For comparison, Field researched the property tax for the Palisades Nuclear Plant in Covert Township along Lake Michigan. He found that the annual real and personal property taxes for Palisades are just over $12 million or .2 cents per kilowatt hour.
…
Field said he considers Michigan’s system to be “schizophrenic” in the sense that it places a tax burden on renewable energy while at the same time the state has a renewable portfolio standard law to encourage renewable energy. He contends that all sources of producing energy should have the same per kilowatt hour tax rate.
Full story here
h/t to Mike Lorrey
“… He contends that all sources of producing energy should have the same per kilowatt hour tax rate…”
Make it fully equal… no subsidies.
How can that be? The IPCC has certified that land like sun and wind is free, and that the opportunity cost of thousands of hectares of land covered in panels is nill.
Welcome to Michigan.
Coal still works very well for making electricity. There is plenty of it in the ground in the US. It’s needs to be taken out of the ground at an increased pace so its price will come down lower and electricity bills will go lower.
🙂
Very funny! This is all in Michigan’s 6th Congressional district represented by Rep. Fred “lightbulb” Upton. There are two nuke plants in this district; Palisades and D.C. Cook. D.C. Cook has been crankin’ out the megawatts year after year for over 35 years now. I grew up in this area. Ol’ Fred and I attended the same high school. The Uptons co-founded Whirlpool Corporation. They’re veritable royalty in that part of Michigan. Trust me, I can think of few places more poorly suited for large scale PV power generation. Hell, I remember stretches of 6 weeks in the late Fall, early Winter when we wouldn’t see the sun. I say tax the facilities the same but remove all the subsidies for both nuke and solar. Let’s see which industry survives.
Wow, that’s interesting economics. Taxes exceed revenue so that even huge subsidies are not enough.
I wonder why the hi-tech folks don’t invent some sophisticated panels that e.g. collect light from a bigger areas via mirrors and lenses, so that the area of the expensive solar panels is reduced, and/or why the detectors are not rotating themselves to optimize the inflow of radiation.
The power to tax is the power to destroy.
It may be that the assessed value reflects the greater investment necessary for solar power generation. More assessed value means more taxation. This tax structure may reflect reality, whereas the price of solar power (after subsidies) does not.
All forms of generation should have the same tax per KwH … for income or sales-tax. The owner seems to be betting that a judge either doesn’t get what property tax is, or will pretend he doesn’t and write laws from the bench for his benefit.
Awesome. Gonna put a 150W bicycle generator in a 4000sq-ft house, call it a “generating facility” and watch my tax bill go to nothing/yr. Smart man, there.
Isn’t land just taxed by the acre based on its zoning regardless of what you decide to do on it within the law?
It’s up to the indivvidual investor if you want to invest in an industry that is only viable with government subsidy. Like all government subsidy that can end with a change in government or a change in government cashflow 🙂
These people just didn’t do their homework before laying out their cash. It sucks to be them.
Spain already proved beyond a shadow of a doubt solar farms are a money pit. Running a diesel generator to fake output….. sheesh.
Property tax proportional to area of land occupied? Solar is low energy density; nuclear is high energy density. It makes sense that solar pays a much higher property tax than solar per MWh (or kWh in the case of useless solar) of electricity produced.
In Michigan you should all be very grateful that they are just taxing one facility. In Australia we are all going to be taxed into the 18th century. At least that is the way we will all have to live without power and running water if our PM gets her way with the “Carbon” tax.
What jumped out at me is that they are being paid 45 cents per kilowatt hour! That is preposterous, and a clear indication that this form of solar is not viable.
These liberal solutions to energy production are like a deer pissing on a forest fire.
225 thousand kWh the first year – using 1,5 acres?? That’s a lot of land use for a little electricity!
When you need lots of square feet to generate your power, you have to pay the tax on lots of square feet. Energy density is the key… Too many forget that little factor (like the folks recently cheering the solar-powered plane as a revolution in commercial air transportation – never mind you can’t get enough energy out of the surface area of a 747 to even keep up with a gas-powered Cessna 180!).
Low energy density = LOTS of room needed. Add in NIMBYs and concern over just about every ecosystem on the planet, and I can’t see the logic behind a push for solar and wind. You’d think we’d push for floating nuclear power plants, 2o miles off-shore. Imagine something the size of an aircraft carrier or supertanker, dedicated to being a platform for a nuclear power plant. High energy density and ZERO footprint on land (not to mention a rather large cooling reserve all around).
You’d think we’d push for floating nuclear power plants, 2o miles off-shore.
Won’t someone think of the fish?…
/sarc
time to march
Here’s a great article by Ross McKitrick detailing more green insanity in Ontario.
http://opinion.financialpost.com/2011/05/16/ontarios-power-trip-the-failure-of-the-green-energy-act/
Includes summary of latest net job loss stats from UK and Spain.
“despite receiving net transfers of about £330-million ($521-million) from the rest of the U.K. for its renewables sector, Scotland still experienced a net job loss from wind power, and for the U.K. as a whole, 3.7 jobs were lost for every job created in renewable energy.
In Spain… on average, each job in the wind sector cost the country more than £1-million, implying a loss of 2.2 private sector jobs for every new job created in the renewables sector.”
Do some sums –
1.5 acres of solar panels.
20 houses supplied.
How many houses per acre?
To me it seems we may need more land for solar panels than for houses? Sounds a bit like the biofuel problem . . .
That sound like a good idea Shanghai Dan.
Providing security bothers me in this current world condition.
Question: how is the energy captured by the PV panels converted for use on the local grid?
Strikes me there must be a lot of fancy hardware between the panels and the grid that nobody ever talks about. Cost of that hardware must also be factored in.
If they would be taxed by produced energy, the extremely low of output of solar could be utilized to grab land while paying close to no taxes.
Luboš Motl says: May 16, 2011 at 10:13 pm
“I wonder why the hi-tech folks don’t invent some sophisticated panels that e.g. collect light from a bigger areas via mirrors and lenses, so that the area of the expensive solar panels is reduced, and/or why the detectors are not rotating themselves to optimize the inflow of radiation.”
