California passes law that prevents cities from taxing energy generated by solar rooftop projects

California Governor Gavin Newsom signed into law last week financial protections for consumer investments in rooftop solar energy. The law, AB 1208 authored by Assemblymember Phil Ting (D-San Francisco), extends a prohibition on cities and counties taxing the energy generated by rooftop solar panels for use by homeowners and businesses.

“We applaud Governor Newsom and Assemblymember Ting for protecting consumers’ right to generate their own energy from the sun without unfair taxes,” said Bernadette Del Chiaro, Executive Director of the California Solar & Storage Association, sponsor of AB 1208. “Reducing costs, eliminating red tape, and encouraging consumers to go solar are all critical components of meeting California’s ambitious clean energy goals.”

Cities and counties have the ability to tax utility services, such as electricity, as one potential source of local revenues. Since 2013, the energy generated by rooftop solar panels has been explicitly exempt from what is called the “Utility Users Tax” or “UUT.” That pre-existing exemption was set to expire December 31, 2019. AB 1208 extended it another seven years.

“I’m proud to champion a bill that maintains California’s position as a leader in promoting renewable energy, which helps the effort to clean our air and fight climate change. The Governor’s signature keeps customer-owned clean energy affordable and will keep encouraging the use of greener power to reduce our carbon emissions,” said Assemblymember Ting.

At a time when the state has set ambitious clean energy goals, AB 1208 ensures that local governments do not create counter-productive disincentives to homeowners and businesses considering investments in clean energy. The law also provides consumers that have already invested in solar energy with the assurance that cities and counties will not tax their solar energy in the future.

“I’m thrilled to see California take this decisive step toward protecting a homeowner’s most basic clean energy right,” said Dave Rosenfeld, Executive Director of Solar Rights Alliance, a statewide association of California solar users. “Just like growing your own carrots and avoiding sales taxes, if you put the sunlight that falls on your roof or property to your own use, you shouldn’t have to pay a tax either.”

The bill faced little controversy since it was introduced in May. It passed both the State Assembly and Senate with unanimous support.