Valuation of Solar Plants

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

  1. 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
  2. The municipality has voted to exempt the plant pursuant to 32 V.S.A. § 3845; or
  3. 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 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.

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