Spring 2014, Vol. 39, No. 1

Abstract: As the renewable energy industry matures, growing controversy swirls around its funding and, ironically, its sustainability. Left unchecked, local assessors can undermine the operating efficiencies of wind and solar farms with assessments based on replacement cost rather than market value. In this article, the author explores the implications of how wind and solar farms are project financed and poses two questions that bear directly on their ad valorem assessment: 1. Given that, but for production or investment tax credits, most projects would not be built—do these credits accrue to market value, or are they a form of inverse economic obsolescence? 2. The relative productivity of a wind or solar farm is a function of its nameplate capacity. A “Net Capacity Factor” measures its efficiency. Might the latter serve as a measure of functional obsolescence? These issues now are being raised in Lost Creek Wind LLC v. DeKalb County Assessor before the State Tax Commission and Circuit Court of Missouri.