You totally fail to understand the economics of solar subsidies. These are industry invented subsidies sold to gullible politicians. So solar energy is not a way to make electricity but a way to sell solar panels. And of course mirrors and rotating panels would produce more electricity per panel … which means that less panels will be required … therefore this is not encouraged!
What a crazy world. You threw out the British for less taxation. Vote Ron Paul.
IMHO, the complaining taxpayers in this article seem to believe in the Tooth Fairy, Father Christmas, and any other magical source of income that their personal belief system might include. The madness of paying huge subsidies on solar generation is nothing more than robbing the consumer. The idea of calculating property taxes on the basis of income derived from the business occupying the property seems very strange to me -is it not usual in the USA to calculate assessable tax on the value of the land the business occupies?
the handbook of physics and chemistry says that the maximum solar energy deposit on the ground in an area of one square meter is 746 watts. and that is only on a patch roughly banana shaped between los angeles and phoenix between about 0900 and 1500 on about 300 days a year. all other places in the united states are downhill from there in this matter.
746 watts is the electrical definition of one horsepower.
think about it.
C
I think many are missing the point this example brilliantly exposes. Property taxes in most states are based on the greater of 1) Purchase price of the property (cost to construct) or 2) Market value. The actual tax calculation is then the tax rate multiplied by the greater of either numbers 1 or 2.
The solar plant in question would be sunk on either case 1 or 2. Market value would be established by the absurdly high rate per Kwh the plant is actually receiving (not the rate someone else is receiving). Cost to construct would be based on the absurdly high capital cost of solar.
What the example demonstrates very clearly is that photovoltaic solar cannot even bear the same costs of doing business everyone else bears and make a profit even at the ridiculous rate of 45-cents per Kwh. That has also been the European experience. What readers (consumers) should be asking themselves is whether THEY could make it financially if THEY were forced to PAY ten times their current rate for their electric power.
Except in rare circumstances, solar electric power generation makes no economic sense whatever.
pat says: May 16, 2011 at 11:20 pm
“These liberal solutions to energy production are like a deer pissing on a forest fire.”
A typically optimistic post.
It’s more like throwing a bottle of scotch on the forest fire – expensive, and although it may initially appear to douse the fire, in the end it is worse than useless as it just stokes up the fire.
Economy of scale.
Keep Smiling 🙂
Jeff
Does this show how high the taxes are or how low the productivity of these solar panels are?
I suspect the latter.
$27k for 1.5 acres seems excessive. I would expect much less. I fail to see why land used for generating power should attract more taxes than other land.
Having said that, 1.5 acres gives them a ‘maximum’ of 147 KW. That is ~100 KW per acre. enough (apparently) to power 20 homes. Well, max is rare, so let’s be generous and make two very bold assumptions:
1. Half of the energy is needed during the day when the sun shines
2. Energy can be stored at 50% efficiency.
3. during that day we get 50% of max on average.
That gives us 1/3 for the day, and 2/3 to be stored and used later. Ignore the fact that much of the 1/3 for the day needs to be stored too, as demand will be sporadic.
So that gives us 50% of max times 2/3 because we lose 1/3 overall in storage. That gives us overall 1/3 of max.
Max is 14 homes powered per acre.
1/3 max is 5 homes per acre.
In most places where you have detached houses, 1/2 acre is plenty for a house. In the UK, for example, the legal max is 12, although 17 is pretty common I read. I also read that it is typically between 8 and 20 houses per acre, avg 16.
So that’s pretty simple for the UK, then. Have three times as much land set aside for solar than you have for housing. And that’s with some generous presumptions. More likely six times.
Still, it could work here in Oz, I suppose!
Madness. He wants to rewrite the rules because his use of the land doesn’t make up for the land tax. So if I put 1 solar panel on 1,000 acres, I get to pay a proportional tax for 200 wh per day created?
A solicitor investing in solar energy. Reminds me of a story where a bunch of doctors got together to buy an ex racehorse for stud work. Only when they took delivery it failed to do any stud work. It was only later that one of them checked and found it was a gelding.
No doubt just an urban legend, but a tale to show that expertise in one field doesn’t necessarily transfer to another. Surely someone checked what the property taxes were before they started putting in the panels? Surely someone ran the sums?
The worst thing about all this is there will be literally thousands of abandoned renewable power detritus littering the landscape in the next 20 years. Abandoned windmills, solar farms and more will be everywhere. Too expensive to run, too expensive to dismantle.
Green math is backwards when concerns density and quantity.
By these numbers (KW output per acre), the area required to power my apartment complex (high density living the greeies like) would be double the area taken up by the complex itself. (that’s including the parking lot, entry drive, trees , grass and park.)
dcardno says: May 16, 2011 at 11:49 pm
You’d think we’d push for floating nuclear power plants, 2o miles off-shore.
Won’t someone think of the fish?…
/sarc
First Bin Laden, now a nuke plant? – it sucks to be a fish.
Further in the article, the tax-payer says, ¨With reasonable or no property taxes, Kalamazoo Solar could make a small profit, Field said.
“What we’ve learned is that if we solve some of these economic issues, that solar energy is just amazingly feasible in Michigan.¨
¿¡´…if we solve some of these economic issues…´?! Yup: ´…amazingly feasible…´
By the story, the PV farm generated 225,592 kilowatt hours in its first year of operation. By the picture caption, the farm should yield 147 kilowatts at maximum power. Simple division yields 1535 hours of maximum power in its first year. At 365 days per year, that’s 4.2 hours of maximum power every day for the first year. In Michigan?
Attention meteorologists on this site, does Michigan really get that much direct bright sunlight a year? Also by that pic and the other one in the story, those are simply mounted panels, no sun tracking and apparently manual tilt adjustment as needed, thus there aren’t that many hours in a day when the sun will be close enough to directly above for maximum power anyway. Are there really enough cloudless un-foggy hours close to noon in a year in Michigan?
Are these folks just stupid, surely the cash flow projection within their business plan would have demonstrated where the break even point lay?
“Give us the subsidies, no we don’t want to pay tax, the government should borrow more”
People forget that when inefficient governments collect taxes for redistribution as subsidies, the huge overhead cost, is probably higher then the final funds distributed.
