Solar Panel Lifetimes and Property Taxes

Executive Summary 

Solar panels convert energy from sunlight into electricity. The typical lifespan of a solar panel is around 25 years. Some of the earliest installed solar energy systems are starting to arrive at the end-of-life of their systems. States vary in terms of their classification of solar panel waste as hazardous waste and whether they have any end-of-life policies for solar panels, including waste management and recycling. Many states (including Indiana, Illinois, Iowa, Kansas, and Missouri) provide tax incentives that encourage renewable energy, including property tax incentives for solar panels. HB 1997, filed during the 2022 Missouri regular legislative session, would remove the statewide exemption of solar energy systems from property tax valuations, but still allow the assessor to exempt these systems at their discretion when used exclusively by a single property. This bill would also modify several provisions relating to property taxation of solar energy systems owned by utility companies. 

Highlights 

• Solar panel electricity generation capacity decreases at a rate of 0.5% per year due to degradation. After 20 years, solar panels typically produce approximately 90% as much electricity as they did in their first year.

• Solar panels are typically warrantied for 20-25 years, after which their output is no longer guaranteed.
• Over half of states, including Missouri, currently provide some form of property tax incentives for solar panels.
  • Some states, such as Nevada, have separate property tax regulations for utilities. Utility companies using solar energy of a certain minimum size in Nevada may apply for a 55% abatement of their property taxes.
    

Limitations

There is less information on the degradation and failure timelines for the most recently installed solar panels. It is unclear if data on older panels will apply to newer panels.