OKLAHOMA CITY – The House on Monday passed a bill that would prohibit solar generation facilities and battery energy storage systems (BESS) from qualifying for the five-year manufacturer ad valorem tax exemption beginning in January 2028.

Rep. Mike Dobrinski, R-Okeene, is the House author of Senate Bill 237.

"Huge international energy developers do not need to be subsidized by Oklahoma tax dollars,"

Dobrinski said. "Oklahoma has 30 more days of sunshine than the average U.S. state. Our land prices, even with recent significant hikes, are still some of the lowest in the nation. We've removed similar exemptions for wind energy and data centers. It's past time for Oklahoma to treat solar and battery storage the same."

Dobrinski explained this tax exemption was eliminated for wind in 2015 with Senate Bill 498. In 2021, the Legislature recognized data centers were costing the state $46 million annually through the exemption, he said. Their eligibility was removed with Senate Bill 609.

"As lawmakers, we have the authority to add or remove categories of qualifying manufacturers through statute when these exemptions are no longer needed to promote investment in various industries," he said. 

Dobrinski said most in the state embrace an all-of the-above approach to energy, and the state enjoys some of the lowest costs for power because of it.

"Oklahoma is a net exporter of energy because of our abundance. Each new energy project should be based on the market opportunity and the return on investment," he said.

Dobrinski pointed to a recent project in his House district as a reason the bill is needed. In March, NextEra Energy applied to the Oklahoma Tax Commission for a manufacturing exemption of ad valorem taxes for the $655 million Skeleton Creek 250Mw solar/200Mw BESS project in Garfield County.

"Located in the geographic center of our country with low costs and low regulation, Oklahoma already makes sense for investments like these. We do not need to be paying property taxes or infrastructure costs on top our already favorable business climate and our natural resources."

The Five?Year Ad Valorem Exemption for Manufacturers applies to real and personal property used in the manufacturing of a product, as well as property used in research and development activities. Because electric power generation is considered manufacturing, as it converts raw materials (fuel, wind, water) into electricity, the wind and solar industry have been able to claim the exemption.

Applications are filed with the county assessor where the facility is located. If approved, the state reimburses the county for the exempted property tax for up to five years. Since the program began, more than $2 billion in property taxes have been exempted through this mechanism.

The bill was amended in the House, so it will return to the Senate for final passage before moving to the governor for his consideration of signing it into law.