Interior Department to Cut Solar and Wind Fees by 80%

The federal government is, yet again, putting its thumb on the scale in favor of renewables. This month, the Interior Department proposed to slash solar and wind developer fees by 80% on federal public lands managed by the Bureau of Land Management (BLM).

The Federal Land Policy and Management Act of 1976 clearly states right-of-way holders are required to “pay in advance the fair market value” of leased public lands. But the Energy Act of 2020 made an exception so that wind and solar projects do not have to pay that much for the public lands they rent. Instead, the Act gives BLM sole responsibility to come to a price considering nebulous factors, such as “economic hardship” that a project might suffer, and whether a reduced fee is needed to “promote the greatest use of wind and solar energy resources.”

Wind and solar projects pay two annual fees to BLM to use public lands: acreage fees and capacity fees, which are due before the lease is issued and when energy generation begins, respectively. The proposed rule would slash a major component of capacity fees, which are based on the wholesale price of electricity and the generating capacity of a project, by 80%. 

That’s already a major discount, but the rule goes further. If the capacity fee is greater than the acreage rent, then it will be collected instead of the acreage rent, rather than in addition to the acreage rent. The rule also allows BLM to accept leasing applications without undergoing a full auction and to accept non-competitive applications when it deems it necessary for the public interest. 

To translate from bureaucratese: renewables developers will get steep discounts on renting land and BLM can give leases to whomever it wants without having developers put in bids. This will give renewable energy developers an unfair advantage over coal, oil, and gas companies.

It’s hard to blame the Interior Department for dropping fees so much when renewable energy projects already need steep subsidies and tax breaks in order to survive. The Interior Department is bound by a congressional mandate to permit 25 gigawatts of renewable energy on public lands by 2025. How better to achieve this goal than offering an 80-percent-off fire sale of federal lands for renewables developers? 

Taxpayer support and special treatment are not likely to overcome wind and solar project technical shortcomings, which require at least ten times the land area as coal or natural gas-fired power plants to produce an equivalent amount of power. And there is already a massive backlog of renewable energy projects looking to be connected to the power grid, which will not likely be helped by the rule.

In a press release, the Interior Department says the rule will complement its Public Lands Rule, which claims to put conservation on equal footing with other uses of land. Yet it’s clear that the federal government is picking winners and losers rather than equalizing an (imagined) imbalance of power. While renewables developers hoping to site projects on federal lands will have their fees decreased by 80%, as of last year fossil fuel developers are facing a 50% increase in royalties they must pay to the federal government. 

Cutting wind and solar fees for federal land usage tips the scale in favor of renewable energy—and in the process, deprives the American people of the full value of their resources.