Investments in renewable energy assets, particularly solar and wind, present unique challenges as their replacement costs continue to decline as advancements in technology and widespread market adoption lowers production costs.
Photovoltaic (PV) solar module technology is one asset category where cost continues to decline rapidly. The difference between Reproduction Cost (indexed original cost) and Replacement Cost New (RCN) is functional (technological) obsolescence.
Since the assessor’s formula for these assets incorporates indexed (trended) reproduction cost, it overstates Fair Market Value – resulting in an excessive property tax burden on those assets. If a replacement cost basis is accurately established, organizations stand to recover millions in overlooked property tax savings.
The challenge for oil and gas equipment manufacturers and processors is quantifying how fluctuating oil prices and oil field activity affect the market value of their inventory and production machinery and equipment.