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Article filed under Energy, Energy Self-Reliant States

Map of State 3rd Party PPA Rules

| Written by John Farrell | 2 Comments | Updated on May 9, 2012 The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/map-state-3rd-party-ppa-rules/

In lieu of smarter policy, schools, libraries, and city buildings hoping to install solar power have to resort to complex public-private partnerships to access federal tax incentives.  One common strategy is the power purchase agreement (PPA).

In essence, a PPA allows the public building owner to buy solar electricity on contract from a third party (instead of the utility), who installs and maintains the solar array on the building roof or property.  It’s similar to a lease, but it allows for the capture of both the 30% federal tax credit and accelerated depreciation.

However, in states with a regulated electricity market (about thirty), utilities have a monopoly over electricity service and may have  standing to oppose PPAs on the grounds that it violates their legal monopoly.  A recent battle in Iowa illustrates the problem.

The good news is that the PPA arrangement is legal or at least unchallenged in most U.S. states.  But it’s an area where clarity will be increasingly important as solar grid parity approaches.

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About John Farrell

John Farrell directs the Energy Self-Reliant States and Communities program at the Institute for Local Self-Reliance and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. More

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  • http://www.striebecklaw.com Chris Striebeck

    John,

    Has anyone looked at some of the stats between the states who allow 3rd party PPAs? …such as use measure on a statewide per capita? ….or number of actual deals completed? …..the relative ease of using 3rd party PPAs by number of pages of documentation needed to implement? It would be nice to have the best in place model available to use as an example to undo the energy oligopoly in Indiana. Thanks.

    Chris

  • http://www.ilsr.org/about-the-institute-for-local-self-reliance/staff-and-board/john-farrell/ John Farrell

    Chris,

    I’ve not come across an analysis of that, but I would guess that simply looking at the top solar states in terms of installed capacity would give you a benchmark of the relative ease of the 3rd party model.

    Sincerely,
    John