Moral superiority doesn’t feed empty bellies. (can someone tell this to the UK government)
There is no way thier tax rate should be tied to their energy output, any judge who takes that position should be thrown out.
If they can’t even make enough profit with a $0.45/KWHR subsidy to pay thier property taxes then that’s proof positive that the venture is a misallocation of resources. Put the land into blueberry production or some other useful venture. Geez, even woodland generates enough value to cover property taxes (usually).
I am glad that Michigan lives in the real world. Reality should hit wind power as well.
When I grow up, I’m going to be a farmer. Not a mucky cow or dirt farm, though, nonono. I’m going to be farming subsidies.
The property tax amounts to 12.3 cents/kwh which is “more than the retail value of the electricity”, but they’re being paid 45 cents/kwh for their power, which leaves 32.7 cents/kwh, which is “more than the retail value of the electricity” x 3 and they’re still losing money. I don’t know the particulars of the situation in Michigan, but I would suspect they received substantial subsidies and other breaks for their capital costs. They’re being paid about 10x the going wholesale rate for their power and if they can just be excused from all the taxes that other power producers have to pay they might be able to eke out a profit. Well I can sure see why everyone’s so excited about our golden alternative energy future. What could possibly go wrong?
Lets hope Svensmark is awarded the nobel prize in SCIENCE!
http://www.agu.org/pubs/crossref/2011/2011GL047036.shtml
That huge facility, with all those solar panels, should (at maximum production) supply electricity for 20 homes? How is it possible to spend and do so much for so little return? What about Michigan’s other millions of customers? Michigan is not exactly Arizona and has minimal sunlight, at quite low angles, for much of the year; so solar power would be slight, intermittent, and unreliable. Stupidity reigns!
Espen says:
May 16, 2011 at 11:20 pm
225 thousand kWh the first year – using 1,5 acres?? That’s a lot of land use for a little electricity!
Well, let’s do the math.
225,592 kWh is 812 GJ. As there are about 31.5 million seconds in a year, average output is 25.75 kW. It is produced on 1.5 acres of land, which is 6,070 m^2.
Therefore land use efficiency is 4.24 W/m^2. They have chosen one of the worst locations for a solar power plant in the entire US. In Michigan average solar flux at ground level is only 125 W/m^2 (in southern California it’s at least twice that number). Even so, overall efficiency of conversion comes out as a pathetic 3.4%.
They have made some really bad investment decisions and now they are trying to avert the punishment on public money.
And it is even smarter than that. It does not produce electricity when it is needed, but when it is available.
There are only two essential resources for which expanded reproduction can’t possibly work, not even with the most advanced technology imaginable. Raw land area is one of them (the other one is span of human attention).
Such a wasteful use of land for industrial purposes is a real crime indeed. It can bring profits only if all property tax is abolished. However, not requesting payment for a restricted resource is a sure way to detrimental environmental damage and swift economic collapse.
This is a fine attitude, to save the environment at all costs, including its utter destruction.
According to EIA average monthly residential usage in Michigan is 666 kwh at an avg. cost of about $72. Their avg. monthly production would cover less than 30 homes’ usage and that’s before allowing for distribution losses which can be as high as 50% but let’s be generous and call it 20 homes. At $.45/kwh they’re collecting about $8500 a month at the fence or about $450/household. Add in distribution costs and all the other little extras that are in every utility bill and each household’s bill would have to be about 10x that $72 to cover the true cost of this power. Michigan should be thankful their output is as feeble as it is. Just imagine what utility bills will look like when we get to those 20% – 30% goals for alt energy production.
They are paid 45 cents per kilowatt hour yet the average price of power is less than one fourth of that. If you charged me 400% more for electricity than what i pay now I could not afford it at for my business or my home.
And yes, all energy sources must pay tax, otherwise it is another subsidy.
Commercial property such as rental property is often taxed at its maximum commercial use value. Even though the 12 cents per kwh is more than the retail value of the electicity, due to government subsidies they get to sell the electricity for 45 cents per kilowatt hour. Margins are much lower in the nuclear industry, the nuclear plant probably only gets to sell its base load at wholesale, 4 to 6 cents per kwh.
I notice he doesn’t go into specifics, like how much land the nuclear plant occupies to produce how many megawatts.
“The property tax burden on our solar project is 60 times as much as the property tax burden on the nuclear power plant when calculated on a per kilowatt hour basis,” he said.
Obviously that’s because they produce so little energy on so much land.
“She has introduced (bills) to abate property taxes on small renewable energy projects of two megawatts and less. We greatly appreciate and applaud her efforts,” he said.
With reasonable or no property taxes, Kalamazoo Solar could make a small profit, Field said.
He doesn’t want a level playing field. He wants MFN status.
On the other hand…what kind of place charges $27,000 in taxes on a 1.5 acre property? No wonder Michigan’s population is plummeting!
Luboš Motl says: “Wow, that’s interesting economics. Taxes exceed revenue so that even huge subsidies are not enough.”
Going on the figures in the article I don’t think that is the case. The revenue from the solar power is given as 45 cents per kilowatt hour. The taxes are the equivalent of 12.3 cents per kilowatt hour.
For the sake of argument they have compared the property taxes to the retail price of electricity but the solar power isn’t being bought from Kalamazoo Solar at retail prices, Consumers Energy is buying it at a much higher price. They are comparing apples with oranges.
If only we could convince councils all around the world to adopt similar taxation policies we may be well rid of these parasites.
No, revenues are ~45¢/kwh, and the taxes ~12¢. It’s profits that are eliminated and exceeded.
Anthony,
A great deal is wrong here.
1.5 acres of solar panels for 20 homes at maximum peaks is not that much power for the cost.
As for the taxation…this now is a commercial use and someone is trying to generate a profit. So, I am all for the fair share of taxation to the proper perspective.
Hate the subsidies that is helping to pay these taxes though.
pk says:
May 17, 2011 at 12:32 am
“the handbook of physics and chemistry says that the maximum solar energy deposit on the ground in an area of one square meter is 746 watts. and that is only on a patch roughly banana shaped between los angeles and phoenix between about 0900 and 1500 on about 300 days a year. all other places in the united states are downhill from there in this matter.
