Tax Break Powers Opposition To Huge Solar Farm

If the East Coast’s largest solar generation facility, proposed for Spotsylvania County, is rejected by its Board of Supervisors this week, one of the reasons will be the major tax advantages sought by that industry and granted by the General Assembly.

The tax exemption is at the heart of the final argument put forward by one of the opponents in Sunday’s Fredericksburg Free Lance-Star:

“Put plainly: Future tax revenues are going down, not up, if the project goes forward. A current estimate is that this $600 million project will only generate some $8 million over its lifetime and, as shown below, our current incremental expenses greatly exceed that,” wrote Alfred King, who lives in a neighboring subdivision but carefully avoids any not-in-my-backyard rhetoric.  

Major Utah-based solar developer sPower has proposed three installations which total 6,350 acres, 3,500 acres of which will contain the 1.8 million panels.  The panels will cover an area one-quarter the size of Manhattan.  The county Zoning Commission supported the special use permit for only one of the smaller sections, covering 245 acres.  The entire project, if built, will produce 650 megawatts of power at peak production, and purchase agreements from Microsoft, Apple and the University of Richmond are financing it.

If Virginia is to achieve the level of solar dependence many desire, it won’t be the only such mega-project needed.

Opposition is fierce and got a national airing February 15 by conservative radio icon Sean Hannity, branding it as Governor Ralph Northam’s own Green New Deal.  Virginia conservative activists are taking up the theme.  The fact this is a private land owner putting land to the use of their choice, normally a sacred right to conservatives, hasn’t cooled their ardor.

The company has paid for a poll that found county-wide support and hired Richmond economist Fletcher Mangum to make the economic case.  It shows more economic benefit than opponents will admit, and substantially more than leaving the land as the source of occasional timber cuts.  But the impact of the special tax treatment is plain.

Mangum puts his estimate of the direct county revenue over 40 years at $18 million (current dollars), and then adjusts it for another issue important in these discussions, the impact of all the new property value on the county’s standing in the state’s school funding formula.  Using the present values and formulas, Mangum shows a potential $5 million in lost county school revenue from that.

That wrinkle has also come up before here on Bacon’s Rebellion.  The issue of the property tax exemption and the school funding composite index are linked.  The problem described by Bacon two years ago seems to have been fixed and the property value used by Mangum to judge impact on the funding formula is the same discounted value used to calculate property taxes.

Now to that.  This project qualifies for an 80 percent discount on its local property tax.  The land is taxed at full value, but not the equipment, which a few years ago was lumped into a state statute that originally exempted pollution control equipment for manufacturers.  Mangum assumes a taxable value of $553 million for the facility, which then immediately gets discounted to $86 million by the exemption and and other State Corporation Commission rules.

That’s another point many don’t grasp.  The assessment value for solar generation equipment is set by the SCC, not the locality.  That is the case with all utilities and public service corporations, who find it highly beneficial to escape the jungle of local variations and assessors they otherwise would face.  The SCC uses a depreciation schedule that will reduce that $86 million taxable value down to less than $10 million well before the end of the facility’s useful life.

Even with the $5 million potential impact on state school allotments, the county appears to come out $13 million ahead under Mangum’s figures. There is some spinoff from the 20 long-term jobs, which will pay very well.  That is higher than the number opponents are throwing around, but over 40 years that is at best a revenue trickle for the local government.

Working backwards from Mangum’s figures, absent the exemption the county might collect $40-50 million more over the decades.  Tax it the same as manufacturing equipment, often with no depreciation, and it might be even more. And any taxes the county collects will ultimately be paid by the energy users.  The sun would shine as brightly somewhere else and the project would go there instead.  

The state-mandated exemption sunsets for projects not under construction by 2024.   A 2019 bill seeking to bring that forward to 2020 was defeated.  As I read it, more recent projects above 150 megawatts of power production do not get an automatic 80 percent exemption, but those below 20 megawatts get 100 percent exemption.  It’s a source of irritation to many rural local governments.

Localities also pushed this session for tighter financial protection on the back end, with bonding up front to ensure proper retirement of the plants and restoration of the property when the time comes.  They got legislation laying some groundwork for that, now on the Governor’s desk, but it is far weaker than this failed version seeking a bond of $10,000 per acre.   Translated to a project comparable to sPower’s, that’s $35 million or more in bonding, a serious cost.

