Nevada lawmakers Harry Reid and Dean Heller this month introduced the American Solar Energy Pilot Leasing Act of 2010 in their respective houses. The legislation would designate two valleys in Nevada as solar pilot project areas where land leases would be auctioned to the highest-bidding solar developers. The legislation calls for the state and county to each get a quarter of the revenue from lease and royalty income from development on the land.
Reid said he wants to make this system the model for all leases of federal land for solar, but whether that’s the way to go is up for debate. Some in the solar industry fear they could lose their spot in line for land they’ve been doing studies on and waiting to lease for several years. And energy experts say extending the system to all land could lead to a backlog of parcels waiting to be leased, as happened when geothermal leases were first auctioned in 2007.
Some companies have been working on applications for rights of way to develop solar projects on parcels of BLM land across the southwest for several years. There are 305,000 acres under application in Nevada, according to BLM. The companies applying for that land have invested millions of dollars in environmental and resource surveys needed to support the companies’ development plans as they request permits to build and operate solar power plants. These rights-of-way leases are granted on a first-come, first-served basis.
Some in the solar industry oppose extending the auction process to all BLM land because they say it will slow down the very system it intends to speed up. There are about 9.6 million acres of prime solar land (with excellent solar potential within 25 miles of an energy corridor) in Nevada, according to BLM records.
The other problem is that it would take years for the BLM to complete environmental studies on all the parcels solar developers want in Nevada. The draft environmental impact statement for the solar energy study zones, for example, was started a year ago and isn’t expected to be completed for a few months. The final decision on whether all or parts of these zones should be made available for solar development isn’t expected until next year.
In the meantime, solar developers are waiting for the land to come to auction. But winning the auction and getting permission to build the plant are two very different things. The solar developers with the winning bids would still have to submit follow-up environmental assessments to show what impacts their projects would have.
Under the new plan, solar developers would bid at auction for leases on parcels in designated solar development zones and would be expected to pay royalties on any income they generate there, although the legislation also allows for deferral or reduction of royalties for the first five years of the lease. The land is considered more valuable because the BLM will have completed most of the requisite resource analyses and environmental impact studies.
It’s not just the money that would go to the state and the county that makes this important. Fifteen percent of the revenue from leases, fees and royalties would go to BLM’s renewable energy permit processing centers in Nevada, and 35 percent would be fed into a fund to mitigate the impacts of renewable energy development on public land in the state and county.
The system is modeled after that used for geothermal energy and mineral land leases on public land across the nation. With the geothermal lease auctions, half of lease, fee and royalty revenues go to home states and a quarter of the revenues to home counties, with geothermal developers responsible for mitigation. Since the law was implemented in 2007, Nevada counties have taken in nearly $17.8 million and the state has gotten about $35.6 million.
Currently solar developers cannot simply sign a lease for approved BLM land, but instead must undergo extensive application and permitting processes to get a lease through the existing rights-of-way process. This process is designed for less exclusive land uses such as livestock grazing or laying pipes or transmission lines in slim corridors, but has been adapted by the BLM to solar and wind projects because the agency lacks any other congressionally mandated process.