Riverside County, home to some of the largest solar energy plants in the state, is considering imposing a development fee on such installations, a move that critics say could chill prospects for the renewable energy business in the region.
The new levy, which would require solar developers to pay 2% of their annual revenue, is needed to help offset the potential toll that the massive plants could take on surrounding communities, county officials said.
More large-scale solar plants are being installed in Riverside County than anywhere else in California, according to the county. More than 185 square miles in the county is set to be blanketed in mirrors. Those projects could strain local roads, bridges, law enforcement and medical services, the county said.
“We’re just saying that when we’re left with all the impacts of development, give us a little something back for the imposition on our county,” said Riverside County Supervisor John J. Benoit, who is backing the measure.
But solar developers said the fee, which they said came out of the blue, could make their installations unaffordable and less attractive to investors. Some are threatening to relocate their projects if the proposal, which they have dubbed the “sun tax,” is approved.
The supervisors are scheduled to vote on the fee Tuesday.
“It’s a game of gotcha,” said Jim Woodruff, vice president for government affairs for First Solar, which is in the process of obtaining permits for Desert Sunlight, a 4,000-acre project that would provide enough electricity for 160,000 homes. “For the county to come in at the eleventh hour, when we’re so close to the finish line, is a troubling way to do business.”
The county’s franchise fee could cost First Solar $3.5 million a year, or $100 million over the project’s life, Woodruff said. And unlike utilities, the company can’t pass the fee on to its customers.
The renewable energy industry, which is opposing the measure, said the fee would be the largest in the region and could cause Riverside to lose competitive ground to nearby counties. In Kern and Los Angeles counties, similar fees would cost First Solar $90,000 a year.
Riverside County officials contend that these projects receive generous government subsidies and incentives and that solar developers can afford to help alleviate the toll that their installations could take on local communities’ resources.
Solar developers say they are already on the hook for millions of dollars in property and sales tax.
But Supervisor Benoit said those figures were “grossly exaggerated.” Much of what the solar developers end up paying will be claimed by the state, he said.
Benoit said he hoped that most of the proceeds from the proposed fee would go to the county’s general fund or to economic development efforts in eastern Riverside County, where many of the installations will be.
The franchise fee could generate as much as $38 million a year based on currently proposed projects, according to government documents.
“This is the epicenter of the modern gold rush,” Benoit said. “We don’t believe that many serious potential solar providers would be turned away by the fee.”
But First Solar said the extra expense could hurt its talks for financing and delay its Desert Sunlight project indefinitely. Construction is slated to begin by the end of September.
Developer Solar Millennium, which broke ground this month on Riverside’s biggest solar installation near Blythe, has similar worries. It would have to pay roughly $5.9 million a year if the measure were approved.
Stalled solar installations could hurt the local economy by keeping hundreds of millions of dollars in spending from project employees, materials purchases and more, solar executives said. They added that many of the county’s concerns about environmental and government resource mitigation have already been addressed.
“The tax is disproportionate to any impact the county’s been able to identify,” Woodruff said. “The benefits that flow from the project are very significant.”
In a symbolic gesture last week, the Blythe City Council voted unanimously to oppose the fee, which it said had “taken everyone by surprise.” In a letter, local business group Coachella Valley Economic Partnership suggested that the fee would create “an incentive for solar companies to take their jobs and investment to other states.”
The International Brotherhood of Electrical Workers union plans to protest at the Tuesday meeting with 17 other organizations. Solar development could create 600 jobs for IBEW workers in the county, where construction unemployment is hovering around 35%, said Robert C. Frost, business manager of the local chapter.
“This tax is coming when we have been fighting for years to get these projects started,” he said. “They could give us enough work to put the local community back on track.”