The push back from local governments is probably just starting,

“Solar developers know this clock is ticking and are rushing to act accordingly,” a supervisor in another county told me in an email unrelated to this project.  “Local Boards of Supervisors are faced with thousands of acres of farm and forestland now transformed into a use we see as quasi-industrial with no meaningful revenue attached.” 

A bit more from that email from the county supervisor, who was unclear on my using this, so no name:  “I have never had ONE constituent ask me to approve a solar project.  I have had many ask me to keep the county from being covered in them.  It’s a philosophical/political mindset that an increasingly blue Commonwealth fails to grasp.  Many of my constituents are perfectly content with dependable, affordable power generated by nuclear, coal, and natural gas. 

“The incongruity and irony that thousands of acres of trees will be lost to solar panels isn’t lost on them.  The fact that an environmentalist will chain themselves to a tree to keep it out of a sawmill but smile joyfully while great swaths are denuded – much of it in the Bay watershed to boot – to pave the way for panels is more than a little hypocritical.”

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18 responses to “Tax Break Powers Opposition To Huge Solar Farm

  1. Make no mistake – it’s NIMBY and willful ignorance on steroids! It’s a gated community with high dollar homes and unlike “poor” communities they DO have the resources to mount effective opposition and ARE!

    Keep in mind the land in question was already in “land use” at a fraction of the normal real estate tax rate AND it has already been clear cut/timbered AND like most rural land, it CAN have sewage sludge spread on it if the owners so decided.

    The opposition is trafficking in propaganda and outright lies about just about anything and everything they can claim… For instance, claiming that it would drain the local creeks and ground water to “wash” the panels… that huge wildfires could break out… that the “noise” from installing the posts to support the panels would “devastate” neighbors… that the solar would increase the price of electricity … on and on … just outrageous stuff.

    One wonders how they would feel if someone put a 1000 head of cattle or pigs on that land … or developed it into several thousands homes that would put tremendous strain on roads and schools, etc.

    Solar is no panacea… and yes , right now… it’s got credits and big corporations want green “cred” while relying on the GRID itself for 24/7 reliability but solar is only going to grow – if not in Spotsylvania – then other places – who will want it.

    But these folks should be ashamed of themselves – most of them are very well off financially – many houses in that gated community cost several hundred thousands dollars – some more than a million – and so one presumes they got their money from good old capitalism…

  2. Steve, thanks for the best reporting I’ve yet seen on the mega Spotsylvania solar farm project.

    There is an interesting political irony here. The urban progressives are the ones pushing hardest for solar power. But the vast solar farms needed to make a dent in Virginia’s energy mix can be located, as a practical matter, only in rural areas where the population doesn’t give a hoot about global warming or green energy. The urban progressives (and associated special interests) carve out a tax break for solar… diminishing the tax base of rural conservatives. I can see how things could get volatile if the solar-farm issue gets entangled with all the other culture war issues that set red against blue.

    I have poo-pooed the concerns raised about solar farms, describing rural foes with NIMBYs. I still feel that way. But thanks to your article I think I get a better feel of where the animus comes from.

    • I do wonder if the tax break were not so generous, and did not give opponents that additional club to use, the NIMBY issue would then take the forefront and be easier to counter. The company’s promotional web page does have a good map which illustrates this is quite rural. I think the 80 percent break for the giant projects will no longer be automatic, but that will just provide more incentive to break them up and spread them out. Some liberals love to whine about tax preferences until it is a preference for something they desire…..

  3. Some observations and questions: First, most solar developers of smaller projects don’t go for forested land, which has to be cleared (not just of trees but also stumps). Maybe they’ll clear a few parcels of woods separating open land, but it’s a negative. Maybe not a huge negative, but a substantial one — and I’d suspect the clear-cutting is being exaggerated for political effect, as Larry confirms is the case to his knowledge.

    Second: the good news about solar generation is that it is readily reversible. The cost of removal of all those collectors is not that great and the land underneath is not poisoned, but easily returned to agricultural use, or for residential or schools etc. I don’t know what level of bonding for removal is cost justified, although the basic idea of requiring such a bond to avoid abandonment-in-place by a bankrupt corporation makes sense. I’d be curious what useful lifetime the SCC uses to figure the depreciated value of the generation assets, as compared, say, to the typical 40 to 50 years for the big electric steam plants. The plant owners want their initial investment amortized as quickly as possible and the declining tax assessment implications you outline only add incentive to that.

