Ohio is close to reforming its property tax laws to dramatically cut the costs of developing renewable energy projects in the state. A vote by the state’s House of Representatives late Thursday – and a final clearance from the Senate – passed a bill that is now expected to become law before the summer recess.
Governor Ted Strickland pledged on Friday that he would sign Sub Senate Bill 232 the moment it hits his desk. The new law will mean that renewable energy projects are no longer taxed as just another form of private property. It will set a flat-rate tax of $7,000 per megawatt of generating capacity for clean energy projects. The reform changes a system that had seen renewable energy developers facing a tax rate of up to $40,000 per MW. This was 10 times the rate of neighboring states, and has been seen as a major reason why the state has achieved only a pitiful 7MW of wind power installed so far.
The new law will apply to advanced energy project facilities that begin construction before January 1, 2012, and produce energy by 2013.
It will allow the three wind projects already holding permits to go ahead, with four more in the pipeline also in with a chance of getting federal tax credits under the Recovery Act. As well as renewable energy projects, the new tax regime will also apply to nuclear and “clean” coal developments, although they have until 2017.
The passing of the bill received a warm welcome from Wind and Solar Jobs for Ohio, a grassroots coalition of more than 100 businesses calling for reform of the renewable energy tax laws.
Brad Lystra, manager, economic development partnerships for the American Wind Energy Association, which has fronted the campaign, said on Friday: “With this vote, Ohio public officials have positioned the State to create and protect thousands of local Ohio manufacturing, construction, operations and maintenance jobs in the wind industry.” “By eliminating this tax disadvantage, Ohio lawmakers have strengthened the renewable market and secured millions in new tax revenue for local communities,” Mr Lystra added.
“Additionally, Ohio’s struggling manufacturing industry will get a significant boost from wind turbine component part orders and position itself to see even greater investments from wind and solar manufacturers looking to expand into new markets and supply chains.”