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New study shows status of renewable energy property tax exemptions in NH

July 18, 2010


A new study explores the impacts of implementing renewable energy property tax exemptions (REPTE) in New Hampshire and analyzes the exemption’s effectiveness at promoting the use of renewable energy in that state.

The study surveyed 62 municipalities across the state that have adopted the statute mandating REPTE. Currently, there are three different REPTE in New Hampshire: 1) Solar exemption, which includes systems such as solar photovoltaic and solar thermal, 2) Wind Exemption, i.e. windmills and wind generators, and 3) wood heating exemption, which encompasses biomass systems that are used to heat an entire home.

The study showed that of the municipalities surveyed, 59 offer the solar exemption, 25 offer the wind exemption, and 23 offer the wood heating exemption. About 313 homeowners have a solar exemption, 22 have a wind exemption, 144 have the wood heating exemption, and about 37 have a REPTE but it is not known which exemption they have. All and all, approximately 516 homeowners have taken advantage of the REPTE in New Hampshire.
The findings of the study are significant because the legislative intent of the REPTE law was to remove the disincentive for property owners to install renewable energy systems across the state. In order to accomplish this goal, the REPTE allows homeowners to avoid taxation on the increase in their assessed property value as a result of the installation of a renewable energy system (RES), like a solar array or wind turbine. So, for example, if a homeowner owns property worth $200,000 and installs a RES worth $20,000 will continue to be taxed on his property at $200,000 rather than $220,000.
The legislation was clearly intended as a tax exemption, and therefore, there is no increase in the assessed value of a homeowner’s property when a renewable energy system is installed. As a result, the homeowner should be in the same position as if they never installed a RES on their property.
But, this study shows that when compared with a property tax exemption, a property tax rebate actually puts the homeowner in a better position because the homeowner receives a reduction in the assessed value of his property before the RES is added to his assessed property value.
In other words, if the exemption were treated as a rebate in the example above, the homeowner with an assessed property value of $200,000 who adds a RES worth $20,000 would have the value of the property reduced to $180,000. However, despite its better benefits toward the homeowner, and despite the fact that it is good public policy to promote an increased incentive for the homeowner to adopt a RES, a tax rebate is not an exemption, and any benefit to a homeowner other than an exemption runs counter to the legislative intent of the REPTE.
Therefore, this study concluded that government must enact clear laws concerning the regulation of renewable energy, take an active role in promoting renewable energy initiatives, and make clear regulations and incentives concerning the administration of renewable energy programs in order to foster its growth.
For a list of the data collected, please click here.
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