746 watts is the electrical definition of one horsepower.
think about it.”
To keep one single horse fed, in my country, it takes about 6000 square meters, but to keep it happy through summer and winter it apparently takes 15 000 square meters.
So either horses are really bad energy choice since it takes 15 000 square meters to gain the power of one horse. However, plastering 15 000 square meters with black slightly retarded solar panels gives you, in percentage, effectively, 0.0 output during 3-4 winter month’s per year.
At least you can eat the horse. :p
Property taxes are normally figured this way:
All properties are given an assessed value. The assessed values are multiplied by a millage rate which results in the dollar value to be paid. The millage is a function of the amount of money needed for the budget. If you have a $60 million total property assessment and you need to raise $6 million for the budget, the millage rate would be set accordingly to produce $6 million in revenue. If they needed $8 million for the budget the millage rate would be higher. The millage rate can be changed each budget to produce the desired revenue. It all goes back to overspending by government and taxing producers to pay for non producers. Look at the local budget for this township and you will find the reason.
It is worth noting that the brains behind this business, according to an earlier Gazette article singing the praises of Michigan’s largest solar farm, belong to Connor Fields. He is Sam Fields’ son, and was a senior at the U of Michigan in…Economics! This lawyer-and-economist team has demonstrated amply to me just why “renewable” energy, and solar in particular, is doomed to utter failure.
Only problem is, the end game looks like failure for the consumers who will be buying that 45-cent-a-kWh juice.
Makes me glad I studied Nuc E at the UofM…!
A couple of questions:
1. In the photo the solar panels appear to be quite “shiny” i.e. reflective, which suggests they are not absorbing all of the available energy. Does anyone know if there is some reason why they aren’t matt black ? – Some constraint to do with the materials maybe ? or do they have a nice smooth surface so that they are easier to keep clean, thus reducing maintenance costs ?
2. Even as inefficient as they are, I imagine they still absorb more of the sun’s energy than the original landscape would have done. Isn’t that additional energy (which is being retained on the planet rather than being partially reflected back into space) only making things hotter ?
I was just wondering why the owners of this facility just didn’t use fake solar panels, bring in electricity off the grid and send it through as to look like it was generated by the solar panels. Pay for incoming electricity at normal rate, collect on the outgoing electricity at the premium rate. Set up off shore account, move to Cayman Islands, enjoy life.
You can tell the intelligence from their first mistake – putting a SOLAR farm in MICHIGAN!! Ha!
Dur….we need to pay PROPERTY TAX on our PROPERTY? Acre for acre it sounds like a nuclear plant pays much higher taxes.
They just want a free ride because they are “green”! The county they are in could get more taxes if the property was used for something more useful.
Scottish Sceptic says:
May 17, 2011 at 12:33 am
pat says: May 16, 2011 at 11:20 pm
“These liberal solutions to energy production are like a deer pissing on a forest fire.”
A typically optimistic post.
It’s more like throwing a bottle of scotch on the forest fire – expensive, and although it may initially appear to douse the fire, in the end it is worse than useless as it just stokes up the fire.
very – true – as you so brilliantly show; not only is it pointless – but it wastes precious resources ! Fancy throwwing away a bottle of scotch – It better not be malt !
I find it amazing the partner lawyer wouldn’t have the sense to research property tax costs before investing in the project.
They can still recoup their losses and turn a tidy profit by purchasing power from the utility at about 14 cents per kw. Then feed that power back through their solar equipment and sell it back to the utility at 45 cents per kw. They could even run 24 hours a day and really make out like bandits. 😉
Steeptown says:
May 16, 2011 at 11:11 pm
I’m surprised at the number of people looking at the tax on 1 1/2 land. It’s not a land tax, it’s a property tax. In New Hampshire, and I assume everywhere else in the US, the valuation is based on both the value of the land and the value of construction on the land (home, factory, barn, sometimes vehicles, etc.). In this case, they probably used the purchase price for 700 brand-new solar panels.
Perhaps someone from Michigan can explain the process for appealing real estate and property tax assessments.
Shouldn’t this have been obvious in the business plan before even embarking on this enterprise?
The wind farms in Oregon and Washington are about to be shut down, leaving the owners wondering where their pie in the sky promises went. Speculators of any source of energy need to be prepared to lose their shirt. That said, few companies control most of the energy. And as we know all too well, fewer people at the top holding onto most of the power (be it political, commodity, or academia) leads to corruption.
Luboš Motl says: “collect light from a bigger areas via mirrors and lenses”.
Better idea. Stop collecting light and start collecting taxes using smoke and mirrors.
He didn’t consider the taxes when setting up his business?
He’s complaining about state property taxes, but it looks like Michigan property taxes involve counties, cities, and school districts.
https://treas-secure.state.mi.us/ptestimator/PTEstimator.asp
I look forward to seeing his solar panels on eBay.
John Marshall says:
May 17, 2011 at 1:58 am
I am glad that Michigan lives in the real world. Reality should hit wind power as well.
Don’t give up on fantasy land in Michigan just yet. Gov. Snyder hasn’t made wind power a priority, nor has he dissed it:
Offshore Wind Turbine Issue
Making money but for the taxes? BULL.
I want to see the balance sheet for this enterprise. How much were the capital costs. Who put up the money? The Taxpayer.
Solar panels are not cost effective, nor are they effective in “overcast Michigan”
Bad article.
Ditto that comment (grew up E. of Kazoo in BC); It’s because of the effects of the 3rd largest body of fresh water (Lk Michigan) in the world to the west of the state …
Returned from TX and spent a year at Heathkit in BH/St. Joseph on the shoreline just north of Cook about the time of the Three Mile Island accident … have pictures of Cook taken from the air from a small aircraft piloted on a sight-seeing trip by one of the manual/technical writers working there at Heath …
.
