2026 Draft Solar and Wind Valuation Model Released
The New York State Department of Taxation and Finance (“DOTF”) released the draft 2026 solar and wind valuation model and updated discount rates (the “Draft 2026 Model”) for public review and comment. Under Real Property Tax Law § 575-b, these discounted cash flow models are mandatory for local assessment of wind and solar energy systems over 1 megawatt AC.
The State statute requires that the Model be updated as appropriate and that discount rates be updated annually. While the DOTF could issue a multi-year model, to date, each draft has been for one year at a time.
The biggest change in this iteration of the model was brought about by legislation affecting the treatment of certain incentives, which are non-taxable intangibles, and the treatment of certain income and expenses addressed by the model (the “Legislation). Through the Legislation, the Model’s discounted cash flow method must now accurately reflect expenses that include host community benefits, decommissioning costs, and community solar subscriber management costs. Similarly, Federal investment and production tax credits granted by the Internal Revenue Code, as well as environmental values, including but not limited to renewable energy credits, will remain excluded from consideration. See our December 3, 2025, alert “RPTL § 575-b is Back (Again) As Legislation Addressing Treatment of Certain Income and Expenses — and Excluding Incentives — in Assessment Model is Signed Into Law.”
The proposed changes in the Draft 2026 Model relate to updates in discount rates, revenue forecasts, and expense forecasts. Wind capacity factors have been slightly revised to reflect technology improvements, and as explained in our separate alert, for the first time, DOTF included solar + storage projects. See our March 18, 2026, alert “Hello Storage! New York State Draft Assessment Model Includes Solar + Storage Category Under Real Property Tax Law § 575-b Methodology.” Stand-alone storage projects are not covered by the Draft 2026 Model, leaving the valuation of such systems open to continued debate and challenge. Finally, the portion of the Draft 2026 Model concerning solar projects no longer distinguishes between fixed and tracker systems, simply using one designation now.
The proposed discount rates are based on weighted average cost of capital (“WACC”), which the Draft 2026 Model separates into two distinct categories based on investment risk associated with: 1) solar projects and 2) land-based wind projects. The Draft 2026 Model acknowledges inflation’s impact by calculating the real and nominal discount rates, assuming 2.5% anticipated rate of inflation. This is consistent with the 2.5% inflation rate used for the 2025 Model. The proposed discount rates for the WACC are separated by nominal WACC and real WACC.
For solar projects, the nominal WACC is proposed at 9.25%, and the real WACC is proposed at 6.59%. These are unchanged from the 2025 Model.
For land-based wind, the nominal WACC 10.40%, and the real WACC is proposed at 7.71%. These are also unchanged from the 2025 Model.
Distinguishing between nominal dollars and real dollars does not affect the output value in the Draft 2026 Model (like the 2025 Model). Nominal dollars include inflation, while real dollars do not.
Hodgson Russ Insights
2025 vs. 2026 Valuation Comparison
Curiously, though there have been no changes in the discount rate between the Draft 2026 Model and the 2025 Model, comparing otherwise identical inputs yields differing values, with 2026 trending higher despite changes in the marketplace. As in the past, DOTF has not explained why its discount rates are below market rates, leading many to wonder if utility interest rates rather than merchant discount rates applicable to these projects have been employed.
Comparing total expenses, the Draft 2026 Model shows lower expenses than the 2025 Model. In other words, DOTF has once again ignored inflation on expenses. Given market conditions, the expectation was that expenses would have increased rather than decreased in the Model.
This difference could be attributed to how Year 1 is treated with the Taxable Status Date vs. the Plant Operations Date. Though comparing identical inputs, including a System Age of 1, in the 2025 Model and Draft 2026 Model, Year 1 in the Draft 2026 Model shows no value in the discounted cash flow for that year. In the Draft 2026 Model, one can force a system age of zero, mirroring how prior models would treat a system operations date the same year as, but predating, the taxable status date. When doing so, the value is even higher under the Draft 2026 Model in comparison.
Decommissioning and Host Community Agreements
The Draft 2026 Model does not have any input for decommissioning expenses or host community agreements, as addressed by the Legislation. These are still assumptions built into the Draft 2026 Model as before. The unlocked Draft 2026 Model shows $0 under the assumption for “Mandatory Host Community Benefit Act Payment” (appearing under the Model tab at B154 and C154). Since host community payments are not an input, there would be no way to affect this assumption. The “Mandatory Host Community Benefit Act Payment” is a new addition not listed in the 2025 Model, but it is not functioning in the way it should under the Legislation.
Solar + Storage Output Does Not Delineate Values for Each System
While including for the first time solar + storage, it is not clear how the values are allocated, as the Draft 2026 Model provides one output value. These should be separated so it is clear which value is attributed to the solar and battery portions of the project.
Inverter Replacement in Year 15 Remains Unchanged
As in prior models, the Draft 2026 Model assumes an inverter replacement in year 15 of the project’s life. The $220,000 value attributed remains as in the 2025 Model. The Draft 2026 Model continues to ignore the reality that most inverters do not have a 15-year life. And the Draft 2026 Model is still only for a 25-year period.
Operations Date Calculation Change
In prior iterations of the Model, you could set the start date of the project’s operation for the same year as the taxable status year. For example, the project may be operational on January 1, 2026, and the taxable status date for 2026 is March 1, 2026. This would, in other models, show a system age of zero. The Draft 2026 Model no longer allows a system age of zero, providing a warning that “[T]he date entered must occur before the Taxable Status Year.” This ignores the realities that projects may become operational the same year as the taxable status year to be measured in the Model. This forces the use of an incorrect date and then begins depreciating a project ahead of schedule.
The Draft 2026 Model and Public Comments
The Draft 2026 Model can be viewed here. DOTF has also made available information on the formulas used on the website, but be aware that these unlocked formulas will be available only during the 60-day public comment period. The updated instructions for the Draft 2026 Model are available here.
DOTF is accepting public comments to the Draft 2026 Model until March 24, 2026, by email at renewables.model.comments@tax.ny.gov to the attention of Michael St. Germain. After the 60-day public comment period, DOTF will make any changes it deems necessary and publish the final model and discount rates to be used by local assessors to value affected solar and wind energy systems in the next tax assessment cycle.
Until the Draft 2026 Model becomes final, the existing 2025 Model should still be relied upon by local assessors. Developers should work with local assessors to confirm the accuracy of Model inputs.
For questions regarding the Draft 2026 Model or submitting public comments, please contact Daniel Spitzer (716.848.1420), Amy D’Ambrogio (585.613.3955), Henry Zomerfeld (716.848.1370), or a member of our Real Property Tax Assessment & Eminent Domain Practice.
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