profits.
The efficiency problem is especially acute with the most tried-and-proven technique, using mirrors arrayed in long troughs. “Trough technology has been more financeable, but now trough presents a separate risk — water,” said Nathaniel Bullard, a solar analyst with New Energy Finance, a London research firm.
That could provide opportunities for developers of photovoltaic power plants, which take the type of solar panels found on residential rooftops and mount them on the ground in huge arrays. They are typically more expensive and less efficient than solar thermal farms but require a relatively small amount of water, mainly to wash the panels.
In California alone, plans are under way for 35 large-scale solar projects that, in bright sunshine, would generate 12,000 megawatts of electricity, equal to the output of about 10 nuclear power plants.
Their water use would vary widely. BrightSource Energy’s dry-cooled Ivanpah project in Southern California would consume an estimated 25 million gallons a year, mainly to wash mirrors. But a wet-cooled solar trough power plant barely half Ivanpah’s size proposed by the Spanish developer Abengoa Solar would draw 705 million gallons of water in an area of the Mojave Desert that receives scant rainfall.
One of the most contentious disputes is over a proposed wet-cooled trough plant that NextEra Energy Resources, a subsidiary of the utility giant FPL Group, plans to build in a dry area east of Bakersfield, Calif.
NextEra wants to tap freshwater wells to supply the 521 million gallons of cooling water the plant, the Beacon Solar Energy Project, would consume in a year, despite a state policy against the use of drinking-quality water for power plant cooling.
Mike Edminston, a city council member from nearby California City, warned at a hearing that groundwater recharge was already “not keeping up with the utilization we have.”
The fight over water has moved into the California Legislature, where a bill has been introduced to allow renewable energy power plants to use drinking water for cooling if certain conditions are met.
“By allowing projects to use fresh water, the bill would remove any incentives that developers have to use technologies that minimize water use,” said Terry O’Brien, a California Energy Commission deputy director.
NextEra has resisted using dry cooling but is considering the feasibility of piping in reclaimed water. “At some point if costs are just layered on, a project becomes uncompetitive,” said Michael O’Sullivan, a senior vice president at NextEra.
Water disputes forced Solar Millennium to abandon wet cooling for a proposed solar trough power plant in Ridgecrest, Calif., after the water district refused to supply the 815 million gallons of water a year the project would need. The company subsequently proposed to dry cool two other massive Southern California solar trough farms it wants to build in the Mojave Desert.
“We will not do any wet cooling in California,” said Rainer Aringhoff, president of Solar Millennium’s American operations. “There are simply no plants being permitted here with wet cooling.”
One solar developer, BrightSource Energy, hopes to capitalize on the water problem with a technology that focuses mirrors on a tower, producing higher-temperature steam than trough systems. The system can use dry cooling without suffering a prohibitive decline in power output, said Tom Doyle, an executive vice president at BrightSource.
The greater water efficiency was one factor that led VantagePoint Venture Partners, a Silicon Valley venture capital firm, to invest in BrightSource. “Our approach is high sensitivity to water use,” said Alan E. Salzman, VantagePoint’s chief executive. “We thought that was going to be huge differentiator.”
Even solar projects with low water consumption face hurdles, however. Tessera Solar is planning a large project in the California desert that would use only 12 million gallons annually, mostly to wash mirrors. But because it would draw upon a severely depleted aquifer, Tessera may have to buy rights to 10 times that amount of water and then retire the pumping rights to the water it does not use. For a second big solar farm, Tessera has agreed to fund improvements to a local irrigation district in exchange for access to reclaimed water.
“We have a challenge in finding water even though we’re low water use,” said Sean Gallagher, a Tessera executive. “It forces you to do some creative deals.”
In the Amargosa Valley, Solar Millennium may have to negotiate access to water with scores of individuals and companies who own the right to stick a straw in the aquifer, so to speak, and withdraw a prescribed amount of water each year.
“There are a lot of people out here for whom their water rights are their life savings, their retirement,” said Ed Goedhart, a local farmer and state legislator, as he drove past pockets of sun-beaten mobile homes and luminescent patches of irrigated alfalfa. Farmers will be growing less of the crop, he said, if they decide to sell their water rights to Solar Millennium.
“We’ll be growing megawatts instead of alfalfa,” Mr. Goedhart said.
While water is particularly scarce in the West, it is becoming a problem all over the country as the population grows. Daniel M. Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley, predicted that as intensive renewable energy development spreads, water issues will follow.
“When we start getting 20 percent, 30 percent or 40 percent of our power from renewables,” Mr. Kammen said, “water will be a key issue.”