Krazy in Kalamazoo – taxes on solar farm more than the value of the electricity produced

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


newest oldest most voted
Notify of

“… 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.

Seamus Dubh

Welcome to Michigan.

Amino Acids in Meteorites

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.

Dr. Dave

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.

He contends that all sources of producing energy should have the same per kilowatt hour tax rate.

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.

James of the West

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.

Michael Innis

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.

Arizona CJ

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?…


time to march

Al Gored

Here’s a great article by Ross McKitrick detailing more green insanity in Ontario.
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.

Alexander K

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.

Claude Harvey

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.

Jeff Wiita

Economy of scale.
Keep Smiling 🙂

Neil Jones

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.

Seamus Dubh

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.)

Mike McMillan

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?…

First Bin Laden, now a nuke plant? – it sucks to be a fish.

John R T

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…´

kadaka (KD Knoebel)

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?

Sceptical me

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)

Steve R

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).

John Marshall

I am glad that Michigan lives in the real world. Reality should hit wind power as well.

Hector Pascal

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.

Dave Wendt

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!

Dr. John M. Ware

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.

Dave Wendt

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.

Martin Lewitt

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.