By Roy L Hales
Another obstacle to the growth of rooftop solar has arisen in Arizona. The Arizona Department of Revenue (ADOR) claims that solar energy equipment is taxable if it is owned by a solar company and installed on another person’s property. They have assigned a value for property tax purposes at 20% of its depreciated cost, which amounts to about $152 a year for an average solar customer. In response, SolarCity and Sunrun are suing the Arizona Department of Revenue.
As 85-90% of the state’s rooftop solar installations are leased, rather than owned, this new tax could have a strong negative impact.
The Arizona state department seems to perceive solar panels as small power plants providing electricity to homeowners or businesses.
In their writ, the solar companies lawyers pointed out that their clients are not in the business of “generating, transmitting or distributing electricity to customers.” They lease equipment that allows the customer to generate their own electricity.
“ … The Arizona Legislature has made it clear that the Subject Property, when used “primarily for on-site consumption” of the electricity generated by such property, is “considered to have no value and to add no value” to the property on which it is installed, and thus it should not be separately assessed for property tax purposes. Specifically, A.R.S. §42-11054(C)(2) provides:
“Solar energy devices, as defined in section 44-1761, grid-tied photovoltaic systems and any other device or system designed for the production of solar energy primarily for on-site consumption are considered to have no value and to add no value to the property on which such device or system is installed.”
A spokesperson for Sunrun said she believes “the Arizona Department of Revenue’s interpretation is illegal.”
“As with any additional cost, it would reduce Arizonans’ ability to turn to an alternative to Arizona Public Service in order to save money on monthly electricity bills, and would reduce rooftop solar’s addressable market,” SolarCity Director of Public Affairs Will Craven told pv magazine.
(Image at top of page: Solar Panels atop Buildings in Tucson, AZ – photo by David Crummey, CC by SA 2.0)