Sales and Use Tax Exemption for Electric Power Generation and Storage Equipment
Administered by California Department of Tax and Fee Administration
California offers a sales tax exemption on equipment for renewable energy generation and storage systems (solar, wind, geothermal, fuel cells, and other technologies) if you meet the business eligibility requirements—meaning you must be primarily engaged in power generation, distribution, or certain agricultural activities. To claim the exemption, you purchase qualified equipment and special-purpose buildings or foundations used for power generation and storage, paying no state sales or use tax on those purchases.
When you purchase equipment for a qualified customer's power generation, storage, or distribution project, you can claim the sales tax exemption on that equipment as part of your service contract. The exemption covers tangible personal property and special-purpose buildings used primarily for electric power generation, production, storage, or distribution from renewable sources (and storage of power from any source), provided your customer is a qualified person—such as a business primarily engaged in power generation or distribution, or certain agricultural operations.
The partial sales and use tax exemption under Revenue and Taxation Code Section 6377.1, effective January 1, 2018, targets businesses primarily engaged in electric power generation, distribution, or certain agricultural activities that purchase qualified tangible personal property and special-purpose buildings for power generation, storage, or distribution. The program covers renewable technologies (solar, wind, geothermal, biomass, fuel cells, hydroelectric, anaerobic digestion, and lithium-ion storage) and storage of power from any source, but excludes nuclear, large hydroelectric, and fossil fuels except in cogeneration. The exemption extends through June 30, 2030, and claims should be made through the California Department of Tax and Fee Administration.
Program details
- Program ID
- 22048
- Effective
- 1/1/2018
- Expires
- 7/1/2030
- Last updated
- 9/4/2026
Eligibility
- Sectors
- commercial industrial agricultural appliance manufacturers
- Technologies
- geothermal electric solar thermal electric solar photovoltaics wind (all) biomass combined heat & power fuel cells using non-renewable fuels landfill gas hydroelectric (small) anaerobic digestion fuel cells using renewable fuels lithium-ion
Program summary
AB 1817 of 2018 created an exemption from the sales and use tax for "qualified tangible personal property purchased for use by a qualified person to be used primarily in the generation or production, or storage and distribution, of electric power." The exemption also applies to contractors who purchase the equipment in the service of a contract with a qualified person. "Qualified person" is defined in the statutes.
The exemption does not apply to the generation or production of electricity from nuclear energy, large hydro, or fossil fuels, except when used in cogeneration. However, the exemption does apply to the storage and distribution of electric power from any source.
The exemption also applies to "special purpose buildings and foundations used as an integral part of the generation or production or storage and distribution of electric power."
Contact & resources
- Additional resources
Please verify current program details with the administering agency before making any financial decisions.