    Third: Larry raises a good point: how is this land already being used, and how is that use being taxed? Maybe the SCC’s valuation net of exemptions comes out ahead of what Spotsylvania is currently netting from this land based on the special tax deals available out there for other “desirable” uses. And where does solar generation’s use of open land fit in under Virginia’s conservation set-asides — can such conservation land be used for solar yet taxed as “conserved”?

    Fourth: One can imagine a day when a local jurisdiction favors solar generation on its open agricultural land not only because it helps pay the bills for struggling farmers but also because it preserves the open space vis-a-sis suburban sprawl with all its implications for roads and schools and water/sewer infrastructure, while nevertheless providing a contribution to the tax base. I’m not against the SCC’s formula recognizing (correctly I believe) the depreciated value of utility assets; but let’s hope the pollution control equipment exemption is allowed to expire so the locality will view the implicit future tax revenue tradeoff against residential development favorably. In fact I’d like to see it expire earlier, and without any grandfathering for solar units already built.

    Fifth: that exemption for solar units of less that 20 megawatts is way too large. Consider that the proposed development is 650 mw from 3000 acres of collectors; thus 20 mw requires around 100 acres. If you are trying to encourage solar distributed generation (aka “rooftop solar”) an exemption from local taxation for 1 mw would be more than ample. I expect this 20 mw exemption was overkill pushed by the solar equipment industry and by larger potential solar customers like the US Navy — it is not supported by current energy or land use policy! On the contrary, if the goal is to encourage solar development in rural areas, you want to have the backing of the local authorities, and that means any larger solar development should make a reasonable contribution to the local tax base.

  4. Just a comment on behalf of local governments: It certainly was thoughtful of the General Assembly to give the solar industry, which benefits the whole state, a tax break on the locality’s dime.

  5. There is so much land that is not used these days. Farming as a means to make a living is pretty much gone in most rural counties like Spotsylvania which probably has 5 true working farms left.

    The land in question for the solar has been already timbered.

    take a look:

    ?ve=1&tl=1

    this is what it looks like right now – today – that’s Fawn Lake, the gated community in the distance. The owners timbered it and now want to sell it to S-power for solar but the opponents would have you believe that it’s forested land that would be cleared.

    The question is – what exactly do folks think this land should be used for – now – that it’s already been timbered? You don’t get that from the opponents.

    There is a LOT of land in Spotsylvania that is not used for anything other than open fields that used to be farmed but no longer – and a lot of tracts of timber that have been harvested. Solar is a perfect use for that land.

    If this project gets turned down – S-Power will go to another county that will want it.

    The Chamber of Commerce wrote an editorial in the Free Lance Star pointing out that many companies now want to buy solar -and they make a decision where they will locate based on the availability of solar . The counties that turn it down are sending a message to tech companies – “go away”.

  6. What was done in the above photograph should be a crime in Virginia.

    • Nah, trees grow back. Hence the word “sustainable.” Replanted it would grow back quickly, and that is very much an option I’m sure the landowners considered. But Larry has a point if indeed that is where the panels are planned.

      • Logging this way is still an abomination. And I suspect that this largest panel farm in the nation, which I consider an abomination as well, may well be related to the solar plan. In any case, I consider this 3500 acre solar farm (totaling 6350 acres) a desecration of nature, especially as its found in Virginia, and particularly since these solar farms are so terrible inefficient. A nuke plant likely could generate far more than 20 times (perhaps 70 times) the usable power (all reliable 24/7) from 150 acres (likely far less with modern technology), and obviate the need for renewable power altogether, while renewable needs fossil fuel plants in massive amounts for the foreseeable future just to survive. The opposition to all the wastage and pillage of nature, has just started in Virginia. Wait and see, once Virginians catch on to the scam.

  7. re: ” which I consider an abomination as well, may well be related to the solar plan. ”

    Nope. You’ve been living in the city too long! Tracts of land like this are timbered all the time! They are essentially “crops” that take decades to “ripen” but when they do – they get cut and provide an income – the property owners “401K” if you will, the trees go to make products for you and me – and the land is then used again – either to replant trees or to turn into residential subdivisions – like Fawn Lake was or to spread sewage sludge or.. in this case solar panels.

    But in Spotsylvania, which is an exurban suburb to Washington – more often than not – the property owner will timber the trees then sell it to a developer who then turns it into a subdivision of “affordable housing” for commuters whose jobs are in NoVa ….

    The wood becomes hardwood flooring, plywood, 2x4s, roofing, etc.

