Solar Energy Property Taxation

June 2021
Eli Gold, advised by Sarah Mills

In this memo, we examine the existing ways states have crafted legislation on property taxes for utility-scale solar developments and find two main categories of existing legislation—”exemption or abatement,” and “exemption and replacement.” We point out the basic reasoning behind these different approaches and find 16 states fall in the former category and 12 in the latter. All other states have no property tax policies specific to solar. We find that in 11 states solar property tax benefits are subject to control by local governments and the remainder are blanket for an entire state or subject to determination by a state body. Next, we do a brief analysis of the potential ramifications of the different types of tax policy treatments. We then look at how some state laws unrelated to solar or renewables are used to lower solar developers’ property tax burdens and how mandates within property tax legislation can be used to drive desirable developer behavior. Finally, we point out some common confusions to be aware of when reading legislation pertaining to solar property taxation.