Consulting on Site Selection for Solar Power Plants
The current administration in Washington, D.C. is highly favorable to green energy sources to reduce the nation’s dependence on fossil fuels for energy. The Inflation Reduction Act (IRA), used for more than addressing inflation, provides incentives not only for individuals to go green, but for those involved in large-scale efforts. One of the alternative sources for green energy is solar power.
In 2007, the Commonwealth of Kentucky had already jumped on the alternative fuel bandwagon with the passage of the Energy Independence Act (EIA). The EIA not only provides tax credits for companies that make the move to solar energy, but also for those entities that create and operate large-scale renewable energy projects. Now, the IRA makes solar even more attractive.
For those large-scale projects, it is important to find a site that is suitable. The Kentucky Energy and Environment Cabinet (EEC) has studied the issue of solar energy project siting based on topographic, environmental, infrastructure, and land-use considerations and constraints. In particular, it has focused on the use of former mining sites for solar power generation projects.
If you and your group are looking to enter the solar generation market and need guidance—in or around Louisville, Kentucky, or throughout the Commonwealth—contact me at Chris Sanders Law PLLC. Though I'm new to green technology, I can get you and your group started on the way to financing, permitting, tax incentives, and even community involvement needed for your project.
Solar Project Siting Issues
The EEC has done a lot of analysis when it comes to finding a suitable site for developing a solar power project. The group notes that sites exist across Kentucky that meet the “basic criteria” for technically supporting the development of such a project. Their analysis, however, does not cover economic or market factors. In other words, the EEC focuses on the factors that should exist for solar power generating sites, not on predicting any financial return.
As mentioned earlier, the group’s analysis focuses on former mining sites that have been, or can be, reclaimed as solar energy sites. The study found that those abandoned mines in Western Kentucky are more technologically suited for solar power siting than most available sites in Eastern Kentucky. In the East, it suggests that micro-site development and potentially smaller projects might be more suitable.
Here's where it gets interesting. Against this analysis, against the odds, one of the largest solar installations in America is going in on reclaimed coal-mine land in Eastern Kentucky. Development has just begun on the Starfire mining site, near Hazard, which has hundreds, even thousands of acres available for solar installation. Surfaces leveled by reclamation make a lot of sense for panels. Power-grid access via underused overhead lines previously used in strip mining is ideal for electricity generated by solar. I'm not involved in the project, but we should all keep watch as the Starfire project moves from announcement in 2023 toward operation the near future.
Because the EEC cautions that not all suitable locations can be ultimately developed due to private land ownership issues and community desires and needs, here is where I play a vital role. In addition to legal issues around green energy, I am also actively involved in community organizing and public involvement to help pave the way for your project.
Siting Considerations and Suitability
The EEC analysis addresses the suitability of a site to be developed for a solar energy power project. It suggests that only sites with 250 acres, or more, should be considered, and then only if there is a potential for connection to a transmission line. Access to such a line within one mile is considered ideal, but up to five miles is manageable.
Also, there are permitting and demographic considerations. It suggests that sites with more than 300 residents to a square mile might not favorable. It is important to note that a site should not be constructed in an area where there are threatened or endangered species. Before commencing the project, the EEC recommends consulting with the Kentucky Office of Nature Reserves.
Kentucky and Federal Incentives
The Energy Independence Act (EIA), as noted earlier, provides incentives not only for businesses that want to employ solar energy solutions on their sites, but for those who are looking to create large-scale projects.
Companies must apply to the Kentucky Economic Development Finance Authority before starting their project, whether for their own business or for a large-scale site. There is a $1,000 application fee and then an 0.25 percent administrative fee capped at $50,000. The project offers tax incentives, but they may not exceed 50 percent of the capital invested in the project. The incentive package may not exceed 25 years.
The terms and incentives include:
At least $1 million must be invested.
A solar project must generate at least 50 kilowatts (kW).
An incentive of 100 percent of corporate income tax is available for up to 50 percent of the capital investment.
A 100 percent incentive of limited liability entity tax is available.
Incentive of 4 percent of gross wages for each employee.
Up to 100 percent of sales and use tax for large-scale projects.
The federal Inflation Reduction Act retains some existing consumer and business tax credits for solar projects. Prior to the IRA, solar generation projects were entitled to an investment tax credit (ITC) that is set to go down to 10 percent in 2024 (it’s 22 percent in 2023), but the IRA created an opportunity to obtain a 30 percent ITC – as long as the project generates no more than 1 Megawatt (MW). Construction projects must begin before the end of 2024 to qualify.
Legal Counsel for Green Technology
If you and your partners are looking to undertake a solar generation project in Kentucky, contact me immediately. I can consult and advise you on solar siting issues and other concerns, including the legal requirements and other consulting concerning permits, licensing, financing, and community concerns. Reach out to me at Chris Sanders Law PLLC, today for knowledgeable legal guidance.