The Washington State Legislature passed a bill in 2023 directing the Department of Commerce (Commerce) to develop a study and report assessing the economic impact of and public opinion toward clean energy development in the state’s rural communities. Beginning in December of that year, the Clean Energy Transition Institute (CETI) joined forces with Ross Strategic, Industrial Economics Inc. (IEc), and Commerce to deliver on this legislative directive.

Throughout 2024, the Rural Clean Energy Team (RCE Team) conducted two parallel lines of inquiry: a detailed analysis assessing the economic and financial impact of utility-scale clean energy development on Washington’s rural communities and a rigorous public engagement process to better understand rural communities’ perceptions of those types of projects, and of clean energy in general.

The results of the study informed eight recommendations for the Legislature to consider when crafting future clean energy policies as the state works to achieve its emission reduction and clean energy targets. These results and recommendations were presented to the Legislature in November of 2024 and are detailed below. 

Economic Analysis Results

The economic analysis quantified the magnitude and distribution of financial impacts from utility-scale projects in Washington to inform how costs and benefits may be more equitably distributed in rural communities. It considered the impacts of existing and planned clean energy projects larger than one megawatt (MW) built in rural communities since 2019. Findings were grouped into five categories: geographic distribution of large energy projects; effects on other rural land uses; financial returns to property owners; effects on local tax revenues; and direct, indirect, and induced jobs in construction and operations.

Geographic distribution of large energy projects

The RCE Team examined 20 utility-scale clean energy projects, the majority of which were solar (65%) and wind (30%). Of these, 10 utility-scale projects were developed and are operating, with four located west of the Cascades and six in the southeast portion of the state. Altogether, the operating capacity for these projects is 823 MW. The four largest projects–Rattlesnake Flat Wind, Lund Hill Solar, Skookumchuck Wind, and Tucannon Wind–operate at over 100 MW each. Another 10 projects are planned or currently under construction, mostly located in central or eastern Washington. Seven of these projects will have over 100 MW of operating capacity.

Effects on other rural land uses

The economic analysis also assessed whether utility-scale clean energy development negatively impacts local economies through loss of agricultural land and attractiveness for tourism, recreation, and other activities. The case studies suggest that wind projects have a relatively small footprint, taking up only 2-4% of total project area, and have little impact on agricultural yield when sited on farmland. Solar, on the other hand, requires near total conversion of land uses within an established project area and co-locating other land uses is more prohibitive.

Financial returns to property owners

An assessment of the short-and long-term financial impacts of utility-scale clean energy projects on property owners whose land is developed revealed that both wind and solar project lands are typically leased by project developers rather than purchased outright. Leases typically involve a pre-development agreement that lasts two to five years. Once the design is established, landowners of parcels where infrastructure is built are compensated either on a per-acre or per-MW basis at an established fee.

Average lease rates identified through public sources range from approximately $200 to $1,000 per acre for solar leases and $3,000 to $4,000 per MW capacity for wind leases. Financial returns for both solar and wind developments are likely to exceed agricultural crop revenue on a per acre bases. A literature review found that adverse effects on property values ranged from 0-6% between pre- and post-construction, regardless of property location or project type.

Effects on local tax revenues

The study assessed whether additional tax revenues from clean energy projects are sustained over time and how changes to tax payments impact jurisdictions where projects are located, especially as the investments depreciate.

State and local taxes are collected from clean energy projects as real property tax (land and buildings), personal property tax (equipment and machinery), and sales tax. The contributions to the county tax base through personal property tax were far larger than from real property tax due to the high value of assessed equipment, although depreciation of those assets reduces the amount collected over time. Sales tax is collected on all labor and materials purchased for a project, which primarily occurs during the construction phase.

The analysis found that all counties with operating projects experienced an increase in local tax revenue relative to previous land uses, with additional collections representing nearly half of countywide tax collections for several years following project construction in smaller counties. However, local county officials raised a concern about their lack of authority and expertise to assess these projects, which challenges their ability to anticipate depreciation year-to-year.  

Direct, indirect, and induced jobs in construction and operations

The lack of public data sources on clean energy employment in Washington made it difficult to accurately estimate the short- and long-term jobs that utility-scale clean energy projects produce in the state. Given this limitation, the economic impact of projects, including potential construction- and operations-related jobs, were estimated with a regional economic model.

This modeling revealed that although clean energy projects provide substantial jobs during construction, very few of them are direct construction jobs for local hires due both to lack of training and expertise and to the fact that clean energy infrastructure is often manufactured out of state. Projects provide only a modest number of permanent jobs during operations, and those jobs are typically local due to the need for frequent site visits. Although there are some incentives in Washington to increase the use of local workers, there is little evidence of their effectiveness.

Community Engagement Results

The community engagement process for this study included a mix of individual and small-group conversations, focus groups interviews, in-person public meetings, and a virtual public meeting. There was also an online portal through which individuals could submit comments. The intent of this process was to better understand the opportunities, concerns, and solutions that rural communities perceive regarding utility-scale clean energy development. Feedback was aggregated, analyzed, and synthesized thematically as follows:

Opportunities

• Potential for clean energy, especially community-scale, to offer increased energy independence, reliability, resilience, and affordability.
• Financial benefits for individuals who receive additional income from leasing lands to utility-scale developers.
• Potential to attract investment and economic opportunities if the state is seen as a leader on clean energy.
• Improved health from reductions in harmful pollution.
• Potential for increased local tax revenue, mitigation payments, job creation, and other community benefits.

Concerns

• Lack of transparency, local control, and input on decision-making.
• Skepticism about the need to prioritize decarbonization in Washington given how clean the electricity grid is and other competing priorities.
• Lack of sustained and direct local benefits.
• Negative impacts to the environment, quality of life, tourism, and recreation over the entire lifecycle of clean energy infrastructure.
• Belief that the timeline for emissions reductions and clean energy targets set by the legislature are unrealistic.
• Shrinking tax base and revenue over time as clean energy assets depreciate.
• Lack of training opportunities preclude local workforce from benefitting from employment opportunities; even when a clean energy project supports local jobs, they are often short-term.

Solutions Related to Community Concerns

• Focus development and state support on smaller community-scale projects with more direct benefit to communities.
• Revise energy permitting, siting, and grant application processes to be more efficient, streamlined, and inclusive.
• Increase collaboration between the state, counties, and local communities on clean energy siting decisions.
• Provide more opportunities for community engagement that will increase transparency, education, and participation.
• Require Community Benefits Agreements (CBAs) to ensure local communities receive the benefits of clean energy projects in their regions.
• Update tax structures or payment designations to better advantage rural communities.
• Guarantee sustained local employment and economic benefits to address concerns around job displacement with local labor agreements.

Recommendations

Based on the above findings from the economic analysis and community engagement process, the report offered the following eight recommendations for the Washington Legislature to take into consideration as they explore clean energy strategies and policies in the future:

• Strengthen local involvement in clean energy siting and project development processes to ensure that rural communities are informed and have a meaningful role in the decision-making process.
• Ensure increased rural community benefits and mitigate potential harm from clean energy projects.
• Safeguard and enhance the quality of life in rural communities as clean energy projects are developed.
• Improve transparency in the planning, development, and operation of clean energy projects.
• Explore an alternative taxation approach for large clean energy projects.
• Improve communication about sales taxes and clarify expectations about payback timelines for developer rebates.
• Increase transparency of economic and financial data reporting.
• Improve documentation of federal and state incentives.

To dig even deeper into the results and recommendations from this study, check out the full report.

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