DC Exempts Solar Energy Systems from Personal Property Tax

The DC Council approved and enacted legislation that would allow for solar energy systems to be exempt from the personal property tax.

The DC Council approved and enacted legislation that would allow for solar energy systems to be exempt from the personal property tax.

The District of Columbia Council once again expressed its support for the solar industry by recognizing and eliminating one of the potential barriers to building solar in the District.  On December 17, 2012, the DC Council approved and enacted legislation that would allow for solar energy systems to be exempt from the personal property tax.  The Energy Innovations and Savings Amendment Act of 2012 specifically amended Sec. 47-1508 of the District of Columbia code to include solar energy systems and cogeneration energy systems under the Personal Property Tax Exemption.

Personal property tax has been a significant barrier to solar finance and installation, as it can raise the costs of the system following installation, specifically hindering third party ownership.  This tax had created an unfair discrepancy between owners of solar systems who install facilities on their own property and third party owners who have installed a system on a host site.  Owners who install systems on their own property do not have to pay the personal property tax imposed, but rather pay a real property tax at a much lower rate.  Third party investors, who do not own both the property and the solar project on the property, are subject to the personal property tax, rather than the real property tax, at a much higher rate, close to 20-30% of revenue in the first year of operation of a system.  This discrepancy had created an unequal playing field, discouraging third party solar investments.

With the enactment of this bill, the exemption will reduce the tax burden on solar energy systems and further incentivize the construction of solar energy projects in the District.  DC now joins the extensive list of states that have taken similar action to reduce the barriers to building solar by exempting the personal property tax.

The District continues to take the necessary steps to ensure equal access to solar for all those interested and spur third party investments to help DC maintain its aggressive goals for renewable energy.  DC is already one of the solar hotspots in the country and, in relation to its size, the District currently tops the list of installed capacity (kW) per square mile.  With strong SREC market conditions and growth in installed capacity, DC remains an increasingly attractive market for solar development.

Developers or investors interested in commercial scale project finance within the District should contact our project finance team at info@solmarket.com.  In addition to  project financing services, Sol Systems currently offers three SREC solutions for photovoltaic and solar thermal systems located in the District: Sol Annuity, Sol Brokerage, and Sol Upfront.  Please email info@solsystemscompany.com for more information.

About Sol Systems

Sol Systems is a boutique financial services firm that offers investor clients direct access to the renewable energy asset class and provides developers with sophisticated project financing solutions.  Founded in 2008, Sol Systems focuses on meeting the most critical needs of the industry, including SREC monetization, capital placement, tax equity, and New Market Tax Credits.  To date, the company has arranged financing for thousands of projects and facilitated hundreds of millions in investment on behalf of Fortune 100 companies, private equity, family offices and individuals.

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