So let me get this straight. One company makes a bunch of electricity, very cheaply, very efficiently and pays 12 Million in taxes… Another company makes a very small amount of electricity, at high cost, they only pay $26,000, but it’s MUCH more per unit (kilo)watt… And the crappy (that’s a technical term) electric manufacturer is whining that they have to pay too much in taxes… Even better, they want to pay the same rate, well they can, if they quit being crappy. I hope I’m not losing anyone here with the complexity!
I think when you remove a kid from a goats teat, they bleat loudly and not with any pleasant timbre to the sound – that’s why I call our federal government a nanny state. Others may use the term for different reasons.
Dave D
I heard a report on NPR yesterday morning touting how wildly successful the renewable energy industry has been in Germany. I’ve read many articles on the failure of Spain’s renewable energy projects to be profitable. How are the Germans succeeding at it? If they are.
>>When I grow up, I’m going to be a farmer. Not a mucky cow or dirt
>>farm, though, nonono. I’m going to be farming subsidies.
Thats what tax collectors used to be called in the Roman Empire – tax farmers. They farmed as much tax as they could, and gave a certain proportion to Rome. The more you could farm, the richer you got.
Looks like they have reinvented the wheel, but now the central state pays the farmer, instead of the farmer paying the central state. Seems to me to be an unsustainable system.
.
“Also exceeding expectations is the property tax . . .”
Why? Was the law unclear at the time they purchased, or did they just fail to take into account the property tax before they bought? Or were they promised a hugely greater amount of electricity production than they are actually getting? Something doesn’t add up.
There are several owners, and $28,000 divided by “several” would be enough profit for them? Not much profit for that investment.
Incidentally, is “Tips” filled, and is that why it’s not accepting comments?
The Kalamazoo Solar System has a nameplate capacity of 158.8kw and began operation on February 17, 2010. Total generated for the 327 days in service was 225,592kwh. I believe the system operated at 18% nameplate capacity. The solar array contains 756 solar panels and according to the website of the installer, “By engineering our own proprietary multi-position panel mounting system, we developed a low cost method of improving array output by 20% without sacrificing system reliability.” Also, “The cost of solar panels is falling rapidly due to improvements in technology and new investments in manufacturing capacity. As a result, the cost of producing solar energy is rapidly approaching parity with other sources of electricity production.” Frankly, I do not see how solar energy is approaching parity when a subsidy of over four times the retail value of a KW hour does not return a profit. All Michigan users will have to pay more per kwhr to subsidize this solar generator and now the generator desires a property tax break. Obviously, Michigan and Wisconsin should easily be able to reach their respective renewable goals (sarc). Pure insanity.
Property taxes are assessed on the value of the land plus improvements. So if the solar array is valued at $1 million or so, the taxes appear about right.
At least in theory, “property taxes” are based on the value of the “property” as property, not the income, if any, the property produces. Otherwise, most home owners—who earn little or nothing on their “property”—would be receiving negative tax bills (where the town owed them, instead of the other way around). Solar farms take a lot of land that might be more productively used for some other purpose. Perhaps as parking lots. Ron P.
Think the solarenergy is the way to go, if not the italian hope true…
Wouldn’t it just be easier, and cheaper, to cover the roofs of 20 houses with solar panels?
The NREL website provides 30 year averages of measured kWhr/m^2/day for lots of locations around the country. For Grand Rapids, the average for a panel fixed-tilted at latitude is 4.2 kWhr/m^2/day, or 4.2 hours/day of full sun.
http://rredc.nrel.gov/solar/old_data/nsrdb/redbook/sum2/94860.txt
The property tax millage rates in Climax are about 30 per mill, or 3%.
225,592 kWhr/year = 618 kWhr/day for 700 panels
Each panel generates 0.88 kWhr/day
With 4.2 hrs of sunshine on average, that gives 210 Watts per panel.
Most systems are about 80% efficient from panel O/P to AC on line, so the panels are likely 280 W panels. With 700 panels, that gives 196 kW peak panel nameplate power.
Since this was installed in 2009, and not likely a DIY job, the system cost was probably $6/peak panel Watt, or about $1.18Million. This assumes the land has no costs.
The first reimbursement, a 30% federal tax credit, reduces this to about $825,000 capital outlay.
The millage rate, applied to this amount, results in a property tax estimate of $24,750 per year. That is in the ballpark of the property taxes the owner complains about in the article.
The owner receives $0.45 per kWhr delivered. The wholesale purchase price of electricity in Michigan is probably closer to $0.05/kWhr. The subsidy provided to the owner is therefore $0.40/kWhr, or about $90,000 per year.
There is a property tax exemption in Michigan for renewable energy systems installed at commercial sites. He could lobby the county or township to change their property tax rules so that residential sites also receive the property tax exemption.
Perhaps that is what this article is really all about- demanding a third large subsidy for the owner’s solar system. Ugh.
“12.3 cnents per kwh… that amount is more than the retail value of the electricity”
That 12.3 cents per kwh property tax is not more than what I pay for electricity here on the east coast of Canada. We’re paying 13 cents now and are expected to hit 15 cents in a year or two to pay for those damned wind turbines. Folks where ever you live, stop the wind turbines and solar or you could end up like my province with high unemployment, companies passing us by and no immigrants wanting to move here (they’re not stupid).
Pissed off in Nova Scotia.
Here’s how the tax calculation would look in Wisconsin.
Property taxes on a recently-built enterprise are paid on the land plus all improvements, i.e., buildings and structures, and in Wisconsin tend to be at a level of about 2%. I suspect Michigan is close, say between 1.5% and 2.5%, though I could be wrong. (Wisconsin property taxes are pretty high compared to national norms.)
Let’s assume 2% though. The land isn’t worth more than $10,000/acre and probably much less, so 2% of $15,000 is $300 in property tax. The remaining $27,389 would be on the “improvements”, i.e., the purchase price of the solar panels plus construction costs. This implies a $27,389/.02=$1,369,450 cost of the “improvements” at a 2% tax rate. (Even at an astronomical 3% it would be over $912,000.)
So they probably invested over a million dollars in capital to generate about $22,500 in retail value of electricity (at 10 cents/kwh), or half that at wholesale value. Of course, they’re getting just over $100,000 at the $.45/kwh rate, so until this property tax problem surfaced, they probably figured they had a good thing going, especially since they no doubt got massive tax credits for the original installation.
