Community Solar Tax Policy May Deter Projects in New York

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Community Solar

A new set of community solar tax policies may cause some developers to pull future planned projects. The Oneida County Industrial Development Agency (IDA) recently proposed a new set of policies that outlined how the taxes on future community solar projects would be handled. Unfortunately, for some developers, the fees included in the policies may prove to be a deterrent despite the potential tax breaks.

The IDA issued a proposal that would regulate solar decisions throughout New York. While it wouldn’t affect the format of community solar programs and developers would still receive payment for the electricity generated, but how the projects are taxed could see some changes. Typically, solar projects can receive up to 15 years of tax exemptions. However, if the project is being developed on a school or municipality, it can still be charged property taxes. The policy put forward by IDA is in the event that developers bypass municipalities and go straight to the agency.

According to the new policies, developers will face new eligibility criteria and will take on a set payment instead of paying taxes on the energy produced. The operator would be responsible for an annual fee over 15 years, starting at $10,000 per megawatt. Between the second and tenth years, the fee increases by 2%. After year 11, the fee goes up another 5%. Once the 15 years is up, developers switch to paying normal property taxes. This is on top of a $2,000 yearly rent paid directly to the IDA and a 5% fee if there isn’t an agreement with the host community.

The proposed community solar tax exemptions and fees were met with objections from local developers. Andrew Day of Source Renewables told the Daily Sentinel that the suggested $10,000 per megawatt fee is double what’s typically charged in upstate New York. According to Day, the plan is “anti-solar.”

Omni-Navitas representatives also voiced concerns, stating that projects of 5-megawatts would likely be shelved under the new policy. Omni-Navitas also allegedly submitted applications for development under an assumed rate of $6,000 per megawatt discussed during the June 19 IDA meeting. 

Oneida’s IDA assured that the $10,000 fee was not chosen at random. Looking at other county’s IDAs and models of the New York State Energy and Research Development Authority, the local branch determined that the average rate fell between $3,000 and $12,000. 

A public hearing to discuss the draft policy has been set for Aug. 10 at 10 a.m. Participants can call in at 1-408-418-9388 with access code 132 541 7600.


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