Renewable Energy Development on State Trust Lands

Abstract

This article looks at the opportunities and challenges presented by leasing state trust lands for renewable energy projects. The enormous growth in installed capacities of renewable energy sources, primarily wind and solar energy projects, in the United States, the European Union, and China over the last ten years shows no signs of slowing as we enter the third decade of the millennium. Indeed, even in the midst of a worldwide pandemic that wreaked havoc on manufacturing capacities, construction timelines, and supply chains for key components for renewable energy projects, global installations of renewable energy sources in 2020 grew by 45 percent from 2019 levels. Globally, 261 gigawatts of new renewable energy capacity were added in 2020, 50 percent more than the previous record for annual global renewable energy additions. New installations of renewable energy sources also far outstripped installations of nonrenewable energy sources, accounting for 82 percent of total global installed power capacity from all sources in 2020. Looking forward, renewables are projected to account for 90 percent of total global power capacity increases in both 2021 and 2022.

These global trends are reflected in the rosy projections for continued growth of renewables in the United States. The U.S. Energy Information Administration projects a doubling of the share of renewables in the United States’ electricity generation mix in the next 30 years. Wind and solar projects are expected to be responsible for much of this growth. These new wind and solar projects will require the leasing of tens or even hundreds of thousands of acres of land by renewables developers to site wind turbines and solar facilities, much of it in the western United States where most of the best wind and solar resources in the U.S. and large tracts of relatively unencumbered land are found. With many of the best (most energetic) sites for wind and solar projects already hosting operating wind and solar farms, the already fierce competition for what remains is likely to intensify with the growing demand for renewable electricity in the coming years. Renewable energy developers have long favored leasing privately-owned land for their wind and solar projects. Going forward, however, the growing scarcity of prime, privately-owned sites will force some developers to take a closer look at public lands for their projects, including state trust lands.

Given the strong political, market, and policy forces driving the rise of renewable energy generation in the United States, the siting of an increasing number of renewables projects on state trust lands over the next several years is all but assured. This is good news for state trust land managers, who are ever cognizant of their fiduciary duty to the beneficiaries of these lands. It is also, however, a challenge. State trust land managers, accustomed to leasing trust lands for comparatively low impact and less complicated uses, such as grazing leases, must grow their knowledge about and comfort with renewable energy projects. For their part, renewable energy developers will be challenged to adapt their private property-based approach to land acquisition, permitting, and project construction, operation, and decommissioning to fit the more stringent and, at times, less flexible requirements for developing renewable energy projects on state trust lands. It will not be easy, but the benefit to both parties (and to our rapidly warming planet) from meeting these challenges is more than worth the effort.

Keywords: climate change, renewable energy, wind energy, solar energy, state trust lands, leasing

JEL Classification: K12, K32