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Committee Report

May 4, 2023

H. 3948

Introduced by Reps. Ballentine, Robbins, Brewer, Murphy, M. M. Smith, Williams, Gilliam, Chapman, Gagnon, Kirby, Cobb-Hunter, Erickson, Bradley, Ott, Caskey, Hyde, Bernstein, Bauer, Anderson, Wheeler, Connell and Vaughan

 

S. Printed 05/04/23--H.

Read the first time February 14, 2023

 

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The committee on House Ways and Means

To who was referred a Bill (H. 3948) to amend the South Carolina Code of Laws by amending Section 12-37-220, relating to property tax exemptions, so as to provide for an exemption for certain renewable, etc., respectfully

Report:

That they have duly and carefully considered the same, and recommend that the same do pass with amendment:

 

    Amend the bill, as and if amended, SECTION 1, by striking Section 12-37-220(53) and inserting:

    (53) a renewable energy resource property having a nameplate capacity of and operating at no greater than twenty kilowatts, as measured in alternating current for a customer-generator.  For purposes of this item, "renewable energy resource" and "customer-generator" means propertyas defined in Section 58-40-10 includes solar energy equipment, facilities, or devices that support, collect, generate, transfer, monitor, or store thermal or electric energy.  This definition includes including, but is not limited to, all components that enhance the operational characteristics of the generating equipment, such as an advanced inverter or battery storage device, and equipment required to meet all applicable safety, performance, interconnection, and reliability standards established by the commission, the National Electrical Code, the National Electrical Safety Code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, the Federal Energy Regulatory Commission, and any local governing authorities.

Renumber sections to conform.

Amend title to conform.

 

BRUCE BANNISTER for Committee.

statement of estimated fiscal impact

Explanation of Fiscal Impact

 

Local Revenue

This amended bill modifies the property tax exemption for a renewable energy resource property.  Currently, a renewable energy resource property with a nameplate capacity of and operating at no greater than twenty kilowatts (kW) is exempt from property tax.  This bill exempts all renewable energy resource property for a customer-generator from property taxes.  A renewable energy resource property includes solar energy equipment, facilities, or devices that support, collect, generate, transfer, monitor, or store thermal or electric energy.  Additionally, per §58-40-10, a customer-generator is defined as a generator that is located on a single premises owned, operated, leased, or otherwise controlled by the customer. 

 

Based upon the most recent data available from the Energy Office as of July 31, 2022, there are approximately 34,573 residential and commercial solar installations with a combined total capacity of 297,034 kW, which results in an average capacity of 8.59 kW.  Also, the current cost of a residential solar system totals $3.80/W, according to the Energy Office.

 

Multiplying the estimated $3.80/W times an average capacity of 8.59 kW yields an estimated value of approximately $32,600 per system.  For the estimated 34,573 solar installations currently in the state, the total estimated value is $1,127,080,000.  At an assessment ratio of 10.5 percent and a projected average millage rate of 352.5, if 10 percent of this property is currently taxed as business personal property tax, these installations would generate approximately $4,172,000 in local property taxes in FY 2023-24.  This represents approximately 0.04 percent of current projected property tax revenue.  However, based on conversations with assessors, residential solar installations may not be reflected in assessed property values.  Also, we are unsure how much of this property is currently exempt and how much will become exempt due to this bill.  Specifically, solar installations with a capacity of 20 kW or less, which includes most residential solar installations, are currently exempt from property taxes.  Additionally, not all of the remaining solar installations will qualify under this newly modified exemption.  Installations that are not for a customer-generator, such as those on a solar farm, would not qualify for this exemption.  For information purposes, based on discussions with assessors, most solar farms are currently operating under Fee-in-Lieu of Property Tax agreements.  Further, we anticipate that local governments will increase millage rates, within the limitations, to offset any potential reduction in local property tax revenue.  Therefore, this bill as amended will result in an undetermined local property tax revenue impact.  

 

Frank A. Rainwater, Executive Director

Revenue and Fiscal Affairs Office

 

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A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 12-37-220, RELATING TO PROPERTY TAX EXEMPTIONS, SO AS TO PROVIDE FOR AN EXEMPTION FOR CERTAIN RENEWABLE ENERGY RESOURCE PROPERTIES.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Section 12-37-220(B)(53) of the S.C. Code is amended to read:

 

    (53) a renewable energy resource property having a nameplate capacity of and operating at no greater than twenty kilowatts, as measured in alternating current.  For purposes of this item, "renewable energy resource" means property defined in Section 58-40-10 that includes solar energy equipment, facilities, or devices that support, collect, generate, transfer, monitor, or store thermal or electric energy.  This definition includes including, but is not limited to, all components that enhance the operational characteristics of the generating equipment, such as an advanced inverter or battery storage device, and equipment required to meet all applicable safety, performance, interconnection, and reliability standards established by the commission, the National Electrical Code, the National Electrical Safety Code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, the Federal Energy Regulatory Commission, and any local governing authorities.

 

SECTION 2.  This act takes effect upon approval by the Governor.

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