Budget Breathes New Life Into Alternative Energy Tax Break

Twenty-three wind and solar energy developers have lined up to benefit from a three-year-old tax break program that was recently extended in the biennial budget, underscoring a growing level of interest in the incentive program.  In 2010 the General Assembly created the Qualified Energy Project Tax Exemption for renewable and advanced energy developments (SB232, 128th General Assembly). Rather than paying Ohio's public utility tangible personal property tax and real property taxes, developers can pay a fixed payment per megawatt of electricity with the revenue flowing to local governments.

The wind and solar energy industries had argued that Ohio's tax rate was too high compared to neighboring states and would stymie renewable development, despite earlier passage of the state's alternative energy portfolio standards (SB221, 127th General Assembly).  To date, seven renewable energy projects - four wind farms and three solar facilities - have been approved for the tax exemption, according to the most recent information from Development Services Agency. Sixteen applications are still pending.

 All of the applications, so far, have come from wind and solar developers, DSA said. However, the tax exemption is also available for advanced energy projects, such as high-tech nuclear, clean coal and cogeneration technologies.  DSA spokeswoman Katie Sabatino said the agency has seen a spike in interest in the Qualified Energy Project Tax Exemption during the last two years.  There were only two applications in 2010 and in 2011, she said. In 2012, DSA received nine applications and has already received 10 this year.

Once approved, the "payment in lieu of taxes" program covers a facility's lifespan, but policymakers included a sunset date in the legislation. The original deadline was set for new renewable projects to be under construction by the end of 2011 and in production by the end of 2012.  However, lawmakers extended the sunset date in the previous biennial budget (HB153, 129th General Assembly) by two years, then added another two years to the program's lifespan in the current budget bill (HB 59).