Lawmakers hope bill will boost solar energy investments in Tennessee

Lawmakers hope bill will boost solar energy investments in Tennessee

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"It would have just killed investment in the solar industry and it would have hurt a lot of people," Gill Hough said about the original bill. "It would have just killed investment in the solar industry and it would have hurt a lot of people," Gill Hough said about the original bill.
Proponents say the amended bill could create tens of millions of dollars of added investment of solar energy in the state. Proponents say the amended bill could create tens of millions of dollars of added investment of solar energy in the state.

By MIKE KRAFCIK
6 News Reporter

OAK RIDGE (WATE) - State lawmakers are scheduled to vote Monday on a solar property tax bill.

The bill would change the valuation of solar equipment for tax purposes. It's intended to lower the threat of high taxes to solar industries.

HB 0062 is an agreement worked out by Republican State Sen. Randy McNally and Democratic State Sen. Lowe Finney. It ends two years of debate over the proper valuation of solar equipment and clears up constitutional concerns raised by the state comptroller's office.

The bill would put a constitutionally defensible cap of 12.5 percent on the value of solar energy production property for Tennessee property tax purposes.

The bill, as amended, passed the State Senate 31-0 on April 1.

Right now, solar facility owners pay a tax rate of .5 percent of the salvage cost of the material, which is essentially nothing. Legal questions arose within the attorney general and comptroller's office on whether this tax rate was constitutional.

"They went a little too far, and the AG and comptroller became concerned," said Gill Hough, president of the Tennessee Solar Energy Industries Association.

The bill sets a 12.5 percent cap on valuation that reflects the ratio between the estimated output of a system, based on scientific calculations, and its maximum capacity.

The amendment is supported by members of the Tennessee Solar Energy Industries Association.

Prior to the McNally and Finney amendment, HB 0062 proposed a tax rate of one-third of the property's value, which effectively would "increase the property tax on solar systems by about 6,000 percent," according to Robbie Thomas, president of Efficient Energy of Tennessee.

Hough is the Manager of the Renewable Energy Division at Restoration Services Inc. in Roane County. He says because of uncertainty in the tax code, his company has held off on expanding a number of solar projects.

Experts feared the original language of the bill would cause state revenues to decline by more than $1 million, since fewer solar arrays would be built.

"It would have just killed investment in the solar industry and it would have hurt a lot of people, like my own company, who already put the investment out, who understood how much they'd be paying in taxes," said Hough.

Proponents say the amended bill could create tens of millions of dollars of added investment of solar energy in the state.

"Fixing this question is critical for investors. They don't want to know what might or might not happen, they want certainty in their investment, and this creates the certainty that they need," said Hough.

The $77 billion industry is forecast to expand the most since 2011. Hough hopes his business can also grow with a new set of tax codes.

"It's a quickly growing industry; it's a very exciting growing industry. I think the progressive tax policy is one of the ways Tennessee can become a leader in the industry," said Hough.

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