September/October 2022 Issue

Also in this issue: Remembering Mike May     |     Public Records Retention: When to Say Goodbye     |     PSCW Takes Up Third Party Ownership Question

Municipal Regulation of Solar Energy Systems

Eric B. Hagen | 10.17.22

Over the past decade, Wisconsin has seen a huge increase in the development of solar energy systems,[1] with Wisconsin’s solar capacity increasing from 21.1 megawatts (MW) in 2012 to 837 MW in 2021. With the continued growth of solar, municipalities should understand their role in the regulation of solar development. 

Wisconsin has enacted statutes that protect solar development and limit municipal oversight. Wisconsin Statute § 66.0401 explicitly limits the authority of municipalities to regulate solar energy systems. Under Wis. Stat. § 66.0401(1m), municipalities may not place any restriction on the installation or use of solar energy systems unless the restriction satisfies one of the following conditions:

• Serves to preserve or protect the public health or safety; 
• Does not significantly increase system cost or decrease efficiency; or
• Allows for an alternative system of comparable costs and efficiency.

This statute is not superseded by municipal zoning or conditional use powers. The three conditions listed above constitute the only standards that municipalities may consider when regulating solar projects. In the absence of enforceable municipal restrictions, a developer may construct a solar energy system even without prior municipal approval.[2] Moreover, the courts have upheld these statutes, barring municipalities from making restrictions contrary to the state’s expressed policy.[3]

In addition, municipalities are not permitted to make general policies applicable to all solar energy systems. Rather, permissible restrictions may only be made on a case-by-case basis, similar to a conditional use permit process. Municipalities must hear the specifics of the particular solar project and then decide whether a restriction is warranted. A municipality may not promulgate an ordinance in order to establish an arbitrary, one-size-fits-all scheme of requirements applicable to all solar projects. 

Wisconsin Statute § 66.0403 does allow municipalities to grant solar access permits to the owners of solar energy systems. While a solar access permit is not required to install a solar energy system,[4] such a permit allows an owner to prevent the blockage of solar energy generation by an interfering structure or vegetation. A solar access permit may only be granted if:

• The permit will not unreasonably interfere with the orderly land use and development plans of the municipality;
• No one has demonstrated that they have already made substantial progress toward planning or constructing a structure that would create a blockage;[5] and
• The benefits to the applicant will exceed the burdens. 

Once a permit is granted, notice of it must be recorded against each property restricted by the permit. A solar access permit only prevents blockages erected or planted after the notice was recorded. Any person who erects or plants a blockage after notice is recorded may be liable to the permit holder for damages for any loss due to the blockage, court costs and reasonable attorney’s fees. A permit holder is also entitled to an injunction to require the trimming of any vegetation that would cause a blockage. 

Municipal review is further curtailed for large solar projects of 100 MW or more. Under Wis. Stat. § 196.491, such solar projects are required to obtain a certificate of public convenience and necessity (CPCN) from the Public Service Commission of Wisconsin (PSCW). Solar projects granted a CPCN can proceed with installation and utilization even if they would otherwise be precluded or inhibited by local ordinance. Effectively, municipalities cannot impose ordinances to limit or control the development of solar energy projects of 100 MW or greater. However, municipalities can intervene in PSCW proceedings in order ensure that they have some measure of input and control over project development, maintenance and decommissioning. Municipalities can also appeal PSCW decisions to grant a CPCN. 

While the granting of a CPCN effectively preempts the applicability of local ordinances, through intervention and otherwise, municipalities often enter into project development agreements with solar project developers. Negotiations with the developer should take place as early in the project development process as possible, preferably before PSCW hearings begin. Joint development agreements typically address: 

• Road use, maintenance and repair obligation, including proposed equipment haul routes.
• Drainage repair obligations.
• Allocation of utility shared revenue proceeds between local governments.
• Restoration and decommissioning obligations.

For projects 50 MW and larger, the private land leased to a solar developer becomes exempt from local property taxes. Although this land will no longer be subject to property taxes, the owners of such solar projects pay annually into a utility aid fund which is shared with the local governments where the solar project is located. Under the revenue sharing formula currently in place under the Statutes, a qualifying solar project will contribute $4,000 per MW per year. If the solar facility is located in a village or city, the village or city receives $2,333 and the county $1,667; if it is located in a town, the town receives $1,667 and the county $2,333. Generally, the net gain to municipalities from utility revenue sharing is estimated to be at least 10 times higher than the lost property taxes. Notably, school districts are not included in this revenue sharing scheme nor compensated for the lost property tax revenue. 

While the legislature has significantly curtailed municipal regulation of solar energy systems, municipalities can still play a meaningful role in ensuring that the development of solar projects can be a net positive for the community. 

¹ ​“Solar energy system” means ​“equipment which directly converts and then transfers or stores solar energy into usable forms of thermal or electrical energy.” Wis. Stat. § 13.48(2)(h)1.g.

² See State ex rel. Numrich v. City of Mequon Board of Zoning Appeals, 2001 WI App 88, 242 Wis. 2d 677, 626 N.W. 2d 366, 00 – 1643.

³ See Ecker Brothers v. Calumet County, 2009 WI App 112, 321 Wis. 2d 51, 772 N.W.2d 240.

⁴ See Wis. Stat. § 66.0403(12)(a).

⁵ See Wis. Stat. § 66.0403(5)(a).