Just goes to show you that government largesse can make even the most idiotic “investment” seem attractive, even as it makes paupers of the rest of us. As for the picture of the guy in the suit “adjusting” the panels…Photo op anyone?
The capacity “at maximum power” of this enterprise is enough power for 20 homes. During the sun hours, presumably. Considering cloud, rain, snow, how many homes were actually serviced? 7? During the day.
What a waste of everything. And I bet the solar panels came from China.
being paid $.45 a kilowatt hour – by Consumers Energy
============================================
And Consumers Energy is passing that savings on to each and every one of their customers.
McKitrick’s post is just brutal. Well worth reading.
$28,000 in taxes on 1.5 acres of farmland in Kalamazoo County? Whatsupwiththat?
Who did their business plan? Didn’t they not know what the taxes were? They say the panels exceeded expectations, so they really didn’t understand their costs at all. Were they just hoping to get another subsidy by crying to the press? They are already getting a premium for the power, way above retail value. Do some friggin planning.
The comment by _Jim reminded me of something (BTW, I grew up in St. Joseph). This particular region is famous for its fruit production. It’s known as the “fruitbelt”. They receive ample rain, the soil is incredibly rich and their proximity to Lake Michigan prevents them from getting too cold in the winter. The area grows grapes, apples, pears, peaches, nectarines, plums, cherries, apricots, melons, strawberries, blueberries, raspberries and currants – all for national distribution. I’m pretty sure there are better uses for that land.
For comparison, the D.C. Cook nuclear station sits on 650 acres and cranks out 2,000 MW.
And they wonder why people are leaving Michigan in droves. Was kinda surprised to see Kalamazoo posted…LOL …..life long resident. There are more horror stories of the state and local tax burden putting people out of business here in Kalamazoo.
The interesting part of the story is their economics. After Federal, State, and Local subsidies, they still have to get paid $0.57 per kWh to break even.
That is pretty close to 10x the cost of wholesale power in the region. And that doesn’t include the externalized costs that the rest of the system gets to deal with.
Somehow, they consider this a success.
My favorite quote of the article was “On a level playing field, I’m convinced more than ever that solar is going to prevail and carry the day,” from a man receiving almost four times the retail price for the power he sells.
This is a testament to good planning. Either no one ran the numbers before the facility was built, or someone did run the numbers and decided to scam the investors. The owners/investors deserve whatever they get.
Orders for photovoltaic panels are being cancelled at an alarming rate. Evergreen Solar in Massachusetts is about to go bankrupt because of this. Maybe people are finally waking up to the fact that photovoltaics only make sense in a very limited number of applications (satellites, remote islands, battery chargers for portable devices and where the the power grid is not accessible). This was the case when I worked in the photovoltaics industry 25 years ago. Even with all the wishful thinking since then, the viable application set hasn’t changed.
Here is the list of incentives in Michigan
http://www.dsireusa.org/incentives/index.cfm?re=1&ee=1&spv=0&st=0&srp=1&state=MI
Michigan is in the sub four hour per day for solar insolation.
http://www.nrel.gov/gis/images/map_pv_national_lo-res.jpg
147 kw x 4 hours x 365 days a year = 214,620 kw/hr close to their 225,000 number.
214,620 (this is the 30 year average insolation) x .45 = $96,579 per year revenue.
Solar installation cost should be about $6 per watt x 147,000 = $882,000 installation cost = 9.1 years to payback.
Add in property taxes of $27,689 over 9 years and the payback period goes to about 11.7 years (yes this is a gross estimate).
If you add in any cost of money for this (probably 5%) and this goes out to about 14 years.
This is about right for solar in Michigan
There is no way on God’s little green earth that solar makes ANY sense in Michigan, even at those 4x inflated rates.
If you use the real rate of electricity (12.5 cents/kw/hr) the payback period is longer than the life of the panels.
The cost per kw/hr of the nuclear plant is about 4 cents per kw/hr over the lifetime of the plant.
This makes absolutely NO sense.
I build solar power systems and putting them in Michigan is the height of folly.
Solar panels like that one cost about $6 per watt to install so…
Looking at the picture, I can count 27 banks of 6 panels. I am pretty sure there were at least a half dozen to a dozen in the back row I could not see. Unclear if there are any to the left edge of the photo. So we have at least 162 solar panels. The state of the art is more or less 210 or 220 W for that size panel, but let us say that they are the old 180W panels. That gives them about 30 KW of plate rating for the panels I could count. Somehow 220 KWH from a 30KW plate rating system kinda leaves me a little cold. Yeah sure, there are inefficiencies and losses in the system. There are in any system. But this seems superlatively inefficient. Perhaps they should just dismantle the farm and send the panels to somebody someplace who knows how to use them correctly. They will still lose money against other energy sources, but this thing is worth more dead than alive.
a bit ago i posted about 746 watts per square meter.
to expand on that:
you can only collect that solar energy on the ACTIVE areas of the solar arrays. we could go through a totally inane series of calculations but suffice it to say that (based on the picture) the statement that if the fellow has 10 acres devoted to the project that the actual amount of active area gathering power is less than 30% of the gross.
(i am counting roads, support frames, the aluminum bars that support the active strips, the walkways between them for the workmen to repair, clean, adjust the frames, the places where the electrical cables lay……..).
i saw a post the otherday that the engineers and technical people seem to understand these problems but that the sales and “soft sciences” types do not.
in other words “eagles understand that they have to keep below xx PSI wing loading to fly, turkeys never got that far.”
C
1DandyTroll:
a minor matter in your calculation: one horse can put out ~25 horsepower.
yeah i know, but i bit on that bug too in high school physics class (~60 years ago).
C
“”””” Luboš Motl says:
May 16, 2011 at 10:13 pm
Wow, that’s interesting economics. Taxes exceed revenue so that even huge subsidies are not enough.
