BLM codifies new solar leasing rules

The Bureau of Land Management (BLM) finalized rules governing renewable-energy project development on public lands, revamping the fee schedule and making siting rules clearer for designated leasing areas (DLAs).

Four years ago, BLM designated 17 so-called Solar Energy Zones designed to streamline the permitting process for solar projects in six southwestern states by siting projects in areas where they would have the lowest impact on the environment. In addition, the rules revamp the leasing structures to make it easier for projects to receive financing.

To that end, fees will now be indexed like home mortgages:

  • Developers can either choose Standard Rate Adjustments (SRAs), which adjust based on land values on electricity prices (akin to a variable rate on a mortgage); or
  • Developers can agree to Scheduled Rate Adjustments, which are set percentage adjustments at fixed intervals from the time of the initial agreement (similar in function to a fixed-percentage rate on mortgage).

According to the BLM, the new financing options allow competitive solar leasing that more closely mirrors a free-market approach, which they say will bring down near-term costs for solar projects, encouraging more development. It also says the new rule will help renewable energy flourish on the 700,000 acres of public lands identified in Arizona, California, Colorado, Nevada, New Mexico and Utah.

BLM projections suggest the new rule will lower rents and fees for solar projects, with the appropriate caveat that the scope of fees will depend on numerous other factors, including:

  • Whether the project is new or existing;
  • Whether it relies on a grant or a lease; and
  • What rate adjustment method the developer chooses, among other factors.

Under the new rules, the BLM will issue one-time and annual net reductions in payments. The regulations become effective 30 days after they are published in the Federal Register.

BLM undertook the rule changes to facilitate the development of 20,000 MW of renewable energy on public lands that President Barack Obama’s Climate Action Plan demands. To date, the Department of the Interior (which oversees BLM) has approved 60 utility-scale projects on public lands, including 36 solar projects (more than double those of any other renewable-energy source).

In combination with the other renewable-energy projects, BLM has permitted projects totally 15,500 MW of capacity, which would power approximately 5.1 million homes.

The new rules, in development since the Advanced Notice of Proposed Rulemaking was published in December 2011, were formerly published on Sept. 30, 2014 for public comment. BLM received a total of 36 comment letters and other feedback during stakeholder engagement meetings.