A Primer on State and Local Taxation of Utility-Scale Wind and Solar Projects.

For example, Michigan imposes a value-based personal property tax on "Solar Energy Systems."[10] In that case, a preset depreciation factor is applied to a project's original cost to reach the "true cash value", which is ultimately subjected to local property tax rates. B. Sales and Use Tax Like property tax, most states follow similar paths for sales and use tax. It provides a short background on the components that make up wind and solar projects, summarizes commonly applicable taxes, including property tax and sales and use tax, and concludes with a brief discussion of why developers should care about state and local taxation. Between a rapidly changing planet, generous federal tax incentives, and high demand, wind and solar projects are experiencing a major growth spurt.[1] In the summer of 2010, the United States had a total net capacity of 39,134.5 megawatts in utility-scale wind energy.[2] By the summer of 2020, that number climbed to 118,378.7 megawatts, more than a 200% increase in just ten years.[3] Similarly, in the summer of 2010, the United States had a total net capacity of just 393.4 megawatts in utility-scale solar energy.[4] Ten years later, however, that number reached 46,306.2 megawatts, a gigantic 11,600% increase.[5] As wind and solar continue to grow, state taxing authorities are examining, and reexamining, how best to tax these unique projects. [Extracted from the article]