Property Tax Assessment for Renewable Energy Equipment

This incentive is aimed at utilities and other entities that own renewable energy and storage equipment in Arizona, not at individual homeowners, so there is no application or direct benefit for a typical household. It can help keep the cost of utility-scale renewable projects lower, which may support clean power in the state. For details on how it applies to your situation, contact the Arizona Department of Revenue or your county assessor.

Utility, cooperative, and other owners of renewable generation, storage, transmission, or distribution equipment in Arizona benefit from property being assessed at 20% of taxable original cost after depreciation, which can improve project economics when you pitch solar, wind, biomass, hydro, or lithium-ion storage projects. The equipment must be located in Arizona, be used for generation, storage, transmission, or distribution of power or fuel from solar, wind, or other nonpetroleum renewable sources, and not be intended for self-consumption. Taxable original cost is the equipment's original cost reduced by any investment tax credits, production tax credits, or grants in lieu of ITCs, so factor those into customer cost estimates.

Qualifying renewable energy and storage equipment is assessed for property tax at 20% of taxable original cost less depreciation, with taxable original cost equal to original cost minus investment tax credits, production tax credits, or grants in lieu of ITCs. H.B. 2403 of 2014 clarified that depreciation uses the straight-line method over the equipment's useful life. The incentive targets investor-owned utilities, municipal utilities, cooperatives, and other entities operating in Arizona, covering equipment such as generation, storage, transmission, and distribution property, including materials, supplies, and construction work in progress, but excluding licensed vehicles and property valued under sections 42-14154 and 42-14156.