The federal government is the nation’s biggest landlord, and much of that public land is in deserts of the Southwest prized by solar plant builders. The government charges fees for using public land for commercial enterprises, but, as reports the New York Times, some claim the nature of the fees is a remnant of 20th century thought that’s discouraging innovation.
The Bureau of Land Management, the governmental department responsible for this sort of thing, charges two fees: rent, for using the land, and a “megawatt capacity fee,” that’s essentially a charge based on output.
Representatives of the solar industry claim both those fees are unfair in some way. The rental fees, say Monique Hanis, a spokeswoman for the Solar Energy Industries Association, “are in many cases two times higher than market rates for private land. The B.L.M. must collect ‘fair market value’ from developers, but this seems to go beyond that threshold.”
But it’s the megawatt capacity fee that’s arousing the real controversy. That fee scales up with production and varies based on the type of technology being used. So photovoltaic power plants, which use solar panels like you or I could put on our roofs, are charged $5,256 per megawatt. But solar thermal plants, which use mirrors to focus the sun for greater efficiency, are charged $6,570 per megawatt.
It gets even more expensive if the plant actually stores the energy, which is an essential feature if solar power is to move forward. When the sun isn’t shining, you need to use stored excess energy; without storage, solar will never be a true alternative. And the government charges $7,884 to any plant that stores energy.
Critics of the fees say the government is “using a leasing system developed for the 20th century to deal with 21st-century technology.” They say the fees unnecessarily penalize more efficient technologies, which may discourage development and innovation.
Representatives from the B.L.M. say “the agency was following a mandated formula that takes into account the efficiency of a technology.” The greater efficiency from certain technologies can also, notes the representative, have undue repercussions on the environment, including increased water usage.
So how much damage are these fees actually doing? Maybe not as much as you think. While a solar analyst estimates the fees at “as much as 3%” of pre-tax cash flow, when compared to the exorbitant cost of building a solar power plant in the first place (into the billions of dollars), perhaps it’s not quite that damaging.
But certainly there’s an argument to be made that the government should be rewarding greater efficiency in this particular industry. Sure, it’s not how things have always been done–but maybe that’s a reason in itself.
