renewable energy equipment; valuation; depreciation

Plain English Breakdown

The bill summary does not provide specific details on the fiscal impact or effective date.

Renewable Energy Equipment Valuation

This bill changes how renewable energy and storage equipment is valued for property taxes, setting different rates based on ownership and construction dates.

What This Bill Does

• Changes the methodology to determine the full cash value (FCV) of renewable energy and storage equipment for property tax purposes through December 31, 2040.
• Sets the FCV at 20% of depreciated cost for equipment owned by or under exclusive power agreements with public service corporations if construction started before January 1, 2030.
• Sets the FCV to 100% of depreciated cost for all other renewable energy and storage equipment regardless of ownership or construction date.

Who It Names or Affects

• Public service corporations and public power entities in Arizona that own or have exclusive agreements with renewable energy and storage equipment.
• The Arizona Department of Revenue (ADOR) responsible for determining property tax values.

Terms To Know

Depreciation

A method to reduce the value of an asset over time due to wear and tear or obsolescence.

Full Cash Value (FCV)

The total assessed value of property for tax purposes, calculated based on specific criteria set by law.

Limits and Unknowns

• The bill does not specify the exact fiscal impact to the state General Fund.
• It is unclear how this change will affect entities that do not fit into the specified categories.
• The effective date of the bill has not been determined yet.

Official Summary Text

HB2918 - 572R - Senate Fact Sheet

Assigned to
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COMMITTEE

ARIZONA STATE SENATE

Fifty-Seventh
Legislature, Second Regular Session

FACT SHEET FOR
H.B. 2918

renewable energy equipment;
valuation; depreciation

Purpose

Modifies the
methodology to determine the full cash value (FCV) of renewable energy and
storage equipment for property tax purposes.

Background

Statute requires
the Arizona Department of Revenue (ADOR) to determine the FCV of renewable
energy and storage equipment for property tax purposes through December 31,
2040. The FCV of taxable renewable energy and storage equipment is 20 percent
of the depreciated cost of the equipment, which is the taxable original cost less
depreciation. The
original cost
is the actual cost of acquiring or
constructing property, including additions, retirements, adjustments and
transfers. To arrive at the
taxable original cost,
the
original cost

is reduced by the value of any investment tax credits, production tax credits
or cash grants in lieu of investment tax credits applicable to the taxable
renewable energy and storage equipment.
Depreciation
is straight-line
depreciation over the useful life, as adopted by ADOR, and may not exceed 90
percent of the adjusted original cost. All energy storage equipment, both
collocated with renewable energy and stand-alone energy storage equipment,
qualifies for this property valuation.

Renewable
energy and storage equipment
is electric generation facilities, electric
transmission, electric distribution, energy storage, gas distribution or
combination gas and electric transmission and distribution and transmission and
distribution cooperative property located in Arizona that is used or useful for
generating, storing, transmitting or distributing electric power, energy or
fuel derived from solar, wind or other nonpetroleum renewable sources not
intended for self-consumption.
Energy storage
is commercially available
technology for electric utility scale that is capable of absorbing energy,
storing energy for a period of time and thereafter dispatching the energy and
that uses mechanical, chemical or thermal processes to store energy (
A.R.S.

� 42-14155
).

If modifying the
methodology to determine the FCV of renewable energy and storage equipment
results in a tax shift that affects the obligations of the state, there may be
a fiscal impact to the state General Fund.

Provisions

1.

Narrows application of the current method to value renewable energy and
storage equipment to equipment that is owned by or wholly subject to an
exclusive power purchase agreement with a public service corporation or public
power entity doing business in Arizona and the construction of the equipment
was initiated before January 1, 2030.

2.

Sets the FCV for renewable energy and storage equipment that is owned by
or wholly subject to an exclusive power agreement with a public service
corporation or public power entity doing business in Arizona and the
construction of the equipment was initiated beginning January 1, 2030, at 100
percent of the depreciated cost of the equipment, which is the
original cost

less depreciation.

