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Minnesota

Minnesota

Incentives/Policies for Renewables & Efficiency

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Wind and Solar-Electric (PV) Systems Exemption   

Last DSIRE Review: 07/02/2014
Program Overview:
State: Minnesota
Incentive Type: Property Tax Incentive
Eligible Renewable/Other Technologies: Photovoltaics, Wind
Applicable Sectors: Commercial, Industrial, Residential
Amount:Solar: 100% exemption from real property taxes
Wind: 100% exemption from real and personal property taxes
Maximum Incentive:None
Eligible System Size:For wind, full exemption without compensating production tax limited to privately-owned systems of 250 kW or less and systems of 2 MW or less owned by political subdivisions.
Authority 1:
Date Effective:
Minn. Stat. § 272.02
01/01/1992
Authority 2:
Date Enacted:
Date Effective:
Minn. Stat. § 272.028
06/30/2001
07/01/2001
Authority 3:
Date Enacted:
Date Effective:
Minn. Stat. § 272.029
05/18/2002 (subsequently amended)
01/01/2003
Authority 4:
Date Enacted:
Date Effective:
H.B. 3167
05/20/2014
01/01/2015
Summary:

All real and personal property of wind energy systems are exempt from the state's property tax, except for the land on which the wind energy system is located. Under H.B. 3167, beginning with taxes payable in 2015, personal property consisting of solar energy generating systems is exempt from property taxation, but the real property (i.e., the land on which the solar energy generating system is located) is still subject to property tax. Wind and solar energy production taxes have replaced more typical forms of property tax.

Wind

In lieu of a property tax on large wind-energy electricity generating systems, a production tax was implemented in 2002 for systems installed after January 1, 1991. The production tax for electricity generated by wind is:

  • $0.0012 per kilowatt-hour (kWh) for systems greater than 12 megawatts (MW) nameplate capacity,
  • $0.00036 per kWh for systems between 2 MW and 12 MW nameplate capacity, and
  • $0.00012 per kWh for systems between 0.25 MW and 2 MW nameplate capacity.

Wind systems less than 250 kW are exempt from the production tax, as are systems with a capacity of 2 MW or less that are owned by political subdivisions and systems located in a designated job opportunity building zone. The wind energy production tax is considered to be a personal property tax.

For 2006 - 2009 (Minn. Stat. § 272.029 Subd. 6), the revenue generated by the production tax was required to be distributed to local taxing districts as follows: 80% to counties; 14% to cities and townships; and 6% to school districts. For 2010 and thereafter, the distribution of revenues is set at 80% to counties and 20% to cities and townships. For further details, please see the Minnesota Department of Revenue's Property Tax Administrators' Manual.

Notably, a provision in a separate statute (Minn. Stat. § 272.028) allows a mutually agreeable alternative to be negotiated between the local government authority and the wind facility owner for the purpose of maintaining "public infrastructure and services." For example, a lower tax might be negotiated by a local government in order to attract wind development.

Solar

In lieu of a property tax on large solar energy generating systems, a production tax is set beginning with taxes payable in 2015. The production tax for electricity generated by solar is $1.20 per megawatt-hour (MWh) for systems exceeding 1 MW (AC); systems 1 MW (AC) or less are exempt from the production tax. The solar energy production tax is considered to be a personal property tax.

The owner of applicable solar energy generating systems must file a report with the commissioner of revenue on or before January 15 annually; on or before February 28, the commissioner of revenue must notify the owner of the tax due to each county for the current year.

The distribution of revenues is set at 80% to counties and 20% to cities and townships.


 
Contact:
  Energy Information Center
Minnesota Department of Commerce
Division of Energy Resources
85 7th Place East
Suite 500
St. Paul, MN 55101-2198
Phone: (800) 657-3710
Fax: (651) 297-7891
E-Mail: energy.info@state.mn.us
Web Site: http://www.energy.mn.gov
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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

Copyright 2013 - 2014 North Carolina State University, under NREL Subcontract No. XEU-0-99515-01. Permission granted only for personal or educational use, or for use by or on behalf of the U.S. government. North Carolina State University prohibits the unauthorized display, reproduction, sale, and/or distribution of all or portions of the content of the Database of State Incentives for Renewables and Efficiency (DSIRE) without prior, written consent.