Supreme Court of the State of Arizona (2018). Solar City Corporation v. Arizona Department of Revenue; March 16, 2018.
Brief introduction and background:
"The issues here are whether ADOR or county assessors are authorized to value solar panels owned by SolarCity Corporation and Sunrun, Inc. (collectively, “Taxpayers”) and leased to residential and commercial property owners; what valuation methodology applies; and, assuming a zero-value provision in § 42-11054(C)(2) applies, whether it violates the Arizona Constitution’s Exemptions Clause or Uniformity Clause. See Ariz. Const. art. 9, §§ 1–2. We hold that ADOR is not authorized to value the leased solar panels. We remand to the tax court to decide the remaining issues.
"Taxpayers lease solar panels to homeowners and commercial property owners. The panels are installed on or around a building (e.g., on a rooftop) to capture solar energy, convert it to electricity in a self-contained “inverter,” and use it to power the property. Although the panels operate “behind the . . . meter” — meaning they operate independently of a utility company’s power grid — they transfer any excess energy to the utility company through the grid for others’ use. The utility company gives the lessee property owner credit for the retail value of the excess energy. See Ariz. Admin. Code R14-2-2306(D)."