The state of Washington’s wind farms generate 8% of the state’s power, and solar power is beginning to grow in the state with its first two utility-scale solar plants coming online in the past couple of years. To stimulate further growth and meet the state’s renewable energy standard, the Washington Legislature enacted SSB 5910 (the “Act”) during 2022. The Act includes language to stimulate growth of solar and wind projects in the state by revising existing renewable energy property tax assessment practices.
Property taxes are one of the largest barriers to a sustainable renewable’s operation in all states. As the industry is still rapidly evolving, consistent reliable data needed to determine property tax market values are not readily available to the tax assessor community.
The Act requires the Washington Department of Revenue (DOR) to meet with industry stakeholders and conduct separate studies for wind, solar, and battery energy storage solutions equipment (BESSE), using information provided by stakeholders as well as publicly available information provided by the National Renewable Energy Laboratory. These studies found that all three areas are projected to have declining replacement cost trends, which mirror the advancements in materials and lower manufacturing costs in the future. Industry stakeholders also agreed with this trend—a significant departure from all other states that use nonspecific renewables appreciating valuation tables.
The Act required the study establish and publish guidance to assessors that includes specific renewable energy valuation tables for use in a cost-based appraisal method. The valuation tables are specific to equipment used to generate solar and wind power and BESSE. The Act mandates the DOR to publish the valuation tables by January 1, 2023, for property taxes levied for collection in calendar year 2024. The Act also requires that county assessors consider the solar and wind generating and battery storage guidance when valuing renewable energy property, but assessors may also use other accepted appraisal methods.
This is a significant development as Washington may be the first state to recognize the declining costs in the renewables industry and the deficiencies that exist in the current tables used by most property tax assessors. We are convinced the state has cracked the dam for other states to follow suit.
The experts at Ryan will continue to monitor bills that impact power producers across the U.S. To learn more about expansions and considerations for developing property tax estimates, please review Ryan’s Renewable Energy Report.
TECHNICAL INFORMATION CONTACTS:
Jesse Noneman
Principal
Ryan
317.917.3282
jesse.noneman@ryan.com
Jay Belinfante
Director
Ryan
404.365.0922
jay.belinfante@ryan.com
Kyle Nelson
Manager
Ryan
972.770.1119
jeffrey.nelson@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.
- Topics
- Jesse Noneman
- Property Tax
- Washington