Good news from the Buckeye State! The legislature passed important tax reform that drops the tax burden for solar farms from upwards of $100,000 per MW to a flat fee of $7,000 per MW. The bill (SB232) – which is expected to be signed by the Governor any day now - removes a major barrier to large-scale solar development in the state.
Existing Ohio tax law added these unreasonably high costs to the price of developing solar and other renewables. In early 2010 Governor Strickland sounded the call for change as part of his state of the state address. That set the stage for legislative action. February saw the introduction of SB232 by Senator Widener (R), a bill that proposed a flat fee in lieu of the onerous taxes. After hefty ne
gotiations (and support voiced by Vote Solar members in the state!), SB 232 passed both Houses in the wee hours last Friday.
This special tax exemption applies to clean energy projects built between now and 2011, a great incentive to hasten solar development in the state. Additionally, projects with a nameplate capacity of less than 250KW are now permanently exempt from the personal property taxation.
SB232 also contained language that expands last year’s passage of PACE enabling legislation to include energy efficient improvements along with solar. This PACE victory comes with strong concerns from energy efficiency advocates since utilities have access to the efficiency credits gained through PACE.
All in all, great progress made in setting up the kind of policy infrastructure that Ohio needs to be able to meet its solar goals. Thanks to all our Ohio members who emailed their legislators in support of SB232.
12 MWDC Wyandot Solar project, Upper Sandusky, Ohio developed, constructed and operated by juwi solar Inc.
Last November my hometown,Berkeley, announced they would loan homeowners the money for a rooftop solar system with no down payment in return for paying it off through property taxes. There goes my radical little city with another innovative solution.
I was so excited about this development and what it means for residential solar systems that I started researching the topic. Just this week, my colleague Annie Carmichael and I published a paper on the Municipal Property Tax Financing.
For solar nerds, it’s no secret that residential solar installations have lagged far behind commercial installations in the last several years. Residential solar installations have had to make due with a $2000 cap on the federal tax credit and without the creative solar financing arrangement know as a “power purchase agreement.” What that added up to was the need for some serious capital outlays for a homeowner to go solar.
Municipal property tax financing removes the upfront costs of going solar. This city financing scheme has several other sweet benefits. First, the loan payments are fixed for 20 years at reasonable interest rates. Second, the loans are neither dependant nor do they impact homeowner credit. Third, the loan is a tax assessment tied to the property, not the property owner, so if the current owner sells the remainder of the payments go to the next owner who also reaps the solar benefits.
I believe this innovative financing policy has the potential to greatly increase the amount of residential solar rooftops installations. Several cities- Palm Desert, Boulder- already have plans underway to offer this type of solar financing to their residents. And we have heard from many more city officials who are keenly interested.
California cities have the state go-ahead to implement a municipal property tax financing program. Cities in other states will need to amend state code to allow authority. The paper provides a how-to for other states.
If I had had to buy my 2004 Prius without easy access to financing, I wouldn’t have one. Now with the Berkeley solar financing, called BerkeleyFIRST (financing initiative for renewable and solar technology) I am calling my Berkeley landlords to get them interested in this win-win solar opportunity. That and waiting to own my own solar-powered house.