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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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?