Minnesota Production-Based Tax for Wind Energy

October 02, 2002

Minnesota has adopted a tax for wind energy projects based on the electricity production. It is the first state to adopt a production-based tax in favor of tax on the value of the equipment.

Counties governments favor a production payment because it provides a constant level of revenue to the as opposed to property taxes that decline when levied against the depreciated value of equipment. The wind industry also favors a tax on production because it is proportional to annual revenue, which can vary from one year to the next.

The production payment rate will vary with the size of a project up to a maximum of $0.0012 per kWh for projects larger than 12 MW. Systems rated at less than 250 kW will be exempt from property taxes. The new law will become effective in 2003.

Source: May 24, 2002 issue of Wind Energy Weekly.