I wonder why the hi-tech folks don’t invent some sophisticated panels that e.g. collect light from a bigger areas via mirrors and lenses, so that the area of the expensive solar panels is reduced, and/or why the detectors are not rotating themselves to optimize the inflow of radiation. “””””
Sorry but no cigar. The solar farm will use just as much land, maybe more, if you replace most of the silicon with aluminum (or glass) mirrors. And the less silicon (area) you use, the more you will spend on steerage paraphernalia.
The TSI is till 1362 W/m^2. That’s the starting point for free renewable clean green energy. Welcome to the real world.
In solart panels; nothing matters except conversion efficiency. Cheaper less efficient solar panels garner higher propertyy tax bills. It’s a good thing that windmill farms aren’t taxed for all of the surrounding land that is of restricted use, because it is needed for entrance and exit to and from the windmill.
Yes solar energy is free; but the gathering of it is not; it is prohibitively expensive to collect; unless you do it the old fashioned way, and let Mother Nature gather it for you, and turn it into carboniferous fuels.
Mike McMillan:
the United States Navy has been “sponsoring” “floating neuculaarr power plants” for about fifty years. there have been many occasions over the last 120 years that navy ships have tied up at the pier at some city whose power people got messed up and “fed the town” for an extended period.
I HAVE NEVER HEARD OF THIS HAPPENING WITH A “NUKE”.
one instance comes to mind when a cruiser was used to feed Boston for an extended period of time around WWII.
the ships have connections where they normally shut down their power plants in port and use “shore power”, its only a matter of throwing a few switches to feed the town rather than vice versa. they don’t like to do it but when the commander in chief smiles at the skipper of the ship they salute and say “aye aye sir.”
sometimes it happens by accident. one fine day in long beach ca. the local edison co. “lost the load”. there was an aircraft carrier tied up at one of the local piers. the two emergency diesels on the carrier (~10,000 hp between them) fired up automatically and carried the entire town for about 30 seconds (they made a really strong MILITARY try but just couldn’t do it) the transfer switches that protect the generators in overload situations disconnected the ship from the town and the towns normal power supply came back up about 20 seconds after that. the whole thing was over with in about a minute.
so you see sometimes a brilliant idea has been in service for decades.
C
Now my sneaking suspicion is that this guy is fishing for a tax abatement from the county/locality. Perhaps he was refused already. So, now, maybe his strategy is media attention in order to see if he can guilt the count/locality into giving him a tax abatement on the premise that solar panel energy is green and that is the new morality. Of course, on morals, how is it fair for the government to show favoritism for some companies over others?
Luboš Motl says:
May 16, 2011 at 10:13 pm
“I wonder why the hi-tech folks don’t invent some sophisticated panels that e.g. collect light from a bigger areas via mirrors and lenses, so that the area of the expensive solar panels is reduced, and/or why the detectors are not rotating themselves to optimize the inflow of radiation.”
A few year ago tracker systems were used in Germany to move the panels as you describe; but as silicon PV panels got cheaper, the tracker systems became too expensive. As they’re mechanical systems exposed to the weather, they’re not cheap. So, the invention WAS made, it WAS deployed, but not anymore.
dcardno says:
May 16, 2011 at 11:49 pm
You’d think we’d push for floating nuclear power plants, 2o miles off-shore.
Won’t someone think of the fish?…
/sarc
When I lived in Jacksonville, Florida this was under serious discussion by Jax Electric. They had to switch from oil burning plants to something after 1973 and this was part of the thinking. They finally settled on coal.
I live in the UP of Michigan and much is wrong with the RES passed several years ago by Granholm. This is one of them. My rates have almost doubled. Coal is good but Granholm spiked a coal plant before she left. But she was in love with the Volt. Sell Volts but cut back on electricity production. Fine move hers.
The math doesn’t work on that, no way $27,000 exceeds their profit on their generation. now if they are saying that their cost too service dept+property taxes exceeds their profit that me be true, and more likely is the case.
Don’t you love it when rent-seeking-bastards whine?
This is why rooftop solar is the best choice. The space is available, it shades the roof to lower cooling costs in the sumer, and the property tax is the same with or without the panels. Using farmland for solar energy is wasteful. Using buildings and homes is not.
Solar anywhere is wasteful simply because of its high capitol cost. Solar north of about 30 degrees north is foolish……..zenith angle to the sun and all that rot. I live in SW Lower Michigan near this plant and solar here is colossally stupid. As others have alluded to, Lake Michigan ensures we see very little sun through much of the late fall and winter.
Dear State of Michigan,
There is a power plant near Climax in Kalamazoo county that has sold 225,592 kilowatt-hours of electricity. Have they paid their sales tax on this sale?
I HAVE NEVER HEARD OF THIS HAPPENING WITH A “NUKE”.
It was 1964 or 65, a hurricane hit Hawaii and a poseidon sub pulled up and ran the whole island for a while.
Jeese! I tell them how valuation for property tax purposes is established and they blather on in ignorance anyway. Go back and read what I wrote. If you spend a million bucks building a facility including the price of the land, your initial valuation is a million bucks minimum. End of story. It has nothing to do with dollars per Kwh or acres involved.
After a few years of losing money on that investment and establishing that no one in his right mind would pay you a million bucks for that property, you may appeal that valuation to the county tax assessor with a case for “market value”. But you can only establish your case after you have demonstrated over a period of time that, “I was a fool. I can’t find a buyer who is foolish enough to pay me anything like what I’ve put into this facility. I’m losing my behind on this property. Please give me the ‘terminally stupid’ reduction in valuation.”
Again, in most states the initial property valuation for tax purposes is the higher of either: 1) what you paid or 2) market value based on either comparable sales or cash flow analysis.
In the ’90’s when the “USSR” was contemplating having a fire sale, Asian Development Bank did a feasibility to help power Metro Manila with a lease of two Russian nuke subs. The MM area was having daily brown-outs at the time. It was found to be an easy installation nad the economics were excellent but anti-nuke public pressure and a sudden award for several IPO coal-fired plant installations ruled it out. There have been several “barge” power plants used but they are normally diesel or gas powered.
$27,689 is a ridiculous property tax bill. Something’s fishy.
