EXCLUSIVE: Biden administration aims to cut costs for solar, wind
projects on public land
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[August 31, 2021]
By Nichola Groom and Valerie Volcovici
LOS ANGELES/
WASHINGTON (Reuters) - The
Biden administration plans to make federal lands cheaper to access for
solar and wind power developers after the clean power industry argued in
a lobbying push this year that lease rates and fees are too high to draw
investment and could torpedo the president's climate change agenda.
Washington’s decision to review the federal land policy for renewable
power projects is part of a broader effort by the government of
President Joe Biden to fight global warming by boosting clean energy
development and discouraging drilling and coal mining.
“We recognize the world has changed since the last time we looked at
this and updates need to be made,” Janea Scott, senior counselor to the
U.S. Interior Department’s assistant secretary for land and minerals,
told Reuters.
She said the administration is studying several reforms to make federal
lands easier for solar and wind companies to develop, but did not give
specifics.
The push for easier access to vast federal lands also underscores the
renewable energy industry’s voracious need for new acreage: Biden has a
goal to decarbonize the power sector by 2035, a target that would
require an area bigger than the Netherlands for the solar industry
alone, according to research firm Rystad Energy.
At issue is a rental rate and fee scheme for federal solar and wind
leases designed to keep rates in line with nearby agricultural land
values.
Under that policy, implemented by the administration of President Barack
Obama in 2016, some major solar projects pay $971 per acre per year in
rent, along with over $2,000 annually per megawatt of power capacity.
For a utility-scale project covering 3,000 acres and producing 250
megawatts of power, that is a roughly $3.5 million tab each year.
Wind project rents are generally lower, but the capacity fee is higher
at $3,800, according to a federal fee schedule.
The renewable energy industry argues the charges imposed by the Interior
Department are out of sync with private land rents, which can be below
$100 per acre, and do not come with fees for power produced.
They are also higher than federal rents for oil and gas drilling leases,
which run at $1.50 or $2 per year per acre before being replaced by a
12.5% production royalty once petroleum starts to flow.
"Until these overly burdensome costs are resolved, our nation will
likely miss out on living up to its potential to deploy homegrown clean
energy projects on our public lands — and the jobs and economic
development that come with it," said Gene Grace, general counsel for
clean energy trade group American Clean Power Association.
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Solar panels are seen at the Desert Stateline project near
Nipton, California, U.S. August 16, 2021. REUTERS/Bridget
Bennett
The renewable energy industry has historically relied
on private acreage to site large projects. But big tracts of
unbroken private land are becoming scarce, making federal lands
among the best options for future expansion.
To date, the Interior Department has permitted less than 10 GW of
solar and wind power on its more than 245 million acres of federal
lands, a third of what the two industries were forecast to install
nationwide just this year, according to the Energy Information
Administration.
The solar industry began lobbying on the issue in April, when the
Large Scale Solar Association, a coalition of some of the nation’s
top solar developers - including NextEra Energy, Southern Company
and EDF Renewables - filed a petition with Interior’s Bureau of Land
Management asking for lower rents on utility-scale projects in the
nation’s blistering deserts.
A spokesperson for the group said the industry initially focused on
California because it is home to some of the most promising solar
acreage and because land around major urban areas like Los Angeles
had inflated assessments for entire counties, even on desert acreage
not suitable for agriculture.
Officials at NextEra, Southern, and EDF did not comment when
contacted by Reuters.
In June, the Bureau lowered rents in three California counties. But
solar representatives called the measure insufficient, arguing the
discounts were too small and that the megawatt capacity fee remained
in place.
Attorneys for both the solar companies and BLM have discussed the
issue in phone calls since, and further talks are scheduled for
September, according to Peter Weiner, the attorney representing the
solar group.
"We know that the new folks at BLM have had a lot on their plates,"
Weiner said. "We truly appreciate their consideration."
(Reporting by Nichola Groom; Editing by Dan Grebler)
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