Solar photovoltaic plants in Vermont are potentially subject to a tax on plant capacity and municipal property tax. Depending on several factors, a plant can be subject to both taxes, one of the taxes, or be exempt from both taxes.
Vermont imposes a Solar Energy Capacity Tax on operating solar plants with a plant capacity of 50 kW or more. The tax is imposed at a rate of $4.00 per kW of plant capacity. Plant capacity is determined by the rated nameplate capacity stated on the plant’s Certificate of Public Good (CPG) unless a taxpayer can demonstrate that another method is more accurate.
A group of solar-generating facilities is considered one "plant" under Public Utility Commission (PUC) Rule 5.100. One Form SCT-603, Solar Energy Capacity Tax, must be filed if a group of solar-generating facilities uses common equipment and infrastructure, such as roads, control facilities, and connections to the electric grid, and the facilities are not found by the PUC to be separate plants.
Solar plants subject to the Solar Energy Capacity Tax are exempt from the education property tax. Solar plants with a plant capacity of less than 50 kW and are (1) on a net-metered system, or (2) off grid and only provide power to one property, are exempt from both municipal and education property taxes. Municipalities may also vote to exempt some solar plants from municipal property tax.
Solar plants that are not exempt from municipal property tax must be valued. Vermont law requires a solar plant to be valued using the discounted cash flow method as described in 32 V.S.A. § 3481(1)(D) and designated by the Department’s Division of Property Valuation and Review.
Form PV-604, Vermont Photovoltaic (PV) System Inventory Form is a document used by municipalities to record property information. See Taxation of Solar Plants for more information.
Valuation of Land Supporting Solar Facilities
The land supporting a solar facility is to be based on highest and best use. Although Vermont Statute provides special treatment to Solar Facilities 32 V.S.A. § 3481 (D), there is no statutory language addressing treatment to the underlying land.
The market approach or income approach are the appropriate approaches to value.
Solar Facilities on Exempt Land
32 V.S.A. § 8701 was later amended to explicitly preserve the exempt status of any underlying land. That is to say if a solar facility is constructed on exempt land the land remains exempt.