Dive Brief:
- The Iowa Supreme Court, by a 4-2 decision, ruled it is legal for Eagle Point Solar to sell solar energy-generated electricity to the City of Dubuque from an Eagle Point-owned system on a city building through a power purchase agreement.
- The ruling opens the way for third-party ownership (TPO) of solar in Iowa, a business model that has driven big solar growth in 22 other states by allowing buildings to host leased solar and benefit from lower electricity bills with little to no upfront costs or ownership responsibilities.
- Alliant Energy and MidAmerican Energy, Iowa's dominant electricity suppliers, oppose TPO because it could infringe on their state-protected right to sell and deliver electricity and recover the costs from ratepayers. According to the supplies, the recovery of those massive fixed power plant and transmission-distribution line investments must be protected in order to ensure system reliability.
Dive Insight:
The court's dissenting opinion argued the decision would make Eagle Point Solar a de facto utility and the decision should therefore be made by the Iowa Utilities Board and not the court.
The majority opinion argued TPO is a specific and limited business arrangement that should be unregulated.
The majority opinion also called TPO "a low-risk transaction" that requires no expenditure by the purchaser unless "valuable electricity" is produced.
TPO can allow governments and nonprofits ineligible for the 30% federal investment tax credit to install solar because third party owners can benefit from it.
Iowa could get approximately 20% of its electricity from rooftop solar, according to the Iowa Environmental Council.
The ruling is expected to impact other Midwestern states, including Wisconsin and Minnesota, where TPO is currently being debated.
