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Valuation of Solar Plants

Municipal property tax is imposed on a solar plant unless one of the following applies:

  • The solar plant has a plant capacity less than 50 kW and is either (a) operated on a net-metered system or (b) not connected to the electric grid and only provides power on the property on which it is located; or
  • The municipality has voted to exempt the plant pursuant to 32 V.S.A. § 3845; or
  • The municipality has entered into a contract to stabilize the property’s taxes pursuant to 24 V.S.A. § 2741.

All other solar plants must be valued for municipal property tax purposes. Solar plants with a plant capacity of less than 50 kW, and that do not qualify for any of the three exemptions described above, will also be valued for education property tax purposes. 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 (PVR). Assessing officials should contact their district advisors for help with using the valuation model identified by PVR.

The appraisal value that an assessing official should use is 70% of the value calculated by the valuation model based on the expected 25-year project life.

The assessment will remain unchanged for either 25 years or the remaining life of the project, whichever comes first. For net-metered systems that are not exempt, an assessing official must reduce the plant capacity by 50 kW before calculating an appraisal value.

Valuation of Energy Storage Facilities

An energy storage facility is defined as “a stationary device or system that captures energy produced at one time, stores that energy for a period of time and delivers or may deliver that energy as electricity to the grid for use at a future time.” Municipal property tax is imposed on an energy storage facility unless one of the following applies:

  • The energy storage facility has a plant energy rating of less than 600 kWh; or
  • The facility is connected to, and part of, a solar plant that has a plant capacity less than 50 kW and is either (a) operated on a net-metered system or (b) not connected to the electric grid and only provides power on the property on which it is located; or
  • The municipality has voted to exempt the facility as part of a plant pursuant to 32 V.S.A. § 3845; or
  • The municipality has entered into a contract to stabilize the property’s taxes pursuant to 24 V.S.A. § 2741.

Other energy storage facilities are subject to municipal property taxes. The appraisal value for real and personal property of the facility must be calculated as $0.25 per kWh of plant energy rating.

Valuation of Land Underlying Solar and Energy Storage Facilities

Land Underlying a Facility Subject to Uniform Capacity Tax

When a solar plant or energy storage facility is subject to Uniform Capacity Tax, the underlying land must be valued as if the plant is not present. Municipalities should use the appropriate value according to the land schedule for the municipality without any further adjustments.

A solar plant is subject to the Uniform Capacity Tax if it generates electricity from solar power and has a plant capacity of 50 kW or more. Any energy storage facility connected to the plant is considered part of the generating plant and also subject to UCT.

A storage facility is subject to Uniform Capacity Tax if it is connected to the grid (but not connected to a plant) and has a plant energy rating of 600 kWh or more.

Land Underlying Facilities Not Subject to Uniform Capacity Tax

The following facilities are not subject to the Uniform Capacity Tax, Municipal Property Tax, and Education Property Tax:

  • A solar plant with a plant capacity of less than 50 kW; and
  • An energy storage facility with a plant energy rating of less than 600 kWh.

In both cases, the underlying land is nevertheless subject to municipal taxes. When this occurs, the land should be valued based on its highest and best use. Market and income approaches are appropriate for determining value.  

Solar and Energy Storage Facilities on Exempt Land

Solar plants and energy storage facilities do not alter the preexisting exempt status when constructed on land that is subject to a property tax exemption. The underlying land continues to be treated as exempt.

 

LAWS, REGULATIONS AND GUIDANCE
32 V.S.A. § 8701 Uniform Capacity Tax
30 V.S.A. § 8002 Definitions (Chapter 89: Renewable Energy Programs)
32 V.S.A. § 3802 Property Tax (Chapter 125: Property Tax Exemptions)
32 V.S.A. § 5401(10)(J) Definitions (Chapter 135: Education Property Tax)
32 V.S.A. § 3481 (D)(i) Miscellaneous Provisions Pertaining to the Listing of Property for Taxation
24 V.S.A. § 2741 Municipal Corporations; Property Values Fixed by Contract
Taxation of Solar Plants