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Rooftop Solar Iowa rooftop solar

Published on July 12th, 2014 | by Tina Casey

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Huge Legal Victory For Rooftop Solar Power

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July 12th, 2014 by
 
If you’ve never heard of the company Eagle Point Solar before, you’re going to hear a lot more now. The Dubuque-based rooftop solar specialist’s biggest installed project to date measures up to only 370 kilowatts, but the company just won a big legal battle that could break the US rooftop solar market wide open in Iowa and beyond.

By clarifying the regulatory standing of non-utility solar installers like Eagle Point, the ruling provides much-needed market certainty in the many US states that don’t currently provide a firm footing for non-utility solar installations, on rooftops or anywhere else, for that matter.

Iowa rooftop solar

Rooftop solar (cropped) courtesy of Eagle Solar.

Legal Victory For Rooftop Solar, And Distributed Solar

The solar installation involved in the case is a rooftop solar installation on a municipal services building in Dubuque, Iowa, but it applies generally to distributed solar installations.

The new rooftop solar ruling, a split decision handed down by the Iowa Supreme Court yesterday, basically says that Eagle Point can provide its turnkey solar installation services within an area already serviced by a utility.

That affirms a lower court ruling, which nulled out a previous finding by The Iowa Utilities Board, which had ruled that Eagle Point’s activities classified it as a public utility, which would mean that it could not operate within another utility’s service area. In this case, that would be the utility Alliant Energy.

Here’s how the Supremes came down (break and emphasis added):

According to the district court, Eagle Point’s provision of electric power through a “behind the meter” solar facility was not the type of activity which required a conclusion that Eagle Point was a public utility.

The district court further found that  although it was conceivable under some circumstances that an entity that was not a public utility could nevertheless be an electric utility under the applicable statutory provisions, Eagle Point’s proposed arrangement with the city did not make it an electric utility for purposes of the statutes.

A Victory For Power Purchase Agreements

Oh ho, so now we’re getting somewhere. That arrangement with Dubuque was a power purchase agreement, specifically a third-party power purchase agreement.

Power purchase agreements (PPAs) have emerged as the key driver of non-utility distributed solar installations, most familiarly in the form of rooftop solar.

PPAs are a make-or-break financing mechanism for the distributed solar market. To own a rooftop solar installation on a single family home you would have to kick out thousands of dollars up front, even with the help of generous tax cuts. PPAs mean you get the solar without the up-front costs.

In a PPA, instead of owning a solar installation outright the property owner allows a solar developer to put their solar panels on the property. The property owner agrees to purchase the electricity generated by the installation, through monthly payments. The developer typically provides “turnkey” services, which covers everything including operation, maintenance, and repair, with the idea of making the whole thing as seamless as utility service.

Under many PPAs, the installation is grid-connected and the customer’s monthly payments go through their utility bill. In others, such as in the Dubuque case, the local utility is bypassed and the solar-generated electricity is sold through a third party.

In either case, aside from getting a crack at the solar-powered lifestyle of the future without up-front costs, the property owner wins out because their monthly payments are typically lower than what they would pay for grid-supplied electricity.

Rooftop Solar For Me, And Thee

PPAs are critical enough for private sector solar installations, but they play an even more crucial role for installations on public property, such as the Dubuque municipal services building.

That’s because public properties can’t take advantage of the same kind of solar tax breaks that reduce up-front costs for solar installations on privately owned properties.

The same goes for other non-private sectors, including non-profits and religious organizations.

The Rooftop Solar Domino Effect

The Eagle Point case has been closely watched by solar advocates. According to MidWestern Energy News (a project of the RE-AMP media center at Fresh Energy), industry watchers foresee that affirmation of third-party PPAs will create a more stable investment atmosphere in Iowa, attracting more institutional financing from banks and insurance companies.

According to a report in the Des Moines Register, industry watchers also foresee that the ripple effect of the Dubuque case could reach Wisconsin, Minnesota, and other states in the region.

 

The Register notes that even with Iowa in the fold, only 23 states currently allow third-party PPAs, so as the legal barriers fall Wisconsin and Minnesota could be just the beginning.

For that matter, the Obama Administration has already been going at PPA-financed solar installations hammer and tong on federal property, most notably through the Defense Department’s many PPA-financed solar projects.

We’re also going to go out on a limb and predict that as the technology for building-integrated solar grows, you may also see PPA-type financing go beyond standalone rooftop or ground mounted solar panels, and on into solar building elements including roof tiles, walls, and even windows.

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About the Author

Tina Casey specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Tina’s articles are reposted frequently on Reuters, Scientific American, and many other sites. Views expressed are her own. Follow her on Twitter @TinaMCasey and Google+.



  • Matt

    First let me say, that I am not now nor ever been pro-lease. It is part of the higher soft costs in US verse Germany. But because of the way tax code is written in the USA; there are groups like non-profits, governments (local, state, fed) for whom it is a useful path.

