Hidden Opportunities for Financial Returns. There’s nothing more brilliant than learning that you are sitting on a goldmine (when you actually thought it was a landmine). That 45 acres the county wants you, the land bank, to take on… Now you can turn it into a commercial solar “farm” and not only meet your mission of making land productive, you can get funding support to clean it up and then create renewable energy that local community assets can use – often for less than the local utility charges. It’s a win-win-win — and win.
Impact. As is often the case with a brownfield remediation, once it’s cleared the neighbors may not want another industrial company moving in; and, it’s not generally considered wise for housing (not always). Solar energy is an excellent choice for this type of land. It also helps move communities towards the energy transition needed for a brighter future for our children and grandchildren.
Understanding the Financial Opportunities.
So how does this work? Aside from the various funding pathways for the remediation process, (if needed) which we will help you navigate, there are new ways to generate ongoing income, depending on who you are.
Per-Acre Lease. First, we pay the landowner to lease the land, usually for 25 years. We pay an annual, per-acre price of between $2,000 and $4,000. Simple math reveals that a 30-acre parcel at $3,000/acre is $2,250,000 over the 25-year period. After the lease is up, we can negotiate for the solar equipment to become the owner’s property for continued use well into the next decade. So far so good!
Payment In Lieu Of Taxes – The PILOT Program. As a landowner, you must pay taxes. However, there is a program called the PILOT Program, which stands for Payment In Lieu Of Taxes, which reduces your taxes to $7,000/MW. As a general rule of thumb, a 1 MW solar farm requires 4-7 acres of land. (The key variable in that 4-7 acre range is how sunny it is in your area.) So, let’s take 5 acres as our unit for one MW; that means our 30-acre solar farm would pay the county $42,000 annually in taxes. For the landowner, that could be a significant reduction in taxes.
Investment Tax Credits (ITC). A landowner can receive up to 50% tax benefits if various criteria are met:
- Up to 30% tax credit is available if prevailing wage and apprenticeship requirements are met during the construction process.
- An additional 10% ITC if ‘materials content manufactured domestically’ is satisfied.
- An additional 10% ITC via the Inflation Reduction Act if the “Energy Community” requirement is met.
For more information about the investment tax credits for solar, please see https://www.energy.gov/eere/solar/federal-solar-tax-credits-businesses. The Solar Energy Technologies Office (SETO) accelerates the advancement and deployment of solar technology in support of an equitable transition to a decarbonized economy.
Questions? This may generate more questions. It’s often best to get on a call to get them answered and begin to develop scenarios and a timeline. We are happy to work with you to provide those answers. Email us at info@olbdc.com and let’s talk.