To meet rising electricity demand and make electricity more affordable, we need to build lots of power plants, and fast. Solar, wind, and batteries are the cheapest technologies to bring online quickly, but they’re becoming harder to site, permit, and build as local opposition mounts. Achieving local buy-in is a growing obstacle to siting clean energy across the country, and the local benefits of hosting clean energy infrastructure, including property tax revenue in its current form, may be an insufficient tool for building local support.
Most utility-scale wind and solar projects need discretionary local approval to build and operate a project. Developers often use property tax revenues to make the case for approving the project, but when a state’s tax structure makes that revenue unpredictable and hard to explain, it weakens the case for approval. Improving state property tax policy for clean energy will not resolve every siting debate, but it can remove one barrier and give local decision makers a more clear benefit to weigh against the perceived impacts.
Poorly designed tax structures that involve inconsistent valuation methodologies, rapid depreciation schedules, exemptions and rollback provisions, and an overall lack of transparency are preventing communities from realizing the full potential benefit of hosting clean energy projects. These same policy features also increase overall project costs on developers by adding uncertainty to the process, while complicated tax structures make it difficult to communicate the benefits of hosting projects. Through smarter tax policy, it’s possible to provide substantial, predictable revenues for communities to ensure a positive local impact, while simultaneously creating more certainty around project costs for developers.
Although clean energy projects currently provide local property tax revenue across the nation, residents are not aware of these benefits.
Over half of voters lack confidence that they will experience personal benefits from energy projects.
If your county were to host a new utility-scale renewable energy project in the future, how confident are you, if at all, that you would feel personal benefits from that project being built?
Source: Data for Progress, “Clean Tomorrow Renewables Tax Revenue Survey Toplines and Crosstabs,” survey of 1,182 U.S. likely voters conducted June 26–28, 2026, September 2026.
We identified elements of tax policy that deliver community benefits and improve the investment outlook for developers by interviewing developers and communities about their tax policy preferences, and conducting a comparative analysis of tax treatments informed by recent research within the field. Because property taxes and alternative payment structures are the most direct source of clean energy project revenue for local governments, the scope of this report is limited to property tax policy and alternatives to traditional property taxation.
Four Principles for Effective Clean Energy Property Tax Policy
1. Transparency
Before a clean energy project is built, residents should be able to see and understand clearly what the project will provide in annual revenue, how that total is determined, what uses that revenue will go toward in their community, and when those revenues will be available. Upon the project’s operation, residents should also continue to be informed of the actual revenue and how it is being used in the community.
2. Consistency
Predictable tax structures allow communities to plan and budget long-term and even bond based on anticipated future payments, while providing developers with more certainty which lowers project financing costs.
3. Flexibility
Communities have different needs and place priority in different areas, so tax policy or alternative payment structures should give them the flexibility to direct benefits accordingly.
4. Additionality
Lastly, the revenue a project generates should be substantial enough, and should flow to the right places, to provide a meaningful impact locally.