How Solar Subsidies Might Backfire in Accomack

Does mixing sheep with solar panels make a solar "farm" an agricultural use?
Does mixing sheep with solar panels make a solar “farm” an agricultural use?

by James A. Bacon

Back in April, John VanKesteren told the Accomack County Board of Supervisors that he and his family wanted to build an 80-megawatt solar facility on their family farm. The 200-acre site they had selected was an ideal location: less than 1,000 yards from a power station. The family, organizing under the name of SunTec Solar Solutions, had aspirations of landing a $100 million solar energy project.

One might think that the community would embrace a project that would create wealth for local landowners, generate a slew of construction jobs, and increase the tax base of the economically depressed Eastern Shore county. But local planners and supervisors weren’t entirely pleased. They saw a solar facility conflicting with the agriculturally zoned use of the land.

“There’s a contradiction between agriculture and solar,” said Rich Morrison, the county’s planning director, in a report to the Board of Supervisors in September, according to Delmarva Now. “It’s basically pick one. You’re either picking solar or you’re picking ag. … They haven’t found a place to coexist.”

Last month the Board approved a planning commission request to start preparing an ordinance amendment that would remove utility-scale solar and wind farms from the county’s Agricultural Zoning District, severely limiting the potential to develop renewable power sources in the county.

One of the reasons cited for the amendment was a 2016 state law that provides tax exemptions on real and personal property, including equipment, for solar farms up to 20 megawatts in size. While the measure improves the economics of solar from the developer’s perspective, it undermines the economics of taxation from a county government perspective.

“It’s a different game with the ruling of the state and not being able to tax that property,” said Board Chairman Ron S. Wolff in the September board meeting. “That would’ve made a big difference in how I would’ve looked at it.”

Land-use conflicts may become more frequent in Virginia as the state energy mix shifts increasingly toward utility-scale solar, the most economically efficient way of producing solar electricity. Solar panels will consume thousands of acres of land just to provide the modest amount of electricity contemplated under the state’s current energy plan — and far more if Virginia were to meet the ambitious goals of environmentalists who want to clamp a lid on gas- and nuclear-fueled energy. While it may be theoretically possible to retrofit solar panels on building roofs, ease of construction favors utility-scale construction of long banks of solar panels on inexpensive farmland .

The problem is that in rural counties like Accomack with abundant farmland, that land is zoned agricultural, and local governments are the ones who define whether “agricultural” uses include solar. If solar facilities are mostly tax-exempt, local governments could perceive solar farms a revenue loser, not a winner.

The bill (HB1305) signed by the governor “provides a sales and use tax exemption for machinery, tools, and equipment of a public service corporation used to generate energy derived from sunlight or wind. The bill also … exempts from such [real and personal] property taxes 80% of the assessed value of such equipment used in projects equaling more than one megawatt.”

Dennis Nordstrom, a SunTec shareholder, argued that the two uses can coexist. Only 174 acres of the 200-acre site actually would be developed, and solar planels would occupy only 30% to 40% of available space. SunTec proposes partnering with Shooting Point Oyster Company to bring a flock of Hog Island sheep to graze among the panels, similar to what solar farms are doing in North Carolina. That way, the solar farm doubles as a sheep farm and preserves the agricultural use.

Nordstrom also says that the solar farm would yield higher tax revenue, even taking the tax exemption into account. Writes Delvmarva Now:

Based on recent real property tax bills for SunTec’s proposed site, the county received about $5,500 from the land annually, [Nordstrom] said. Switching to a mixed-use solar farm would bump that number to around $26,000 per year, based on the same value per acre the county assessor’s office gave to Accomack’s other solar project, in Oak Hall Nordstrom said.

“The county was a little bit upset, and I can understand this, because they (the state) basically took over their power of taxation,” he said.

However, as Nordstrom sees it, Accomack could garner an additional $15,000 annually from a mixed-use solar and sheep farm, versus a traditional agricultural site — around $375,000 over the solar farm’s 25-year lifespan.

