Solar power brings more land speculation

I shouldn’t be surprised to read, in Fortune, that speculators are buying up sites with good potential for solar power generation. The article indicates that these are largely desert areas near major cities of the West, and particularly the Mojave near Los Angeles. Prices have increased from $500 to $10,000 (or more) per acre. Much of the site is government (BLM) land intended as a nature reserve; it’s not (currently) for sale but can be leased (prices not discussed in the article.)

First Georgist point to make: none of the folks who own this land did anything to create the demand for it.  Nearly all of the $10,000/acre, or the lease fee, rightfully belongs to the community, in this case probably at the state or federal level, where it should be used to reduce other taxes or public debt.

Several specific projects are described:

name acres megawatts acres/mw
Abengoa 1920 280 6.86
OptiSolar (pv) 105300 9000 11.7
Solar Inv (Goldman) 125000 10000 12.5
total (“nearly a million ac”) 990000 60000 16.5
OptiSolar (near Ausra’s) 6080 550 11.05

We could assume about 12 acres/megawatt, or $120,000 land cost per megawatt, $120/kw.  If a typical house draws a maximum of 3 kw, that’s only $360, which on an annual basis is a very modest share of power costs.  That’s one reason the speculators will doubtless get away with it.

BLM tries not to lease to speculators, so they have to pretend to be something else.  Thus Goldman Sachs has created Solar Investments, which is expected to bring in a “partner” to actually build the plant, or maybe just sell the company to an actual plant developer.  Outside the BLM area, speculators are free to buy, and do.

If Fortune’s numbers are reasonably accurate, this desert is now going for far more than productive midwest farmland.  I wonder whether it would pay to build solar plants in rural areas around Chicago.  Of course we don’t get as much sun as the Mojave, but on the hot days when demand is high this might not be a problem.

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