  • SolarPod

    Like everything in policy there is a choice. In each choice there are people for and against. Here are two models that are quite present in
    the infrastructure and construction industries.

    1. Take the building construction industry. In this industry, the financing companies are a separate entity than the construction companies. The construction companies typically perform engineering tasks and execute the project to established engineering guidelines. The finance companies perform
    the task of time value of money. For example in the home construction industry, the home builder is never the mortgage company. Similarly the mortgage company is never the home building company. Automobile industry is another example where the financing companies are most of the time different than auto manufacturing and distributing companies. While GMAC finance is present they are not the primary focus of GM, at least in my understanding.

    2. The financing industry is very established in performing established financing methodology for projects and giving money when large sums are at stake. Financing companies (Goldman, Lehman, AIG, Fidelity, SolarCity, SunRun, Bank of America, Wells Fargo, US Bank, etc.) take large sums of money coming from 401K, retirement and securities and invest so they can get some profits from the
    investments.

    With the above two models, we must take a company that we have in our experience that moved from manufacturing to financing and then split to manufacturing and financing. The company based in St. Louis, MO was called MEMC. MEMC was a well-established silicon wafer manufacturing company. It was listed in the stock exchange in the sticker WFR. It provided quality single
    crystal wafers for integrated circuits. In about 2009, MEMC purchased Sun Edison. Sun Edison was a solar financing company. They had very good PPA and
    pioneered. Sun Edison’s PPA propelled much of the utility and commercial scale solar growth. I am not an expert in the percentages of MEMC and Sun Edison in revenue at the time of the purchase in 2009. My memory indicates MEMC market
    capitalization was about $2B at the time of the purchase. In about 2012 or 2013 MEMC changed their name to Sun Edison.

    In 2013, Sun Edison split the company to the silicon wafer manufacturing division and the solar division. The focus of Sun Edison (Sticker SUNE) is solar project
    development. The focus of SunEdison Semiconductor (Sticker SEMI) is semiconductor wafer manufacturing.

    The USPTO search for patents awarded to MEMC results in about 250 patents. As most of the patents are in silicon wafer manufacturing for semiconductor I would assume they would go to SunEdison Semiconductor.

    Manufacturing companies that are in project development like First Solar (and Sun Power) are also present and they control a small portion of the market compared to the other well capitalized solar sector (SolarCity, SunRun, SunEdison, etc.). Whether this is good or bad is left to the reader and is not a point I wish to make.

  • CaptD

    I hope Tina Casey will try and get other Solar Installer comments and even some BIG Utilities like SDG&E, SCE and FPL to comment on this decision and how it might affect their “public” monopolies.

  • CaptD

    Solar Energy is a terrible thing to waste – CaptD

  • Senlac

    Geez, I’m for installing Solar any which way it can be done. Some take the no risk PPA approach, fine, let them pay more. The point is more will be installed with flexible financing options. Iowa just took a step forward, good for them. There is an old saying, “the avalanche has already started, to late for the pebbles to vote.” Solar has the momentum behind it, the Iowa verdict is like one more pebble saying, ok we get it, we’ll be coming along one way or another, we’ll do so willing, like they had a choice.

  • http://www.michaeljberndtson.com/ Michael Berndtson

    This is interesting stuff. I’ll leave the business and politics out because it’s too confusing.

    The following issues maybe what freaks out traditional power generation: land acquisition, raw materials and disposal cost. Solar on top of existing properties, the back 40 or roof, simply kills fossil fuels and nuke on those cost items alone. Solar really only has capital costs (i.e. major purchased equipment and installation) that’s high relative to fossil fuel and nuke. There’s also little to no disposal costs for PV, assuming PV panels can be recycled after 20 years or so of life. This is pretty much true for wind.

    All three items, land acquisition, raw materials and waste disposal, also comes down to land. Land and what that land yields, in terms of natural resources and waste disposal, is becoming more dear. PV solar, regardless if its distributed or not, is and will continue to blow the incumbent technologies away.

    Our business geniuses should be figuring how to make this work – and fast. That’s why they get paid a hell of a lot more than engineers. Until they unwrap themselves from this axle of confusion, us engineers can snip and scoff at their unbelievably feckless attempt at doing their job.

  • andereandre

    “break the US rooftop solar market wide open in Iowa and beyond”
    Hyperbole is counter productive.
    This is the state court ruling on state specific regulation, it means nothing for other states.

    • Bob_Wallace

      If this interpretation works in Iowa then organizations in other states are likely to attempt the same changes. It’s not that a change in Iowa regs apply to other states, but the change provides a route for other states.

      An idea is born and made work.

      • andereandre

        But many states already have those rules.
        This is positive news. Just present it as such without the exaggeration.