Bacon’s bottom line: Clearly, tax subsidies had consequences that solar advocates did not anticipate. If Accomack’s Board of Supervisors ends up removing solar from the list of agricultural uses, solar energy in Virginia will be dealt a significant blow. If other counties adopt Accomack’s logic, the result could be disastrous. Assuming Accomack moves ahead as planned, the General Assembly should consider amending the legislation again. Gaining access to agriculturally zoned lands is more important to advancing the cause of solar in Virginia than the exemptions on sales and property taxes.

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7 responses to “How Solar Subsidies Might Backfire in Accomack”

  1. Larrytheg Avatar

    hard to figure the issue here since Accomac does provide a much-reduced tax category for AG and Forestal land already.

    Given the fact that such land requires little in the way of county-provided services in the first place – you’d think they’d be all in favor of things that would benefit those who farm. Is this any different than a farmer getting a lease for a cell tower or an easement for a powerline or pipeline?

    I think you could even classify the sheep – as what is used to keep the vegetation down instead of having to pay to have it removed – manually by humans.

    What’s the real problem here that requires penalizing farmers financially?

  2. I agree with you, these are unintended consequences. But it seems to me the change in the law, which does not take effect until next year, was pretty carefully written to balance the tax impacts. As I read it (you provided the link), the bill lowers the exemption from local taxes from 100% to 80% for solar installations over 1 megwatt in total output — in effect, that allows 100% exemption to continue only for homeowner-sized “rooftop” units, but gives the County a taxable 1/5 share of the much higher-than-agricultural valuation of the land and the equipment used for bigger solar installations. Thus Nordstrom’s numbers make sense: the taxes collected by the County will go way up — though not as much as if 100% of the equipment and increased land valuation were taxable (in which case, few larger solar installations would get built). If I’m reading this right, the Accomack Board is not losing agricultural tax revenue to solar but just being greedy, and/or, trying to kill the solar generation business locally because they don’t like it aesthetically or philosophically somehow.

  3. That should read, ” change in the State law.”

  4. As far as public policy I would want to benchmark some other states.

    As far as construction policy, I would advise that some materials of construction containing copper/brass/bronze will crack and fail upon exposure to ammonia (from animals).

  5. baconius Avatar

    Acbar, thanks for your observations. I have edited the original post to avoid suggesting that the authors of HB 1305 were the ones responsible for the adverse effects of the solar subsidy.

  6. Larrytheg Avatar

    Here’s the Accomack County – Land Use Assessment Program

    The Land Use Assessment Program is administered by our department. This is an assessment program that is permitted by state law and ordinance for Accomack County by the Board of Supervisors. It allows for the special assessment of property used for agricultural, forest, and horticultural purposes.

    The General Assembly has held that the preservation of special use land is vital to the public interest. Taxation on the basis of use-value is an attempt to help preserve rural lands in the face of rapid intensive-use development, to help preserve natural resources, and to help provide for the orderly development of real estate.

    Use-value is the value that a tract of real estate has solely in the use being made of it without regard for any other possible contribution of value such as location or alternative use.”

    what’s not clear is how much tax reduction is given nor how much land has been allowed to be reduced in taxes.

    but the fact that they willingly reduce taxes on other ag and forestal land – is in seemingly conflict with their statement about solar/wind:

    ” The problem is that in rural counties like Accomack with abundant farmland, that land is zoned agricultural, and local governments are the ones who define whether “agricultural” uses include solar. If solar facilities are mostly tax-exempt, local governments could perceive solar farms a revenue loser, not a winner.”

    so they willingly reduce taxes on land right now…

  7. kvdavis2 Avatar

    I worked with Secure Futures on this M&T tax break, and it was definitely intended for DG (typically well under 1 MW, per meter anyway). Can someone clarify if Accomack was incorrect in thisking an 80 MW solar farm would be exempt from M&T with a 20 MW cap, much less the 1 MW cap?

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