Little Known Fact: Renewable Energy Companies Pay Way More Than Fossil Firms to Lease Public Land

When fossil fuel companies are allowed to lease our public lands to extract oil, gas and coal, they pay close to nothing for the priviledge of disrupting our climate and destroying wildlife habitat.

But for renewable energy developers, it’s another story. They pay top dollar to put solar or wind arrays on public lands.

For solar, costs per acre have a huge range. The Bureau of Land Management (BLM) charges between $16.50 and $6,897 and rates rise each year, but oil and gas leases are set in stone at the bargain price of $1.50 per acre per year, according to Renewable Energy World.

"It’s almost embarrassing what we charge," Dick Bouts, energy program analyst at BLM told Renewable Energy World. "It’s certainly pocket change for these companies that will spend millions of dollars developing a lease to get it in production, and the rent is almost nothing."

And while solar and wind projects produce energy forever, once the oil and gas is pulled from the ground, it’s gone.

Mineral Leasing Act of 1920

It all goes back to the Mineral Leasing Act of 1920 when Congress set the rates. In the 1980s, Congress raised the fee from $1 per acre, but since then has refused to act. Cattle and sheep ranchers can graze their animals on public lands for bargain prices for the same reason.

"Even if we were to try to do a rule making and try to raise the rate for oil and gas, BLM would get beat up so bad by the industry and by certain members of Congress," he told Renewable Energy World.

But Congress does allow BLM to set rates for renewable energy. These market rates rise every year and are based on population and GDP.

In addition to paying rent for the land, there are royalty fees. Oil and gas companies pay 12.5% of the value of what they extract, but various loopholes reduce it to more like 5%.

Solar pays a per-megawatt fee, and the bigger a project is, the price goes up for every megawatt of energy produced. Fees are lowest for solar PV ($5,256 per MW), followed by concentrating solar without energy storage ($6,570 per MW) and are highest with energy storage ($7,884 per MW), reports Renewable Energy World.

The only other fee BLM is allowed to set is for oil and gas pipelines and transmission lines for renewables that run through federal land.

This is one more sweetheart deal that continues to subsidize fossil fuels at the expense of renewable energy.