Tax committee examines 10-year property tax exemption for new energy storage systems, stakeholders raise industrial and legal concerns

House Bill 2083 would create a 10-year property tax exemption for new energy storage systems beginning on or after Jan. 1, 2025, and would exclude those systems from the commercial and industrial machinery and equipment (CIME) exemption. The bill defines a "new energy storage system" to mean a commercial- or utility-scale electrochemical, mechanical, electrostatic or gravitational device that charges or collects energy and excludes systems that received necessary county approval prior to Jan. 1, 2025.

Proponents including developers and trade groups told the Tax Committee they sought statutory clarity for how battery and other energy storage facilities will be taxed as the industry grows, while some industrial users cautioned the bill could widen tax disparities or invite litigation if industrial-scale storage systems are unintentionally swept into new rules.

Amelia (committee staff) opened the hearing and summarized the measure as a two-part change: (1) a new 10-year property tax exemption for qualifying energy storage systems and (2) removal of those systems from the CIME exemption statute (described in testimony as K.S.A. 79-2,223), with certain systems grandfathered if they had county approval before Jan. 1, 2025. She said the bill had passed the House on Feb. 19, 2025, by a vote of 90 to 29.

Randy Stuckey, representing Reno Kansas Biofuels and the Kansas Grain and Feed Association, said his industries were not the intended market for the bill but that industrial-scale users are considering the technology. He warned that if the legislature does not explicitly preserve the existing permanent machinery-and-equipment exemption for industrial-scale systems, affected businesses would likely have to seek that treatment before the Board of Tax Appeals, potentially inviting litigation. Stuckey also said some industrial proposals use thermal-storage approaches not currently covered by the bill's language and suggested an amendment to include those technologies.

Joshua Swati of the Advanced Power Alliance described rapid growth in battery storage nationally and in neighboring states and argued the bill was designed to create statutory certainty for large grid-scale projects. "If you do not like transmission, new transmission lines, you will like battery storage facilities," Swati told the committee, adding that storage can address grid congestion and improve grid stability. He said the industry prefers a clear 10-year property tax schedule rather than the uncertainty of pursuing CIME treatment after construction.

Senators at the hearing pressed proponents on scope and local impact. Senator Owen asked whether the 10-year exemption applied to all property taxes or only to state levies; Amelia responded that the property tax exemption would apply to all property taxes, state and local. Committee members also asked whether the bill would treat behind-the-meter, industrial or small-customer installations differently from utility-scale, grid-connected facilities; proponents and industry witnesses said such smaller behind-the-meter systems would be treated differently in practice and are typically much smaller than the utility-scale projects envisioned by the bill.

Paul Snyder, speaking for Kansans for Lower Electric Rates, supported the bill and submitted an amendment he said was agreed to by industry proponents to include thermal-storage language so ongoing projects would not inadvertently be excluded.

Witnesses repeatedly noted that the tax treatment has real budgetary consequences for counties: large battery projects placed on the property tax rolls can add millions in property valuation and materially change local tax receipts in small jurisdictions. Josh Swati said typical large facilities have relatively small footprints (15 to 18 acres for a 300-megawatt site) and fewer county service demands than many industrial uses but could represent hundreds of millions of dollars in capital investment and therefore a significant property tax base.

The bill sponsor and proponents said they would work on drafting clarifying amendments, particularly to ensure industrial-scale thermal technologies are covered if the legislature intends that. The committee did not take a final vote during the hearing.

Votes and status: House passage Feb. 19, 2025 (90-29). No committee action recorded in the hearing transcript.

Ending: Proponents and opponents stood for questions and the committee closed the hearing and moved to other bills on its agenda.