3.

Sets the FCV for renewable energy and storage equipment that is not
owned by or wholly subject to an exclusive power agreement with a public
service corporation or public power entity doing business in Arizona at 100
percent of the depreciated cost of the equipment, which is the
original cost

less depreciation.

4.

Makes technical and conforming changes.

5.

Becomes effective on the general effective date.

House Action

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Prepared by
Senate Research

March 18, 2026

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Current Bill Text

HB2918 - 572R - H Ver

House Engrossed

renewable energy
equipment; valuation; depreciation

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HOUSE BILL 2918

AN
ACT

amending section 42-14155, Arizona
Revised Statutes; relating to valuation of centrally assessed property.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it
enacted by the Legislature of the State of Arizona:

Section
1.
1. Section
42-14155, Arizona Revised Statutes, is amended to read:

START_STATUTE
42-14155.

Valuation of renewable energy and storage equipment; definitions

A. Through December 31, 2040, the department shall
determine the full cash value of taxable renewable energy and storage equipment
in the manner prescribed by this section.

B.
Subject to subsection C of this
section,
the full cash value of renewable energy and storage equipment
is
the following:

1. For renewable energy and storage
equipment that is not owned by or wholly subject to an exclusive power purchase
agreement with a public service corporation or public power entity doing
business in this state, one hundred percent of the depreciated cost of the
equipment. For the purposes of this paragraph, depreciated cost
shall be determined by deducting depreciation from original cost.

2. For renewable energy and storage
equipment that is owned by or wholly subject to an exclusive power purchase
agreement with a public service corporation or public power entity doing
business in this state and
the construction of the
renewable energy and storage equipment was initiated before January 1,
2030,
twenty percent of the depreciated cost of the equipment.
For the purposes of this paragraph,
depreciated cost shall be
determined by deducting depreciation from taxable original cost.

3. For renewable energy and storage
equipment that is owned by or wholly subject to an exclusive power purchase
agreement with a public service corporation or public power entity doing
business in this state and
the construction of the
renewable energy and storage equipment was INITIATED from and after December
31,
2029, one hundred percent of the depreciated cost of
the equipment. For the purposes of this paragraph, depreciated cost
shall be determined by deducting depreciation from original cost.

C. For the purposes of determining
full cash value of renewable energy and storage equipment pursuant to
subsection B of this section,
depreciation shall not exceed ninety
percent of the adjusted original cost.

C.
D.
For
the purposes of this section, all energy storage equipment, both colocated with
renewable energy and stand-alone energy storage equipment, qualifies for
valuation pursuant to this section.

D.
E.
For
the purposes of this section:

1. "Depreciation" means straight-line
depreciation over the useful life, as adopted by the department, of the item of
property.

2. "Electric utility scale" means a person
that is engaged in a business activity described in section 42-5063,
subsection A or such person's equipment or wholesale electricity suppliers.

3. "Energy storage" means commercially
available technology for electric utility scale that is capable of absorbing
energy, storing energy for a period of time and thereafter dispatching the
energy and that uses mechanical, chemical or thermal processes to store energy.

4. "Original cost" means the actual cost,
without trending, of acquiring or constructing property, including additions,
retirements, adjustments and transfers.

5. "Renewable energy and storage
equipment" means electric generation facilities, electric transmission,
electric distribution, energy storage, gas distribution or combination gas and
electric transmission and distribution and transmission and distribution
cooperative property that is located in this state, that is used or useful for
generating, storing, transmitting or distributing electric power, energy or
fuel derived from solar, wind or other nonpetroleum renewable sources not intended
for self-consumption, including materials and supplies and construction
work in progress, but excluding licensed vehicles and property valued under
sections 42-14154 and 42-14156.

6. "Taxable original cost" means the
original cost reduced by the value of any investment tax credits, production
tax credits or cash grants in lieu of investment tax credits applicable to the
taxable renewable energy and storage equipment.
END_STATUTE