On paper, the state of Michigan might be encouraging residents and businesses to install solar power systems with its solar rebate and incentive programs. But the state officials must rethink their property tax laws if they really want to promote alternative energy use in Michigan.
Take for instance the case of a solar farm in Kalamazoo County, Michigan. Sam Field is an attorney and part owner of Kalamazoo Solar that is operational since early 2010. In a year it managed to generate 225,592 kilowatt hours.
But the bad news was that it was billed by the Charleston Township for property tax of $27,689. This made the solar farm lose money despite the fact that Consumers Energy, a public utility that provides electricity and natural gas to at least six million Michigan residents, pays 45 cents per kilowatt hour.
According to Field, the Michigan property tax costs 12.3 cents per kilowatt hour. That’s more than the retail value of electricity. The tax burden is 60 times as much as the property tax burden of a nuclear power plant when computed according to kilowatt hour.
Field added that Michigan overtaxes some forms of renewable energy but at the same time encourages investors to put up renewable energy systems in the state. When the playing field is leveled, solar power can be a profitable investment not just for businesses but for residential homes as well.
Kalamazoo Solar has already filed an appeal with the Michigan Tax Tribunal regarding its property taxes. But for now it is required by the laws of the state to continue paying the high tax rates. Aside from the tax property issue, the solar farm hasn’t encountered any problems in its one year of service. This convinced Field that solar is a feasible energy source.
Maybe Kalamazoo Solar can apply for an Alternative Energy Personal Property Tax Exemption. This 100 percent property tax incentive was designed to promote the development and manufacturing of alternative energy technologies.
Property exempt from personal property tax are alternative energy systems that are less than two megawatts; personal property of an alternative energy business; alternative energy vehicles; and personal property of business that are engaged in alternative energy technology that are used for research, development, and manufacture of alternative energy technologies. Alternative energy systems that are qualified for the incentive are PV, fuel cells, solar thermal heating and cooling, and clean fuel energy systems.