Crunching solar power’s tax generation potential | Columnists | kpcnews.com – KPCnews.com
Large-scale solar power may be coming to northeast Indiana in the future.
That potential development could have major financial benefits to our area.
Noble and DeKalb counties have been in the midst of working on zoning ordinances to set rules and regulations for commercial-grade solar fields, huge arrays that would generate hundreds of megawatts of power.
We’re not talking dinky 1-2 megawatt fields like those from Noble REMC, City of Kendallville, Reliable, Wible Lumber and Fremont schools. We’re talking big boy solar fields.
Attitudes of rural residents about solar energy are hit and miss. Some appreciate using part of their land for green energy and can possibly benefit from lucrative lease payments. Others scorn rural renewables because if they have to “look at it” they don’t like, regardless of what “it” is, solar panels, wind turbines, houses, you name it.
Anyhow, even for people who live in town or live nowhere near any planned green energy developments, the potential for solar development can be a boon. How is that?
A large-scale solar development can have a positive tax impact for everyone in the county, even people who don’t live anywhere near it.
Let’s investigate, using Noble County as an example:
Like any home, business or industrial site, solar panels would be a new taxable investment. And at a commercial-grade solar scale, we’re talking a major investment.
Geenex, which has been eyeing Orange and Jefferson townships in Noble County, is proposing a 300-400 megawatt field, that could span 2,000-3,000 acres.
But how much would it cost to build a 300-400 megawatt field?
Kendallville’s solar field on the former McCray Refrigerator factory site is a 1.55-megawatt field that had a price tag of about $2.52 million. That’s $1.63 million per megawatt.
Fremont Schools’ field in 2017 was about $4.2 million for a 1.8-megawatt field, or $2.33 million per megawatt.
Since Kendallville is more recent, let’s use that figure, as we know solar costs have been coming down year-to-year as the technology improves and becomes more prevalent.
To be conservative, let’s even suppose there are economies of scale for building larger that might push the cost to $1.5 million per megawatt, just for this example.
A 300-400 megawatt field would therefore potentially result in $450-$600 million new investment.
For comparison, the shell building Kendallville is constructing is $2.2 million and might get another $1 million in investment to build it out when it’s sold to a business.
We’re talking a potential investment hundreds of times larger than a typical industrial relocation or expansion in one shot.
The major Brightmark recycling plant in Ashley, when it was built in 2019, was a $260 million project, so a solar project could even top that major project
OK, that could be a lot of investment, right? But how do taxes figure in?
As you may or may not know or remember, tax rates are determined by dividing the tax levy, the amount of money governments need to raise for services, divided by the assessed value, the value of property in that particular area.
(The assessed value of panels may be less than their construction value, so overall impact could be reduced. For the purpose of this exercise, we’ll assume build value equals assessed value.)
In 2021, Noble County’s total assessed value is $2.44 billion. Adding $450 million in solar panels would be an 18.4% increase in total assessed value, almost 25% if the value if the solar field is valued at $600 million.
Noble County government’s levy was $10.4 million in 2021, resulting in a tax rate of about 0.43%, a rate that everyone in the county pays.
Using the same levy but taking an increased assessed value, the county tax rate drops to right around 0.35%, plus or minus a hundredth of a percent depending on the project size.
If you’ve got a $100,000 home, that just saved you about $27 per year on taxes for solar panels located nowhere near your house, more if your house is worth more. A farmer in nowhere-near Swan Township would save $80.50 for every $100,000 of ground. A $2 million industry in Kendallville shaves $1,600 off their property taxes.
The tax savings would be even more pronounced for someone living in an area where the solar panels are actually located.
For example, Central Noble Community Schools’ total assessed value is currently $485.3 million. If the value in Jefferson Township increased by $400 million, the school’s tax rate would drop from 0.83% to about 0.45%.
Considering the school and county make up most of the tax rate for a person living in rural Jefferson Township, farmers and rural residents could potentially see their tax rate halved by a major solar investment.
A huge solar project would have extreme tax benefits to people living in the same township where the panels are built. It would have big benefit to anyone living in a school district where the panels are built. And it would have small benefit, albeit benefit nonetheless, to everyone in the county regardless of where they live.
(That impact becomes more complicated and less pronounced if there are tax abatements involved, although residents would see smaller benefit during the abatement term and then full benefits long-range after the abatements expire.)
On top of the benefits of generating clean energy, devoting 3,000 acres — about 1% of Noble County’s total acreage — seems like it would be a good use of land and a boon in at least some small way to everyone living here.
This example used Noble County, but the math and impact would be similar in rural DeKalb County, too, with the same huge/big/small stair-step tax impact applying depending on your proximity to the panels.
Economic development types and, realistically, anyone who wants to pay fewer taxes should be strongly supporting the potential for large-scale solar development in our area.