Dive Brief:
- With public lands renewable energy projects often tied up for years, the Obama Administration is planning a new rule that would treat those projects more similar to oil and gas leases, where the locations have already been cleared of environmental objections.
- But according to Bloomberg New Energy Finance, the proposal has critics who want to see right-of-way authorizations replaced with more traditional leases. There is also concern competitive bidding will raise the price of energy projects.
- Power Company of Wyoming (PCW) has been working for almost a decade to develop the largest wind farm in the United States, and while the new rules could help that project move forward, additional state taxes and federal uncertainty have also thrown it into doubt.
Dive Insight:
PCW's Chokecherry and Sierra Madre Wind Energy Project would have a nameplate capacity of 3,000 MW and would place 1,000 wind turbines on land that includes acreage managed by the Bureau of Land Management. But the largest wind farm in the country has been unable to break ground in nine years, as environmental advocates have opposed the project.
The new Obama rule, Bloomberg reports, would pre-clear tracts of land for development and the possibility to lock in terms for up to a decade. Moving to a traditional lease has support from some developers, who say the rules on government right-of-ways allow the taxes and fees to be raised each year.
Taxes are an issue for PCW's would-be wind farm. Wyoming is debating whether to raise its tax on wind energy, a $1/MWh tariff which raised $3.8 million in 2015. But according to the developer, the effective rate is already much higher and increases could make the wind farm uneconomical.
According to PCW, after property, sales and use taxes, generation taxes, and BLM federal royalties, the project would be paying about $4.76/MWh. Of that, $3.91/MWh comes from Wyoming state taxes, a rate the wind developer says is already higher than those paid by fossil fuel generators.
Construction of the Chokecherry and Sierra Madre Wind Energy Project is now in doubt. The company said it is still moving forward with plans to build the farm, but is uncertain when they will begin construction.
