How to Achieve Fair Valuation of Renewable Energy Facilities

By Raymond R. Gray, Esq. for Market Share Blog | November 13, 2025

As renewable energy assets become more prevalent in commercial real estate portfolios – especially among industrial and data center users – property owners face a critical challenge: ensuring that intangible assets are not mistakenly included in the taxable value of real and personal property.

Wind farms, solar installations, battery energy storage systems and nuclear facilities often involve complex ownership structures and revenue models. While these facilities are physically tangible, much of their value derives from intangible elements such as power purchase agreements, state and federal tax incentives including investment tax credits and production tax credits, software and regulatory rights. Misclassifying these intangibles as taxable property can result in inflated assessments and unfair tax burdens.

Most state property tax systems are designed to assess only tangible property, namely land, buildings and physical equipment. Intangible assets, such as contractual rights or intellectual property, are generally exempt. However, in practice, the line between tangible and intangible value can blur, especially when assessors rely on valuation methods that do not clearly separate the two.

For example, values calculated using the cost approach may include development premiums or acquisition expenses that reflect intangible value. Add to that federal tax incentives that can provide up to a 30% credit for development costs. When assessors fail to exclude any or all of these elements from transaction comparisons or a final assessments, their conclusions will skew high and produce inflated values. Similarly, the income approach will capture revenue streams tied to intangible assets, unless carefully adjusted.

Common Intangibles in Renewable Projects

In reviewing assessments on renewable energy projects, taxpayers should be on the lookout for any intangible components contributing to the assessor’s valuation. Power purchase agreements, for example, are contracts that guarantee future revenue but are financial instruments, not physical assets.

Other examples include interconnection rights, because the ability to connect to the grid is often secured through regulatory approvals or agreements, not through tangible infrastructure. Likewise, software and control systems including proprietary algorithms and digital platforms used to manage energy production and storage are intangible.

Intangibles common to many commercial properties include cost of capital, as well as brand and developer reputation. Market trust and recognition may influence value but are not taxable property.