America's Property Tax Advisor

California Extends Property Tax Break for Solar Energy Systems

BY SCOTT DONALD, CMI, IRVINE, SEPTEMBER 2022

A property tax exclusion for newly constructed solar energy systems will remain available longer in California. Governor Gavin Newsom signed Senate Bill 1340, into law, which extends the existing tax break until 2027.

 

There are supporters and opponents of the extension.

 

Support

 

"Gov. Newsom’s signature on this extended tax exclusion will help ensure solar and storage projects continue providing clean, reliable power to California at a time of unprecedented stress on the state’s electric grid," said Rick Umoff, Senior Director, and counsel for California at the Solar Energy Industries Association.

 

"California’s solar market is expected to nearly double in size over the next five years to 61.5 gigawatts of electricity generation capacity. This growth requires tens of thousands of workers and billions of dollars of private investment, and companies now have near-term tax certainty to ensure these investments are made in the California communities that rely on a robust clean energy economy."

 

Opposition

 

The bill faced opposition from Kern County as it passed through the Legislature. Local officials said the solar tax exclusion has cost the county $110 million in lost property tax revenue over the last 10 years.

 

"The fiscal inequity created by the solar tax exclusion for large-scale commercial solar continues to divert resources from Kern’s General Fund and limits the essential services that can be provided for residents," the county wrote in an opposition statement.

 

Governor Newsom acknowledged local government concerns in a signing letter, writing that the policy "has a direct impact on property tax revenues that support essential services at the local level."

 

"I believe this two-year, temporary extension strikes an appropriate balance between ensuring that these delayed solar projects are brought online quickly, while recognizing the impacts to local governments," the governor wrote. If lawmakers bring forth another policy extension, Newsom urged them to “consider the impacts to local agencies” before bringing it forward.