Utility-scale solar developments have proliferated across the United States over the past decade, growing at a rate that few could have predicted just a short while ago. Even as the actual capacity of solar projects installed continues to beat the most optimistic forecasts, States across the country have set ambitious renewable energy targets that will depend heavily on solar energy’s continued growth over the next decade and beyond.
Siting a utility-scale solar project requires balancing a number of competing concerns. In general, costs associated with moving electricity, infrastructure limitations and the complex regulatory patchwork and ownership structures that characterizes the United States electrical grid require that solar projects be installed in the same general geographic area where the electricity is being consumed. Solar projects require a large land area to generate a significant amount of energy when compared to non-renewable resources like coal or gas, and in most markets it is possible to locate areas where there is limited competition for farmland and forestland from other types of development (such as residential or commercial developments) making pristine land particularly economical and generally available for solar projects. As a result, these tensions often result in conflict between solar developers and the communities they are looking to develop in.
Brownfield sites are frequently identified by policymakers as priorities for remediation and redevelopment. Solar and other renewable energy projects are particularly tantalizing prospects on contaminated properties from a policy perspective. Redevelopment of a brownfield site into a renewable energy project should satisfy any land use concerns about the impact of solar development on local ecosystems. In addition, given the passive nature of this use, solar should be highly compatible with properties that are relying on natural attenuation as a remediation strategy, or that face limited redevelopment prospects given the nature or concentration of contaminants on the property.
Unfortunately, a lack of adequate incentives and concerns about risk continue to limit brownfields development for utility-scale solar. Federal and State environmental laws were intentionally drafted to ensure potential liability for environmental contamination reached as broadly as possible. Further, if additional remediation measures might be necessary in the future, it can be extremely difficult to incorporate these unpredictable and possibly significant costs into a base case financial model, threatening project financing. That potential for uncertainty is inconsistent with the established financing strategy for these assets, which often look to predict costs and income with unusually high precision (when compared to other types of real estate developments) over a 20-plus year term.
Some of these concerns can be addressed with additional engineering and diligence. While redeveloping a brownfield property may not be the norm in the solar industry, real estate development projects on brownfield properties have been successfully executed for decades. Many States shield third party tenants or purchasers (as well as their lenders) implementing an approved remediation plan from liability for existing contamination, and various strategies may exist for precisely identifying the scope of any potential risk, as well as for shifting risk for potential contamination onto a third party, such as the existing property owner. Experience really matters here, and the attorneys at DarrowEverett can help navigate you through this area of law that may otherwise seem unfamiliar.
Even with proper diligence and liability protections, incentives on the local and State level may be required to offset the additional cost of developing and holding a brownfield site. Municipalities concerned about the proliferation of solar projects should consider zoning changes that simplify and accelerate the permitting process for developing on a brownfield, possibly allowing for higher density development and reduced setback requirements. Most utility-scale solar projects already rely on tax equity financing, meaning that tax credit incentives would likely be embraced by the industry, as the infrastructure largely already exists to take advantage of those types of incentives. Other strategies exist as well: grants, higher payments for electricity generated by projects located on brownfields, clearer eligibility criteria and greater certainty in liability protections could all play a significant role in incentivizing brownfield development.
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