Wyoming lawmakers want to tax solar like they tax wind

House Bill 94 would levy a $1 tax on each megawatt hour of electricity produced from larger solar energy facilities in the Equality State. If passed into law, the tax would mirror one already exacted on wind energy facilities.

Rep. Albert Sommers, R-Pinedale, sponsored the proposed legislation, with Sen. Cale Case, R-Lander, signing on as a co-sponsor.

“It would create parity within the renewable resource realm,” Sommers told the Star-Tribune. “We tax wind, so all this (bill) would do is tax solar at the same rate as wind.”

The tax would not apply to small-scale energy producers, like homeowners with solar panels on their roofs.

“The idea is not to tax rooftop solar,” Sommers clarified. “This is for commercial scale.”

At the moment, only one utility-scale solar facility exists in the state. The Sweetwater Solar Energy Project in Green River carries a generating capacity of up to 80 megawatts. However, many utilities, including the state’s largest, have started to invest in renewable energy infrastructure to save ratepayers money.

In its latest resource plan, Rocky Mountain Power said it hoped to add 1,415 megawatts of solar generation to Wyoming starting in 2024. That’s in addition to adding 354 megawatts of battery storage and hundreds of miles in transmission-line construction. Though the utility company did not explicitly reject the solar bill proposed Tuesday, it did indicate its preference to keep options for solar energy investment in Wyoming open.

“While the company does not currently own any utility-scale solar energy facilities in Wyoming, we support an all-of-the-above approach to providing safe and reliable energy generation,” a Rocky Mountain Power spokesman stated. “This approach has served Wyoming customers well in making sure prices remain affordable in spite of market changes.”

Other energy companies have recently started pursuing proposals to build solar farms in Wyoming, including Sheridan Solar LLC’s recent application to construct a 20-megawatt facility in Sheridan County.

Dinosolar LLC has also pitched a 240-megawatt, commercial solar photovoltaic system on leased private land just outside Bar Nunn in Natrona County.

This isn’t the first time a solar tax has been proposed in the Wyoming Legislature. Last year, the House Appropriations Committee sponsored a similar bill, but it failed to pass.

Imposing a generation tax on solar facilities could generate an estimated $190,000 in annual revenue in fiscal years 2023 and 2024, according to a fiscal note.

But advocates for renewable energy swiftly came out against Tuesday’s bill that would place more tax burdens on the budding renewable energy industry here.

“HB 94 would impose a new tax on solar, in addition to the property and sales taxes already assessed, making Wyoming solar projects less competitive in this regional electricity marketplace,” explained Rikki Seguin, executive director of Interwest Energy Alliance, a trade organization advocating for renewable energy. “We expect the bill to create a chilling effect on the industry and send much needed revenue elsewhere.”

To Interwest Energy Alliance, utility-scale solar facilities are investments that the state should welcome, translating into employment, economic activity and revenue for Wyoming.

“The best way for Wyoming to bring in more revenue from renewable energy is to ensure these projects are built here in the state instead of going elsewhere,” Seguin continued. “In a regional, competitive electricity market, the ability to build a project can come down to a matter of cents in price differences.”

Tom Darin, of the American Clean Power Association, also emphasized the drawbacks of imposing an additional tax on the nascent solar industry in Wyoming.

“We think that this bill is taking Wyoming in the wrong direction in terms of an opportunity to attract significant investment from the rapidly growing solar industry,” Darin said. “If Wyoming has good wind or solar resources, the proposal on the table to add $1 per megawatt hour when other states aren’t doing that, in addition to the property and sales taxes that we do pay in Wyoming already, that hurts our ability to be competitive in the region.”

Project developers will turn to states that also offer ideal conditions for capturing power from the sun but don’t have such burdensome taxes, like Utah, Nevada or Arizona, he added.

A bulk of Wyoming’s revenue each year comes from coal, oil and natural gas production. But fossil fuel industries have been hit hard by the pandemic and the crash in energy markets last year. Wyoming leaders continue to face the daunting task of diversifying the state’s economy. And this year’s solar bill complements a suite of proposed legislation vying to generate additional revenue streams for the state.

Lawmakers narrowly voted to advance a bill during a committee meeting in November to increase the electricity tax burden on wind energy producers in the state. The bill would eliminate the three-year grace period from the $1 per megawatt hour electricity tax now available to wind facilities.

The solar bill introduced by Sommers on Tuesday would not offer a similar grace period for solar facilities as the Legislature did for wind.

“The three-year exemption (...) would not apply to solar electricity generation,” according to the bill’s fiscal note.

“To me, this is an issue of fairness,” said Sommers, the bill’s sponsor. “If we’re going to tax wind, and we have, then why would we not tax solar?”

Before the legislation advances, the solar tax bill will need to be referred to a committee for review.