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
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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.