    If you have wood products like flooring in your house – this is where it comes from and when they cut – this is what it looks like until the land is replanted or converted to other uses.

  8. re: ” A nuke plant likely could generate far more than 20 times (perhaps 70 times) the usable power (all reliable 24/7) from 150 acres (likely far less with modern technology)”

    FYI –
    North Anna Nuclear Generating Station. The North Anna Nuclear Generating Station is a nuclear power plant on a 1,075-acre (435 ha) site in Louisa County, Virginia, in the Mid-Atlantic United States.

    and this does not include where you have to put the waste and in both cases the land is forever no longer useable for anything else.

    Further – Nukes are base load. What that means is that they either run flat out all the time or they are off.

    Things that run flat out – cannot reduce when demand reduces. That’s why they have tried to build pump-storage reservoirs so that at night when demand is low – they can use the Nukes to pump the water back up to the top reservoir.

    There are very few sites that are geographically suitable for that – not to mention thousands more acres of land removed from other uses.

    Gas plants also use a lot of land – when you take into account the pipelines right-of-ways needed to supply them.

    No power generation is without impacts – gas, nukes, coal – and solar.
    Take a look at West Virginia and SW Virginia if you want to see the impacts of coal on “forests”.

    No power source of electricity is without impacts. It’s just that those impacts are usually far away from where people use the electricity but make no mistake – 3000 acres cleared for solar is a gnat on a dogs butt compared to what happens with coal and gas…

  9. trees are clearcut and permanently removed for gas pipeline right of ways:

  10. There is absolutely no comparison between slicing through a forest with right of way to lay a pipe and replant with natural cover, to the clear cutting down an entire forest only to cover its ground with a 1.8 million metal solar panels for “40” years at the least.

  11. Steve –

    Below are the downsides, according to Wikipedia. I read somewhere that Virginia plans enough solar by 2022 to cover 33 square miles. I will try to find that statistic and add it into another comment, correcting above.

    “Environmental groups criticize clear-cutting as destructive to water, soil, wildlife, and atmosphere, and recommend the use of sustainable alternatives.[12] Clear-cutting has a very big impact on the water cycle. Trees hold water and topsoil. Clear-cutting in forests removes the trees which would otherwise have been transpiring large volumes of water and also physically damages the grasses, mosses, lichens, and ferns populating the understorey. All this bio-mass normally retains water during rainfall. Removal or damage of the biota reduces the local capacity to retain water, which can exacerbate flooding and lead to increased leaching of nutrients from the soil. The maximum nutrient loss occurs around year two, and returns to pre-clearcutting levels by year four.[13]

    Clear-cutting also prevents trees from shading riverbanks, which raises the temperature of riverbanks and rivers, contributing to the extinction of some fish and amphibian species.[where?] Because the trees no longer hold down the soil, riverbanks increasingly erode as sediment into the water, creating excess nutrients which exacerbate the changes in the river and create problems miles away, in the sea.[12] All of the extra sediment and nutrients that leach into the streams cause the acidity of the stream to increase, which can kill marine life if the increase is great enough.[13] The nutrient content of the soil was found to return to five percent of pre-clearcutting levels after 64 years, which demonstrates how clearcutting affects the environment for many years.[14]

    Clearcutting can destroy an area’s ecological integrity in a number of ways, including: the destruction of buffer zones which reduce the severity of flooding by absorbing and holding water; the immediate removal of forest canopy, which destroys the habitat for many rainforest-dependent insects and bacteria; the removal of forest carbon sinks, leading to global warming through the increased human-induced and natural carbon dioxide build-up in the atmosphere; the elimination of fish and wildlife species due to soil erosion and habitat loss; the removal of underground worms, fungi and bacteria that condition soil and protect plants growing in it from disease; the loss of small-scale economic opportunities, such as fruit-picking, sap extraction, and rubber tapping; and the destruction of aesthetic values and recreational opportunities.[15]

    Environmental groups criticize clear-cutting as destructive to water, soil, wildlife, and atmosphere, and recommend the use of sustainable alternatives.[12] Clear-cutting has a very big impact on the water cycle. Trees hold water and topsoil. Clear-cutting in forests removes the trees which would otherwise have been transpiring large volumes of water and also physically damages the grasses, mosses, lichens, and ferns populating the understorey. All this bio-mass normally retains water during rainfall. Removal or damage of the biota reduces the local capacity to retain water, which can exacerbate flooding and lead to increased leaching of nutrients from the soil. The maximum nutrient loss occurs around year two, and returns to pre-clearcutting levels by year four.[13]

