Qualified Energy Property Tax Exemption for Projects over 250 kW (Payment in Lieu)

August 16, 2024

Summary

In order to qualify, the owner or lessee subject to sale leaseback transaction must apply to the Ohio Department of Development on or before December 31, 2024 for renewable energy projects.

Large projects (above 20 mega-watts) require approval from each Board of County Commissioners in which the project is located. In addition, these large projects require agreements to train and equip local emergency responders, as well as repair roadway infrastructure following the construction of the project. Small projects (less than 250 kilowatts) are exempt as a matter of law pursuant to Ohio Revised Code Section 5709.53

Benefits

If the project meets the requirements of the exemption, then the Director of Development will certify the project as a "Qualify Energy Project." Qualified Energy Projects will remain exempt from taxation so long as the project is completed within the statutory deadlines, meets the "Ohio Jobs Requirement," and continues to meet several ongoing obligations including providing Development with project information on an annual basis.

How to Apply

Potential applicants should review the revised rules to determine whether they should file an application to become a Qualified Energy Project. Check the Revised Ohio Code and the Ohio Administrative Code.

Payment in Lieu

In lieu of taxes, the following payments must be made to the county where the renewable energy facility is located:

• Solar energy facilities: $7,000 per megawatt (MW)
• All other qualified facilities employing at least 75% Ohio-based employees during construction: $6,000/MW
• All other qualified facilities employing at least 60% Ohio-based employees during construction: $7,000/MW
• All other qualified facilities employing at least 50% Ohio-based employees during construction: $8,000/MW

The property tax exemption must be approved by local county commissioners if the project is 5 MW or larger. Local county commissioners are allowed to require an additional payment as long as the overall payment does not exceed $9,000 per MW. In addition, the law requires that the renewable energy facility 1) meets certain jobs-creation criteria, 2) provides for road repairs (for projects 5 MW or more), 3) provides training and equipment to local first responders (for projects 5 MW or more), 4) establishes partnerships with universities (for projects 2 MW or more), and 5) makes offers to sell the renewable energy credits to Ohio utilities seeking to buy them.

Visit the ODSA web site for additional information, implementation documents, program documents and the application.

*S.B. 232 permanently exempted renewable energy facilities up to and including 250 kW from the public utility tangible personal property tax. See DSIRE entry Qualified Energy Property Tax Exemption for Projects 250 kW or Less for additional details.