California Gov. Gavin Newsom has signed Senate Bill 1340, which extends the existing property tax exclusion for newly constructed, active solar energy systems by two years.

“The COVID-19 pandemic and supply chain delays have contributed to project delivery interruptions, including planned solar energy projects,” Gov. Newsom says in a statement. “That said, this policy has a direct impact on property tax revenues that support essential services at the local level. I believe this two-year, temporary extension strikes an appropriate balance between ensuring that these delayed solar projects are brought online quickly, while recognizing the impacts to local governments.”

“Further, this year’s budget included $300 million to create the Local Government Budget Sustainability Fund, which provides bridge funding to support county governments who are committed to advancing climate resilient projects that will bolster local revenues and contribute to long-term budget sustainability,” Gov. Newsom continues. “In signing this bill, I urge the legislature to consider the impacts to local agencies before bringing forward another extension of this policy.”

“Gov. Newsom’s signature on this two-year tax exclusion will help ensure solar and storage projects continue providing clean, reliable power to California at a time of unprecedented stress on the state’s electric grid,” says Rick Umoff, senior director and counsel for California at the Solar Energy Industries Association (SEIA). “With incentives in the Inflation Reduction Act, California’s solar market is expected to nearly double in size over the next five years to 61.5 gigawatts of electricity generation capacity. This growth requires tens of thousands of workers and billions of dollars of private investment, and companies now have near-term tax certainty to ensure these investments are made in the California communities that rely on a robust clean energy economy.

“The solar and storage industry thanks Senator Hertzberg and dozens of clean energy champions in the Legislature for recognizing the importance of this exclusion and getting it extended,” Umoff adds. “SEIA now turns its focus to securing a well-rounded energy policy in California that strengthens every sector of this critical industry.”

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