US Government drops solar land lease rates by 3.4% to 21%


The Biden Administration has lowered the land lease rates that facilities must pay as part of a drive to deploy 25 GW of renewable energy on public lands. The announcement by the Bureau of Land Management (BLM) suggests that rents and fees will decrease by over 50% due to lowered rents and a reduction to the standard per-megawatt fees.

According to the official documentation, the rental rate for acreage was adjusted in different ways. First, the average lease rate for land within the state was discounted from 0.7% for New Mexico to as much as 7.5% for Arizona (Equation Variable: A in below chart). This, of course, lowers the lease rate by those percentages.

The second, much larger adjustment, applies to the per acre rental charge. This change decreases the Rate of Return (Equation Variable: C) from 5.7% down to 2%. This downward revision will drop the price of the land lease rate by just over 62%.

BLM also adjusted the flat fee per megawatt deployed for all energy sources, down to $2,000. This downward adjustment ranged from $3,802/MW for wind, to $2,172/MW for solar power. The decrease in price for solar was 7.9% – leaving the cost at about two tenths of a cent per watt.

Combined, the two rate deductions for solar power provide a discount that ranges from 3% to 4% in Arizona, to just over 21% in California.

Along with their announcement on price reductions, BLM delivered a presentation to Congress highlighting the progress they have made, and showing off their project pipeline. The BLM aims to get 25 GW of renewables installed by their target date of 2025.

The presentation notes that BLM permitted twelve projects totaling 2,890 MW, from geothermal and solar power in 2021. The solar facilities make up 96.5% of the total capacity deployed across projects located in Arizona, New Mexico, Utah, Nevada, and California.

This represents a 35% increase in capacity over the 2,148 MW deployed in 2020.

Going forward, the BLM has enough capacity in the pipeline to meet the 2025 goals via solar power alone, because the 39 projects in the queue total 29,596 MW of capacity. 28 of these projects were driven by applicants, while 11 of the potential facilities were initiated by BLM offering up specific, pre-approved land up for development.

Among the BLM initiated lands is a 600 MW plot being developed in Utah. Wind power in the queue totals just over 2 GW, and geothermal capacity totals 188 MW. There are also six power lines in the planning stages, with a total of 1.7 GW of transmission capacity.

According to the press release, BLM has created five ‘Renewable Energy Coordination Offices’ in western states that will help push these projects through processing steps, and they are actively hiring project managers to accelerate the permitting work.

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