        • Kyle Field

          It’s never going to be perfectly written to suit everyone. It’s a comment that’s leaning forward, granted, but not to the extent to be misleading, imho.

    • J Keyes

      It is not hyperbole to say that the decision will reach beyond Iowa. The decision relies on the definition and interpretation of the term “public utility” and every state has a similar definition and similar case law, with modest tweaks. The Iowa Supreme Court relied on the “Serv-Yu” eight-factor test to determine whether Eagle Point is a public utility, referencing a case on point, and found that it was not. Other states have relied on the Serv-Yu test, and undoubtedly states will do so in the future, and reference the Eagle Point case. As well, this case concluded that the Iowa courts did not owe deference to the Iowa Utilities Board’s interpretation of the term “public utility”, which will almost certainly be cited when the next utility commission decision regarding PPAs in some other state gets appealed. To be fair, it is hyperbole to say that this one case “breaks the US solar market wide open,” but the impact of the case is definitely not limited to Iowa.

  • ronwint

    This wasn’t a victory for distributed energy, it was a victory for the expensive solar lease and PPA companies. Solar system ownership makes far more economic sense for home and business owners.

    • Bob_Wallace

      So what, Ron?

      Obviously some people prefer to lease.

      We get your point that it makes more financial sense to purchase than lease. Give it a rest.

      • andereandre

        True that. Let 1000 flowers bloom.

      • ronwint

        Can’t give a rest. The leasing companies have all the money in the world to spread their propaganda and since 2008 and only until very recently there has only been me.

        Now after 6 years of being called a troll, a spammer, a fool, you name it, my diligence has paid off and 1000s of “flowers” are now spreading my message and the industry is changing for the better.

        The power of the pen that you as an advocate for the leasing industry has failed to silence will win in the end.

        • Bob_Wallace

          “you as an advocate for the leasing industry”

          Oh, bullshit.

          • ronwint

            For at least a couple of years now, every time I post a comment concerning leases or PPAs, you post a rebuttal. So it sure appears to me like you are an advocate for the leasing industry.

          • andereandre

            Bob posts a rebuttal on everyone who spreads disinformation on this forum (and on several others).
            I would have given up a long time ago and let the distractors win.
            Thank you Bob.

          • Bob_Wallace

            Why don’t give me some examples of how I stepped on your tail?

            My position on leasing, and it’s been my position from early on, is that it probably makes more financial sense for the property owner to purchase rather than lease. But that all boils down to who has more money in their jeans at the end of the day, the building owner or the leasing company owner.

            My concern is for getting as many panels on roofs and connected to the grid as possible, as fast as possible. If leases permit some people to commit, then fine. I care less who makes the money.

          • ronwint

            “But that all boils down to who has more money in their jeans at the end of the day” Please explain why you would need any money in your jeans whatsoever with a $0 down FHA solar loan that requires no equity in your home and only a 650 credit score to apply for on a much lower priced ($3.20 per watt before incentives) solar system?

            It would seem to me that someone would need a lot more money in their jeans to pay for those 20 years worth of escalating (2.9% per year) lease payments on a higher priced leased system, as well as a higher credit score when they lease instead of buy.

            You see, my goal too is to get “as many panels on roofs and connected to the grid as possible, as fast as possible”, but with the added benefit of a lower cost and a greater return to the consumer.

          • Bob_Wallace

            ​If you purchase then you keep more money in your jeans.

            If you lease then the leasing company puts money in its jeans.

            I got no dog in the “whose jeans bulge” fight. I’m all for getting panels up and coal use down.​

          • CaptD

            Bob – Great Image

            I bet most ratepayers, given the choice, would want their own jeans to bulge and bulge BIG, which is why the Utilities are so afraid of rooftop Solar.

            Said another way, owning and/or leasing rooftop Solar will surely reduce the bulge in the Utilities jeans.

        • Kyle Field

          Blaming the leasing companies for trying to make a buck on this new tech is ridiculous. A scenario I run into often is retirees who likely dont have 20 years left to wait for a solar system purchase to pay off. They dont care about the long term payout, the sustainability of it…but lowering (and locking in) their monthly energy bill gets them all excited. Similarly, people who dont care about “going green” and dont want to drop capital also relate to lowering and locking their monthly power bill.

          • CaptD

            Kyle Field – Uprated

            Plus looking at the bigger picture, the more PV panels that get installed the better it is for everyone, everyone that is, except those making money from Big Utilities; which is why I believe that installing PV panels is great for the USA and the planet.

  • JamesWimberley

    Can you really set up a PPA anywhere for a home rooftop installation of 5-10 kw? I would have thought the minimum would be 100kw or so, in other words a commercial not residential installation. If that’s so, the impact of the ruling is less than Tina suggests – but it’s still significant, as commercial can be roughly a third of the market.

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