Washington, DC – As developers seek buy-in for renewable energy projects across the country, smarter tax policy can provide substantial, predictable revenues for communities and create more project finance certainty. A new report released today by the Siting Solutions Project details key tax policy solutions that states can implement now to provide tangible benefits that communities can connect to the renewable energy projects that provided them.
The report finds that although clean energy projects currently provide local property tax revenue across the nation, residents are not aware of these benefits. In a June 2026 national survey by Data for Progress, a majority of voters did not view clean energy projects as a major revenue driver for their county, and only 40% of rural voters felt at least somewhat confident that they would personally benefit from hosting a renewable energy project. Improved tax structures can increase both the transparency and additionality of these tax benefits, improving community buy-in and predictability for developers.
“The most universal benefit of clean energy development is through increased tax revenue – but as of now, it’s hard for communities to recognize that the newly paved roads or their expanded school funding comes from the solar project next door,” said Nelson Falkenburg, Director of the Siting Solutions Project. “Property tax regulation is one of the most consequential policy decisions a state can make, and the best models already exist. These tax policy recommendations can provide more transparent, consistent, flexible and meaningful revenues for host communities.”
The new report draws on interviews with developers and communities across the country as well as a comparative analysis of state-level tax treatments. The report recommends four key principles and three models as frameworks for building effective tax policies and offering better outcomes for communities and developers.
Four Key Principles
- Transparency: Residents need to be able to understand and see the potential revenues from hosting a clean energy project, including where revenue money will go in their community and how much revenue will be available throughout the lifetime of the clean energy project.
- Consistency: Predictable tax structures allow communities to plan and budget for the long term while providing developers certainty around costs.
- Flexibility: Tax policy and alternative payment structures should give communities the discretion to direct revenue toward their specific priorities.
- Additionality: Revenue from clean energy projects should be substantial and benefit communities meaningfully and locally.
Three Models
- Payments in Lieu of Taxes (PILOTs) allow local governments to set alternative payments for projects, replacing disputable assessment-based property taxes. The report highlights PILOTs currently used in Michigan and New York.
- Capacity taxes offer a flat rate set through state law that automatically applies to every qualifying project, removing the opt-in and negotiation components of PILOTs. The report highlights capacity taxes currently used in Nebraska.
- Centralized capacity-based valuation with levelized depreciation uses a statewide formula to determine the value of clean energy projects. The depreciated value is averaged across the lifetime of the project so local governments can receive more stable, predictable revenues. The report highlights centralized levelized ad valorem currently employed in Colorado.
“Together, these principles encapsulate what effective clean energy property tax policy should provide: revenue that communities can see and feel, costs that developers can predict and the ability of the community to dictate what these taxes fund,” said Zona Martin, Analyst at the Siting Solutions Project. “When good and effective tax policy becomes the norm, everyone wins – from host communities who need more resources for their schools to developers who need certainty to justify investment in clean energy projects.”
Read the full report here.
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About the Siting Solutions Project
The Siting Solutions Project (SSP) conducts rigorous analysis and stakeholder engagement to identify the most promising siting policies to maximize the benefits clean energy provides – for communities, the environment, and the electric grid. The Siting Solutions