Governor Gretchen Whitmer (D) has signed three bulls which will together reinstate the property tax abatement that residential solar installations have been missing in the state since 2012.
After a seven-year hiatus, solar installations will again be exempt from property taxes in Michigan, as Governor Gretchen Whitmer (D) signed into law House Bills 4465 and 4069 and Senate Bill 47. The previous exemptions existed for a decade before expiring in 2012.
The bills come with caveats, however, though they are not necessarily restrictive. In order for an installation to qualify, it must offset all or a portion of the energy use for the property and generate less than 150 kW. Considering the average home installation is in the 12-13 kW range, this will mostly be an issue for large C&I installations.
This is actually a pretty big deal for the state of Michigan, as it is not the first time since 2012 the issue of renewable generation tax exception has arisen. Most recently, in January, former Governor Rick Snyder (R)vetoed House Bill 5143, which would have removed property taxes from residential and commercial PV systems and HB 5680, which was tie-barred to HB 5143.
However, later that same month, Snyder’s term ended and Whitmer stepped up to bat with a vision of Michigan’s generational and climate future:
“Since taking office, I’ve remained committed to protecting Michigan’s environment and combating climate change,” said Whitmer. “I’m proud to sign these bills that will allow for citizens to embrace and utilize renewable energy. This is positive step forward in advancing clean energy, while increasing jobs and protecting the pocketbooks of Michiganders.”
This bill is important, as it could prove to provide a jumpstart to Michigan’s residential solar industry. To date, the state has installed roughly 160 MW of solar, of which just a small, small minority is residential solar. And while the exemption does nothing to directly decrease the cost of a residential solar system, it provided an avoided cost value. A residential solar system, on average, increases the value of a home by 4%. To avoid any tax on that value increase is monumental.
And while this should be a win for residential solar in the state, one which inspires hope for the future, that future has already been partially determined.
This is because earlier this year, DTE, Michigan’s largest utility, killed net metering in its service area for an inflow/outflow model of generation compensation where one flow is valued much more highly than the other. I’ll allow you to guess which one is valued higher. Luckily, the company’s proposal for an additional system access contribution charge on distributed resource owners was denied.
In all, the signing of these bills is a huge step for the state of Michigan, as property tax exemptions have been shown to drive residential solar adoption. However the hope is that this is not too little too late for a state with an already stunted residential solar market.