    Clear-cutting also prevents trees from shading riverbanks, which raises the temperature of riverbanks and rivers, contributing to the extinction of some fish and amphibian species.[where?] Because the trees no longer hold down the soil, riverbanks increasingly erode as sediment into the water, creating excess nutrients which exacerbate the changes in the river and create problems miles away, in the sea.[12] All of the extra sediment and nutrients that leach into the streams cause the acidity of the stream to increase, which can kill marine life if the increase is great enough.[13] The nutrient content of the soil was found to return to five percent of pre-clearcutting levels after 64 years, which demonstrates how clearcutting affects the environment for many years.[14]

    Clearcutting can destroy an area’s ecological integrity in a number of ways, including: the destruction of buffer zones which reduce the severity of flooding by absorbing and holding water; the immediate removal of forest canopy, which destroys the habitat for many rainforest-dependent insects and bacteria; the removal of forest carbon sinks, leading to global warming through the increased human-induced and natural carbon dioxide build-up in the atmosphere; the elimination of fish and wildlife species due to soil erosion and habitat loss; the removal of underground worms, fungi and bacteria that condition soil and protect plants growing in it from disease; the loss of small-scale economic opportunities, such as fruit-picking, sap extraction, and rubber tapping; and the destruction of aesthetic values and recreational opportunities.[15]

    Negative impacts

    Clearcutting can have major negative impacts, both for humans and local flora and fauna.[16] A study from the University of Oregon found that in certain zones, areas that were clear cut had nearly three times the amount of erosion due to slides. When the roads required by the clearcutting were factored in, the increase in slide activity appeared to be about 5 times greater compared to nearby forested areas. The roads built for clearcutting interrupt normal surface drainage because the roads are not as permeable as the normal ground cover. The roads also change subsurface water movement due to the redistribution of soil and rock.[17]

    Clearcutting may lead to increased stream flow during storms, loss of habitat and species diversity, opportunities for invasive and weedy species, and negative impacts on scenery,[18] as well as a decrease in property values; diminished recreation, hunting, and fishing opportunities.[19] Clearcutting decreases the occurrence of natural disturbances like forest fires and natural uprooting. Over time, this can deplete the local seed bank.[20] An example of what clearcutting did in Ontario before 1900 can be found in Edmund Zavitz[not in citation given].

    In temperate and boreal climates, clearcutting can have an effect on the depth of snow, which is usually greater in a clearcut area than in the forest, due to a lack of interception and evapotranspiration. This results in less soil frost, which in combination with higher levels of direct sunlight results in snowmelt occurring earlier in the spring and earlier peak runoff.[21]

    The world’s rain forests could completely vanish in a hundred years at the current rate of deforestation. Between June 2000 and June 2008 more than 150 000 square kilometers of rain forest were cleared in the Brazilian Amazon. Huge areas of forest have already been lost. For example, only eight to fourteen percent of the Atlantic Forest in South America now remains.[22][23] While deforestation rates have slowed since 2004, forest loss is expected to continue for the foreseeable future.[24] Farmers slash and burn large parcels of forest every year to create grazing and crop lands, but the forest’s nutrient-poor soil often renders the land ill-suited for agriculture, and within a year or two, the farmers move on.[25]

    There are also upsides to clear cutting, but don’t we need forests and healthy lands on our depleted earth now more than ever?

  12. geeze… “clear-cutting” is what Northern Virginia did when it grew. they cut the trees down and replaced them with roads and buildings!

    We’ve clear-cut a crap load of Stafford and Spotsylvania to provide houses for folks commuting to NoVa!!!

    “clear-cutting” is what farmers have done so they have fields to grow crops!

    clear-cutting is what they do to provide roads and power-line rights of way…

    All those new homes in Loudoun are on land that was ‘clear-cut”… as well as Dulles Airport!

    and just to remind – all that electricity you and I use – a good bit of it came from places like this that have been “clear cut” and trees will NEVER grow fully on these places and they will continue to drain acidic runoff into the streams which are devoid of critters and fish because of the acid.

    I’m not advocating any of it -but pointing out that many of us are oblivious to this even as we “decry” it for other things that we do.

  13. Pingback: Bacon Bits: I-81 Taxes, VCCS Shrinkage, Solar - Bacon's Rebellion

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