Property tax exemptions are an important way for states (and towns) to promote the use of clean energy, by not taxing the value added to the property through the installation of solar. The California State Legislature recently approved an extension of its property tax exemption that was already in place; the Missouri Supreme Court put an end to the exemption that had been in place for nearly a decade.
In California the property tax exclusion has been extended for two years, decreasing what some may see as a penalty for going solar. The State of California has faced many obstacles in the past year, most notably the net metering proposal and grid access charge. The Net Metering 3.0 proposal has been put on hold by the California Public Utilities Commission (CPUC, but if enacted, would essentially cut payments made by utility companies to rooftop solar owners for exporting their excess solar production back to the grid. The provision that drew ire from solar proponents was the grid access charge, an $8/kW solar capacity charge per month, which experts called a “tax on the sun.” The charge would apply to all solar customers, regardless of whether they have grid-supporting technology like battery energy storage. So in a time of uncertainty for California solar users, the recent exemption extension is seen as a positive.
“The Legislature’s action to extend the solar property tax exclusion is a critical step to ensure California remains at the forefront of America’s clean energy transition,” said Rick Umoff, senior director and counsel, California, at the Solar Energy Industries Association (SEIA). “Since the state instituted the exclusion, California’s solar market has grown to be the largest in the nation, employing over 70,000 people and driving more than $70 billion into local economies statewide.”
The bill now goes to Governor Newsom’s desk to be signed into law.
On the flip side is Missouri. A state ranked 35th in solar installations, which is currently receiving only 0.72% of its electricity from solar (according to SEIA), has added a deterrent to the clean energy transition by ending the solar energy property tax exemption that has been a law since 2013. According to a database maintained by the Clean Energy Technology Center at North Carolina State University, 39 states and the District of Columbia offer varying degrees of property tax breaks for solar energy systems. Some states leave it up to individual towns. This ruling follows a series of discussions held last year on proposed fees for residential solar customers. The fees were introduced as part of HB 539, legislation from Rep. Jeff Knight that would require customers using solar panels to pay a grid access fee for customers who sell generated energy back to their utility.
The good news, however, is that the State of Missouri recently put two pro-solar laws into effect. One is Senate Bill 745, which makes solar purchases exempt from sales taxes and Senate Bill 820 prevents homeowners associations from banning solar.
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