Ohio’s rural renaissance: The tangible benefits of renewable energy PILOT payments

Photo by Xuanyu Han/Getty Images.

As Ohio continues to bring new utility-scale renewable energy projects online each year, an increasing number of communities across the state are experiencing tangible economic benefits. These benefits, once met with skepticism by renewable project opponents and some community members, come in the form of annual fixed payments made directly to local communities over decades.  These payments, known as PILOT (Payment In Lieu of Taxes) payments, are proving their value.

Unlike new property tax revenues, under Ohio law, PILOT payments do not depreciate or devaluate over time, and funds from PILOT agreements do not reduce school district funding through the state funding formula. An increasing number of townships, counties, and school districts throughout the state are now enjoying the long-promised advantages of renewable energy PILOT revenues.

One of the longest-running examples of how dramatically renewable PILOT payments can benefit a local community is in Paulding County, where annual PILOT payments starting in 2013 have funded a decade of investments in local schools and services. As Paulding County’s Chamber of Commerce testified to the Ohio General Assembly in 2021, “the PILOT payments are the #1 tax revenue resource in Paulding County…this is our opportunity to secure a recession-proof, resilient economy for years to come.” The stability and reliability of PILOT payments have even been credited with improving the county’s debt rating to a high investment grade, helping lower the cost of running the local government and keeping property and other taxes low.

PILOT payments have had a broad positive impact across Paulding County, which saw 18 municipal services benefit with direct annual payments over the last decade, including the local library, a local mental health facility, 911 emergency services, and more. The bulk of PILOT payments go directly to Paulding County’s primary school district, Wayne Trace. Wayne Trace has used those funds to invest in building renovations and athletic facilities, hire special needs teachers and teaching assistants, add teachers, classroom aides, tutoring, elementary guidance, and technology coordinator positions districtwide, improve the student-teacher ratio, and hire a full-time Drug Abuse Resistance Education (DARE) officer for the school district.

As Wayne Trace Superintendent Ben Winans has stated, “the return on the investment that we’ve seen is our most recent report card, our GAP closing – which is getting those lower students to achieve at higher levels, improved from an ‘F’ to an ‘A.”  And more recently, Paulding County will use PILOT revenues to help fund and staff a new STEAM center where students can learn 21st-century skills in science, technology, engineering, art, and math.

As new solar projects come online in Ohio each year, more localities are seeing the promise of PILOT revenues become a tangible reality. Over 11% of Brown County’s 2024 annual budget is now provided by PILOT revenues from a single solar project that came online in 2023. PILOT revenues from three Highland County solar projects combine to more than double the amount the county receives in property taxes, and similarly, two recently completed solar projects in Hardin County have provided PILOT revenues that are substantially greater than total annual property tax revenues in the county.

Across Ohio, from Vinton County in the east to Preble County in the west, these revenues mean real, tangible benefits that renewable energy PILOT payments can provide to local communities, revitalizing local economies that often lack new investments in schools and services that ensure the vibrancy of a local community for current and future generations. As the solar industry embraces agrivoltaics—the practice of integrating agricultural uses such as livestock grazing among the fields of solar panels—these tangible benefits come with a land use that can help augment rural agricultural economies and provide opportunities for a new generation of farmers and grazers that would otherwise have limited access to land for raising livestock.

Ohio is experiencing an economic transformation that has vaulted the state into an economic powerhouse among the top states in the nation. However, the state is facing a challenging shortage of new electricity generation on the horizon that threatens to halt its economic leadership and prosperity and increase electricity rates for Ohioans. In-state solar facilities can play a big role in helping address that projected power shortage while keeping Ohio ratepayer dollars in state, and local communities can benefit along the way by embracing PILOT agreements on well-designed solar projects that can fund decades of investments in schools and local services.