Ah, I see the problem. Someone forgot to tell them that you don’t use prime real estate for solar farms. As the utility of the land is not a factor when installing solar panels, they could have used a brownsite or rocky, unfeasible building site. As we can see from the picture, that site could have been developed into housing at a far higher return.
Claude Harvey says:
May 17, 2011 at 6:34 pm
“Again, in most states the initial property valuation for tax purposes is the higher of either: 1) what you paid or 2) market value based on either comparable sales or cash flow analysis.”
There is also the “highest and best use” formula. Many commercial properties are taxed based on that concept without regard to what is actually built on the property or how it is used.
GaryP says:
May 17, 2011 at 5:31 pm
“There is a power plant near Climax in Kalamazoo county that has sold 225,592 kilowatt-hours of electricity. Have they paid their sales tax on this sale?”
Buyers pay sales tax, sellers simply collect it for the government.
Hi Dennis.
Would that be a reference to a Poseidon Missile sub?
Wiki is showing this regarding Poseidon missiles: http://en.wikipedia.org/wiki/UGM-73_Poseidon
“The Poseidon missile was the second US Navy ballistic missile system, powered by a two-stage solid fuel rocket. It succeeded the Polaris missile beginning in 1972, bringing major advances in warheads and accuracy. It was followed by Trident I in 1979, and Trident II in 1990.
…
The first test launch took place on 16 August 1968 and the first test launch from a submarine took place on the USS James Madison on 3 August 1970. The weapon officially entered service on 31 March 1971. It eventually equipped Lafayette-, James Madison- and Benjamin Franklin-class submarines.”
Another reference on the Poseidon missile: http://www.missilethreat.com/missilesoftheworld/id.92/missile_detail.asp
.
A quick check of ’64 and ’65 showed nary a hurricane hitting Hawaii (although a tropical storm did $500,000 damage in 1958):
1951–1964 Pacific hurricane seasons
http://en.wikipedia.org/wiki/1950-1965_Pacific_hurricane_seasons
1965 Pacific hurricane season
http://en.wikipedia.org/wiki/1965_Pacific_hurricane_season
Could it have been a different year?
.
Re:Tom in Florida says:
May 17, 2011 at 8:16 pm
“There is also the “highest and best use” formula. Many commercial properties are taxed based on that concept without regard to what is actually built on the property or how it is used.”
You are certainly correct about that. It explains why there are no cabbage farms remaining in New York City, even with the agricultural exemption.
in 96/97 the indonesians were looking to buy a half dozen barge mounted steam power plants fueled by natural gas tankered in from the middle east or from the indonesian oil fields.
never heard what happened to that project.
C
Dear everyone, I of course agree that at this moment, it’s just very unreasonable to produce energy by solar panels and the required subsidies are a genuine crime of the government that proves that this whole scheme is fraudulent.
However, that doesn’t prevent me from thinking about ways how solar panels could become economically feasible at some point.
Re:Luboš Motl says:
May 17, 2011 at 11:49 pm
“However, that doesn’t prevent me from thinking about ways how solar panels could become economically feasible at some point.”
While you are thinking about that one, consider that only 50% of the cost of a central photovoltaic solar power plant resides in the solar cells themselves. The other 50% of the investment is in land, hardware and software required to mount the cells, track the sun, convert and condition the electrical output, etc. That means if the cost of the solar cells were reduced to “zero”, the plants would still not be anywhere near economically viable without subsidies. The problem with solar is its very poor “energy density” which precludes its achieving economic parity through “economy of scale”.
To a less extreme degree, wind power has the same problem.
re: Claude Harvey says: May 18, 2011 at 5:39 am
I agree that using solar to supply a grid is not feasible. It is much more likely that individual homes and commercial buildings will have their own solar array to supplement there power needs. This will reduce demand on the grid and is the only way solar will have any chance of making a significant contribution.
The trouble with solar on residential roofs is that they reduce your property value, they void your shingle warrenties, they cause leaks into the house, they get dirty and need cleaning, leaves cover them in the fall, high winds can rip them from the roof, they need cleaning in winter due to snow, etc. Home owners need to hire someone to manage them or climb on the roof to maintain the panels themselves and will fall off on occasion. In the end they never pay for themselves. The list of reasons not to put them on roofs goes on and on. Yet people still do it. Amazing.
I just think putting this near Kalamazoo is pretty darn funny. No sunshine in the Autumn, not much in the winter, terrible place for solar. Well I guess there aren’t any really good ones Lovins proved that. but Kalamazoo is especially bad.
Frederick Michael says:
May 17, 2011 at 7:37 pm
$27,689 is a ridiculous property tax bill. Something’s fishy.
——————————
My house sits on a third of an acre, and I’m sure cost less to construct than a third of an acre of solar panels. My tax bill is right at $4000. Multiply that by 4.5 and you get $18000 for 1.5 acres. Now, considering that my bill is reduced by a homestead exemption, the millage rate here is less than in Michigan, and the millage rates for residential property is less than commercial, then $27,689 begins to sound about right.
That’s why many say only the Government owns real estate, and the rest of us just rent from the government.
This just proves that the level of capital spending required for solar power is way out of proportion to the value of the power such plants can produce.
Only 45c per kwhr? UK pays about 45p ie 70c per KwHr. Or, rather, UK consumers do, via cleverly hidden subsidy arrangements that require those retailing ‘leccy to buy increasing quantities of “renewable” energy and pay the ridiculous price. As a “wholesale” price it just goes into the Retailer’s cost base and the consumer just sees a higher average price per unit.
Must confess that for non domestic solar PV installations the Feed in tariff rate has just been reduced ‘cos becoming too expensive I think – and in our cloudy land, solar PV not much use anyway… especially in the winter….candles anyone?
klem says:
May 18, 2011 at 7:08 am
“The trouble with solar on residential roofs is …”
They don’t have to be on the roof.
What’s the point of even having a small scale Solar plant, which can supposedly support 20 home? (It dosn’t because homes use power at night as well.) This solar plant doesn’t displace any convetional (i.e. good) power generation. This whole deal is just a hustle by the investors to cash in on the stupid subsidies that are being handed out courtesy of the Tax payer.