What is a Solar Plant?
For purposes of the Uniform Capacity Tax (UCT), a group of solar-generating facilities is considered one plant if the group is part of the same project and uses common equipment and infrastructure such as roads, control facilities, and connections to the electric grid. Each plant should have one CPG for the entire plant.
Solar Plants Subject to the Uniform Capacity Tax
You are required to pay the tax and file Form SE-603, Solar Energy Capacity Tax with the Vermont Department of Taxes if all of the following apply to you:
- you own an operating solar plant;
- the plant has a capacity of 50 kW or more; and
- the plant was in operation as of December 31.
The UCT is imposed at a rate of $4.00 per kW of plant capacity. Plant capacity is the aggregate AC nameplate capacity of all inverters used to convert the plant’s output to AC power. The Department uses the rated nameplate capacity stated on the plant’s Certificate of Public Good (CPG) to determine plant capacity unless the taxpayer can demonstrate that another method is more accurate. Owners are required to pay the tax to the Department by the April filing deadline.. The tax paid on or before the April filing due date is for the prior calendar year.
Implications for Property Tax
Solar plants subject to the UCT are exempt from the statewide education property tax. A municipality may also vote to exempt or stabilize a solar plant for municipal property tax purposes. Municipalities that impose municipal property taxes on solar plants are required to follow a property valuation methodology specified in law. Learn more about how the UCT should be applied.
Valuing and Taxing Enclosures and Buildings that House Batteries
Solar renewable energy plants with a capacity of 50 kW or more are subject to the Uniform Capacity Tax (UCT). A plant subject to the UCT is exempt from statewide education property tax. Those plants may nevertheless be subject to municipal property taxation and are valued using a standard property valuation methodology.
The UCT is limited to solar renewable energy plants. 32 V.S.A. § 8701. The relevant part of the definition of a “renewable energy plant” is an “independent technical facility that generates electricity from renewable energy.” 30 V.S.A. § 8002(18). Accordingly, the UCT does not apply to a facility that is not a renewable energy generating plant.
An enclosure or building housing batteries does not generate solar electricity, which means it does not qualify as a solar renewable energy plant when operating independently. For some projects, however, a battery enclosure is integrated into the renewable energy system through design and function. Integrated projects tend to fall under one Certificate of Public Good (CPG), while standalone battery facilities tend to have their own separate CPG.
The Vermont Department of Taxes recommends that assessing officials consider whether an enclosure or building housing batteries is authorized under the same CPG as an associated renewable generation plant. If the facilities share a CPG, the official should value both facilities for municipal taxation (unless the plant is locally exempted).
For the energy generating portion of the facility, the official should use the discounted cash flow methodology required by statute and published by PVR. 32 V.S.A. § 3481(1)(D). An enclosure or structure housing batteries should be valued for municipal taxes as real property. For example, if batteries are stored in a shed, the shed should be valued as a shed is usually valued. The official should not value any portion of the combined facilities for education property taxation if the solar plant’s capacity is 50 kW or more because they are exempt due to being subject to the UCT.
If a battery facility is not authorized by the same CPG as a solar renewable energy plant, the official should value it as real property for both municipal and education taxes. That is because the facility is not subject to the UCT, meaning that it is not exempt from statewide property taxation.
A municipality should contact its district advisor if it believes unique circumstances warrant a deviation from this general advice.