Why is the U.S. Charging Rent for Solar Energy Companies to Use Public Lands?

The Bureau of Land Management (BLM) has released a rental schedule for solar energy right-of-way authorizations on U.S. public lands. The amount of the rental is charged by megawatt produced and the facilties rated capacity. If we are truely interested in bringing clean energy in the U.S. to parity with coal or natural gas then one has to wonder about this rental structure. I dont understand why we are charging U.S. solar companies land rental at all. In fact after the environmental debacle in the gulf – We should be paying them!

To make maters worse the escalating pay scale makes it more expensive for higher efficiency solar PV and solar thermal technologies with energy storage capability, which are exactly the technologies that we need to encourage.

BLM Director Bob Abbey said the rental schedule moves the nation closer to greater reliance on renewable, clean energy sources. “Today, we are providing the solar energy industry the level of certainty it needs about the costs associated with projects on the public lands and ensuring a fair return to American taxpayers for the use of their public lands,” he said. The BLM is required by the Federal Land Policy and Management Act (FLPMA) to collect an annual rental payment for right-of-way authorizations on the public lands. FLPMA also requires that rents for these authorizations reflect the fair market value for the use of the public lands.

The solar rental schedule was developed based on review and analysis by the BLM, the U.S. Department of the Interior, and the U.S. Department of Energy of economic models comparing the effects various rental rates may have on different kinds of solar projects. The BLM has said it will complete the review process by the end of the year for more than two dozen “fast-tracked” proposals for large-scale solar power developments on public lands in the Southwest U.S.

The solar rental schedule includes a “Base Rent” for the acreage of public land included within the right-of-way authorization and a “Megawatt (MW) Capacity Fee” based on the MW-size of the project. The “Base Rent” will be paid upon the date of issuance of the right-of-way authorization and will be paid on a continuing annual basis during the term of the authorization. The “Base Rent” is a per-acre rental fee that varies from county to county, based on the different average rural land values for each county published by the National Agricultural Statistics Service. Base rates range from $15.70 per acre for some counties in New Mexico, Nevada and Arizona to as much as $313.88 per acre in Yuma County, Arizona and Riverside County California.

The “MW Capacity Fee” will be paid on an annual basis upon the start of generation of electricity from a facility, based on the MW-size of that facility. No “MW Capacity Fee” will be due until a facility is in operation. The MW capacity fee is calculated using a formula that includes an average electricity price of $0.06 per kilowatt hour and an average Federal bond yield of 5%. The Federal bond yield reflects the rate of return the public would expect for the use of Federal resources.

 The formula for the MW capacity fee is as follows:

• Photovoltaic: The MW capacity fee is $5,256 per year, calculated as (authorized capacity on public land in MWs) x (8,760 hours per year) x (20% capacity factor) x (5% Federal bond yield) x ($0.06 average price per kilowatt hour) x (1,000 kilowatts per MW) = $5,256 per year for each MW of capacity.
• Concentrated PV and concentrated solar power without storage: The MW capacity fee is $6,570 per year, calculated as (authorized capacity on public land in MWs) x (8,760 hours per year) x (25% capacity factor) x (5% Federal bond yield) x ($0.06 average price per kilowatt hour) x (1,000 kilowatts per MW) = $6,570 per year for each MW of capacity.
• Concentrated solar power with storage capacity of 3 hours or more: The MW capacity fee is $7,884 per year, calculated as(authorized capacity on public land in MWs) x (8,760 hours per year) x (30% capacity factor) x (5% Federal bond yield) x ($0.06 average price per kilowatt hour) x (1,000 kilowatts per MW) = $7,884 per year for each MW of capacity.

As an example, the MW capacity fee for a 400-MW photovoltaic solar energy right-of-way authorization would be $2,102,400 per year (400 MW x $5,256 per MW), implemented over a 5-year period after start of generation.

The MW capacity fee for a 400-MW concentrated PV or concentrated solar power right-of-way authorization without storage capacity would be $2,628,000 per year (400 MW x $6,570 per MW), implemented over a 5-year period after start of generation.

The MW capacity fee for a 400-MW concentrated solar power right-of-way authorization with storage capacity of 3 hours would be $3,153,600 per year (400 MW x $7,884 per MW), implemented over a 5-year period after start of generation.

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