Appraisal methodology for solar and wind energy projects
Although RPTL § 575-b was held to be unconstitutional in the March 2025 court decision of Airey et. al. v. State of New York, that decision is now on appeal and has been stayed while the appeal is pending.
Furthermore, RPTL § 575-b was amended on December 3, 2025, by chapter 575 of the laws of 2025, to clarify that host community benefit payments, expenses associated with decommissioning, and community solar subscriber management costs shall be included as expenses in the model, and federal investment and production tax credits and environmental values, including but not limited to renewable energy credits, shall be deemed intangible assets and shall not be included as revenue streams in the model.
Assessors seeking guidance regarding the Airey litigation and its relevance to the Tax Department’s 2025 valuation model should contact their municipal attorneys.
The 2021-2022 Enacted State Budget established a process for the New York State Department of Taxation and Finance to develop a standard appraisal methodology for solar and wind energy systems with a nameplate capacity equal to or greater than one megawatt.
The Tax Department—in consultation with the New York State Energy Research and Development Authority (NYSERDA) and the New York State Assessors Association (NYSAA)—will annually develop:
- an appraisal model using the discounted cash flow approach for solar and wind energy systems, and
- discount rates to be applied to the models.
Beginning with 2022 assessment rolls, local assessors are required to use the model and discount rates to value and place assessments on affected solar and wind energy systems.
Note: Municipalities will continue to have the flexibility to negotiate payment in lieu of taxes (PILOT) agreements.
Summary of changes to 2026 model
- Revenue forecasts, expense forecasts, and discount rates have been updated.
- Hybrid solar + storage battery facilities have been added.
- Wind capacity factors have been slightly revised.
Draft 2026 discount rates
The discount rates below are based on the economic principle of weighted average cost of capital (WACC). The cost of capital is a forward-looking measure comprised of the time value of money and investor risk. It takes into account the expected rate of return that market participants require to attract funds to a particular investment. The cost of capital is synonymous with the discount rate that is typically used in renewable energy discounted cash flow analysis.
The discount rates are separated into two distinct categories based on investment risk associated with system type.
| Solar (1 MW and larger) | |||
|---|---|---|---|
| Weighting | Cost | Weighted cost | |
| Debt (pre-tax) | 51.50% | 7.00% | 3.61% |
| Equity (pre-tax) | 48.50% | 8.50% | 5.65% |
| Nominal WACC (pre-tax) | 9.25% | ||
| Real WACC (pre-tax) | 6.59% | ||
| Land-based Wind (1 MW and larger) | |||
| Weighting | Cost | Weighted cost | |
| Debt (pre-tax) | 36.20% | 7.00% | 2.53% |
| Equity (pre-tax) | 63.80% | 9.00% | 7.87% |
| Nominal WACC (pre-tax) | 10.40% | ||
| Real WACC (pre-tax) | 7.71% | ||
The nominal discount rate is converted to real through the formula RR=((1+RN)/(1+RI))−1, where RR is the discount rate in real dollars, RN is the discount rate in nominal dollars, and RI is the anticipated rate of inflation (assumed 2.5%).
Note: The rates specified above are before-tax discount rates. These rates will be combined with the local full-value property tax rates before use in the Solar and Wind Appraisal Model.
Draft 2026 Solar and Wind Appraisal Model
- 2026 draft model (Excel unlocked)
- User Guide (pdf)
Note: The model utilizes earnings before interest, taxes, depreciation, and amortization (EBITDA).
How to provide comments on the draft 2026 model or discount rates
The draft 2026 discount rates and model are not final and should not be relied upon. By law, the department must:
- allow at least 60 days for public comments,
- consider any timely comments, and
- make any changes it deems necessary prior to publishing the final rates.
The draft 2026 discount rates and model were posted on January 22, 2026; the deadline to provide comments is March 24, 2026. Commentors are encouraged to submit comments as early as possible.
We encourage the public to submit comments by email, but you can also submit comments by mail:
Email: renewables.model.comments@tax.ny.gov
Mail: NYS DEPARTMENT OF TAXATION AND FINANCE—ORPTS
VALUATION SERVICES BUREAU
ATTN: MICHAEL ST. GERMAIN
W A HARRIMAN CAMPUS
ALBANY, NY 12227-0801
We welcome comments on all aspects of the discount rates and the model.
For more information
If you have questions, or if you would like to be added to our mailing list on this topic, email renewables.model.questions@tax.ny.gov.
Resources
- RPTL 575-b
- Questions and answers (updated December 28, 2023)
- Land Valuation and the Solar and Wind Appraisal Model
- Summary of 2024 public comments and responses
- 2024 Final Model (Excel, to be used only for 2024 assessment roll)
- 2025 Final model (Excel, to be used only for 2025 assessment roll)
- Unlocked final 2025 model: formulas viewable for analysis and consideration (Excel, to be used only for 2025 assessment roll)
Definition
Discounted Cash Flow (DCF) is a valuation method used to estimate the value of an investment based on its expected future cash flows. The analysis projects how much money an investment will generate in the future, and then discounts that cash flow to arrive at an estimated current value of the investment.