Assigned to FIN                                                                                                                      FOR COMMITTEE

 

 

 

 


ARIZONA STATE SENATE

Fifty-Seventh Legislature, Second Regular Session

 

FACT SHEET FOR H.B. 2918

 

renewable energy equipment; valuation; depreciation

Purpose

Modifies the methodology to determine the full cash value (FCV) of renewable energy and storage equipment for property tax purposes.

Background

Statute requires the Arizona Department of Revenue (ADOR) to determine the FCV of renewable energy and storage equipment for property tax purposes through December 31, 2040. The FCV of taxable renewable energy and storage equipment is 20 percent of the depreciated cost of the equipment, which is the taxable original cost less depreciation. The original cost is the actual cost of acquiring or constructing property, including additions, retirements, adjustments and transfers. To arrive at the taxable original cost, the original cost is reduced by the value of any investment tax credits, production tax credits or cash grants in lieu of investment tax credits applicable to the taxable renewable energy and storage equipment. Depreciation is straight-line depreciation over the useful life, as adopted by ADOR, and may not exceed 90 percent of the adjusted original cost. All energy storage equipment, both collocated with renewable energy and stand-alone energy storage equipment, qualifies for this property valuation.

Renewable energy and storage equipment is electric generation facilities, electric transmission, electric distribution, energy storage, gas distribution or combination gas and electric transmission and distribution and transmission and distribution cooperative property located in Arizona that is used or useful for generating, storing, transmitting or distributing electric power, energy or fuel derived from solar, wind or other nonpetroleum renewable sources not intended for self-consumption. Energy storage is commercially available technology for electric utility scale that is capable of absorbing energy, storing energy for a period of time and thereafter dispatching the energy and that uses mechanical, chemical or thermal processes to store energy (A.R.S.
§ 42-14155).

If modifying the methodology to determine the FCV of renewable energy and storage equipment results in a tax shift that affects the obligations of the state, there may be a fiscal impact to the state General Fund.

Provisions

1.   Narrows application of the current method to value renewable energy and storage equipment to equipment that is owned by or wholly subject to an exclusive power purchase agreement with a public service corporation or public power entity doing business in Arizona and the construction of the equipment was initiated before January 1, 2030.

2.   Sets the FCV for renewable energy and storage equipment that is owned by or wholly subject to an exclusive power agreement with a public service corporation or public power entity doing business in Arizona and the construction of the equipment was initiated beginning January 1, 2030, at 100 percent of the depreciated cost of the equipment, which is the original cost less depreciation.

3.   Sets the FCV for renewable energy and storage equipment that is not owned by or wholly subject to an exclusive power agreement with a public service corporation or public power entity doing business in Arizona at 100 percent of the depreciated cost of the equipment, which is the original cost less depreciation.

4.   Makes technical and conforming changes.

5.   Becomes effective on the general effective date.

House Action

NREW            2/17/26      DP       5-3-0-2

3rd Read          2/26/26                  28-25-7
3rd Read*        3/3/26                    32-24-3-0-1

*on reconsideration

Prepared by Senate Research

March 18, 2026

MG/hk