Virginia governor approves tax exemption for residential and mixed-use solar installations

Dive Transient:

• Virginia Gov. Glenn Youngkin, R, has signed into regulation a invoice creating property tax exemptions for residential and mixed-use photo voltaic set up of lower than 25 kW.

• The invoice creates a good taking part in subject for photo voltaic in a state the place prior regulation gave native governments the choice of exempting photo voltaic installations from property taxes — however not each county adopted the motivation, in keeping with Will Giese, southeast area director of the Photo voltaic Vitality Industries Affiliation.

• Whereas the brand new regulation is standard with trade and with lawmakers on each side of the aisle, environmental advocates in Virginia say it is unclear how a lot the exemption will truly profit residents.

Dive Perception:

A brand new regulation to extend entry to small-scale photo voltaic has handed the Virginia legislature with minimal competition — but it surely stays to be seen whether or not it would have an effect on photo voltaic installations within the state.

Virginia S.B. 686, which Youngkin signed into regulation on Monday, declares photo voltaic installations of lower than 25 kW to be a “separate class of property” not topic to state or native taxes on actual or private property. The invoice updates an current regulation that gave counties, cities and cities the choice to exempt photo voltaic installations from property tax, however didn’t require statewide adoption of the tax exemption — a consequence that drew reward from SEIA, which advocated for the invoice.

“Property tax exemptions permit photo voltaic firms of all completely different strokes and colours, to compete on equal footing with one another and permit shoppers larger flexibility and selection in the place their power comes from,” Giese mentioned. On high of this, he mentioned, Virginia’s invoice “does not simply apply to residential however mixed-use photo voltaic, which it is our hope will deliver extra small scale rooftop photo voltaic to people in rural areas, to allow them to put photo voltaic on their barn.”

The Sierra Membership additionally sees the invoice as an general win for clear power and for the atmosphere — notably given a 2021 report that decided photo voltaic is probably the most cost-effective useful resource for near-term decarbonization objectives in Virginia. Ivy Fundamental, renewable power co-chair for the Sierra Membership’s Virginia chapter, famous that the invoice’s success within the state legislature — it handed the Home of Delegates by a 2-1 margin and garnered unanimous assist within the senate — is indicative of assist for photo voltaic amongst state lawmakers.

However it’s not likely clear how the invoice will profit Virginia residents, Fundamental mentioned, as a result of residential photo voltaic installations aren’t sometimes appraised in a manner that triggers further property taxes past the worth of a property’s different options.

“The true problem the trade has had in Virginia is convincing those who it is a value-add to their home. That it is one thing they will rely on to make their home extra beneficial once they promote it,” Fundamental mentioned. “And our expertise with assessors and appraisers is that they take a look at photo voltaic — one individual informed me it was like a pool. Some individuals need it, and a few individuals do not, so it is a zero. So regardless that [the bill] is an effective factor, it is sensible impact could be restricted by the truth that we’re presently not seeing homes valued larger particularly as a result of their photo voltaic methods.”

Giese additionally mentioned it might take time to see precisely how the Virginia Division of Taxation will apply the regulation. Whereas another states have such exemptions, together with Texas, Florida and South Carolina, every state has interpreted the property tax exemption in its personal manner. And the total influence of the same regulation handed final 12 months in South Carolina isn’t but recognized as a result of that state can also be presently reconsidering its web metering insurance policies, which is interfering with demand for photo voltaic installations, Giese mentioned.

Whereas Virginia has accomplished properly at eradicating obstacles to photo voltaic installations and searching for “low-cost methods to make photo voltaic extra interesting,” Fundamental mentioned she nonetheless believes the state would profit from a extra direct incentive corresponding to a tax credit score.