New Study Finds Opportunity for Tribally Owned, Utility-Scale Solar Development on Southern Ute Reservation
💡 What’s the story?
The Southern Ute Indian Tribe’s economy relies heavily on natural gas and oil production, including on its reservation in southwestern Colorado. The millions of dollars that the Tribe earns each year through severance taxes, royalty revenues, and other sources provide important public services to Tribal members, supporting healthcare, free college tuition, and guaranteed employment.
However, new research from Resources for the Future (RFF) carried out in partnership with the Tribe finds that natural gas production from existing fields is likely to decline in the coming decades. Unlike most oil- and gas-producing states, the Tribe has invested a large portion of its resource revenues into savings funds that will continue to provide economic and social benefits for Tribal members into the foreseeable future. Utility-scale solar development may also offer new economic opportunities for the Tribe and its members.
☀️ How do we know?
For the past three years, researchers at RFF and other institutions collaborated with the Tribe’s Department of Energy to help inform its decisionmaking about energy development on the reservation. The team, informed by Tribal priorities and equipped with data on land and mineral ownership, tax policies, and culturally significant sites, developed a suite of scenarios that show potential for natural gas, wind, and solar development on the reservation.
The team used four scenarios to reflect future demand and prices for natural gas. The scenarios ranged from a pathway in which natural gas prices stayed low to one where prices spiked and remained high for decades to come. The low-price scenario reflects a world where global demand for oil and gas declines considerably, while the high-price scenario assumes strong global oil and gas demand continues.
The researchers also modeled three solar and wind scenarios, ranging from limited growth to full buildout, to explore the potential for wind and solar energy on the reservation.
Expert Perspective
“Declining natural gas production is not out of the ordinary—many fossil fuel-dependent economies in the United States can expect or are already seeing this. The thing that’s really impressive about the Southern Ute Indian Tribe is how thoughtful they have been about planning for this day—they have implemented fiscal policies that will continue to benefit its members for decades to come.”
—Daniel Raimi, RFF Fellow and Director, Equity in the Energy Transition Initiative
📈 How is natural gas production changing?
Under all four scenarios, natural gas production on the reservation declines through 2050. This drop in production reduces Tribal revenues; in the scenario kindest to natural gas production, revenue declines from $90 million to about $50 million per year in the 2030s and 2040s. Under the scenario in which the world meets its net-zero emissions target, revenues stabilize at around $15 million in the 2030s.
The Tribe may tap new shale formations on the reservation, which could upend the results, which only reflect production from existing fields. In addition, the Tribe owns its own oil and gas production company, Red Willow, which invests in and operates wells in some of the most productive US oil and gas plays, such as the Permian Basin and Deepwater Gulf.
Natural Gas Revenues on the Southern Ute Reservation
⚡ What about renewable energy development?
The modeling shows that utility-scale solar development may well be economically viable on the reservation. In theory, solar generation on the reservation could produce the same amount of electricity as four large nuclear generators. However, the Tribe will only develop energy projects that are consistent with its cultural priorities, including minimizing impacts to the land and the visual character of the reservation.
While solar development could thrive, the research team’s modeling shows that utility-scale wind would not be profitable, given current technologies and market conditions.
Because of the troubled legacy of federal land policies impacting Native American land holdings, the Tribe does not control all of the land on the reservation, which complicates the potential for future development. The Tribe collectively controls 31 percent of the land that could develop for solar power, while the rest is owned by a “checkerboard” of individual Tribal members, the federal government, and non-Tribal individuals.
🤝 How is this project an innovative model for collaborative research?
The RFF team worked in close collaboration with the Southern Ute Indian Tribe, in addition to research partners at SMU, the University of Arizona, the University of Washington, the University of Denver, and elsewhere. Experts from the Tribe were involved throughout the research process, providing input into the team’s modeling approaches, its choices about price and land use assumptions, and sharing information about the Tribe’s priorities and expectations about the future.
This innovative research model supports Tribal energy sovereignty while also offering an opportunity for researchers to have significant real-world impact. The researchers believe that this approach may serve as a model for other scholars who want to work with energy-producing Tribes in the United States, Canada, and elsewhere.
📚Where can I learn more?
For more details, read the paper, “The Energy Transition for Oil- and Gas-Producing Tribal Nations: Assessing Options for Energy Development with the Southern Ute Indian Tribe,” by Daniel Raimi, Brian C. Prest, and Alexandra Thompson.
Resources for the Future (RFF) is an independent, nonprofit research institution in Washington, DC. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy.
Unless otherwise stated, the views expressed here are those of the individual authors and may differ from those of other RFF experts, its officers, or its directors. RFF does not take positions on specific legislative proposals.
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