Wisconsin photo voltaic advocates need regulators to look to Iowa’s instance as they contemplate the newest skirmish over how photo voltaic initiatives are financed within the state.

The Wisconsin Public Service Fee is contemplating two petitions looking for authorization for third-party-owned photo voltaic initiatives, by which the entity that owns the array is totally different from the property proprietor that may use the electrical energy. 

The financing mechanism makes photo voltaic viable for a lot of cities, colleges, and nonprofits, in addition to residential prospects who can’t afford the upfront value of a photo voltaic array. It’s additionally been the topic of an extended authorized and regulatory battle between photo voltaic advocates and Wisconsin utilities that see it as a risk.

That was as soon as true in Iowa, too, till 2014 when the Iowa Supreme Court docket affirmed {that a} third celebration can personal a photo voltaic array and promote the facility, or make lease funds, to the proprietor of the property with out turning into a public utility. Within the eight years since then, consultants and advocates say utilities’ fears over such possession opening the door for “deregulation” or different destructive impacts haven’t materialized.

“Iowa continues to be very a lot a utility-dominated state with a vertically built-in utility construction, and with lower than 2% of era from distributed assets,” mentioned Karl Rábago, an power advisor primarily based at Tempo College College of Regulation, testifying on behalf of the advocacy group Vote Photo voltaic in one of many pending instances. “Furthermore, for the reason that 2014 courtroom resolution, I’m not conscious of motion within the state towards deregulation or retail selection.” 

(Rábago additionally supplies occasional editorial suggestions to the Vitality Information Community as a member of a reader advisory committee. See our code of ethics for extra info.) 

Iowa’s courtroom resolution resulted from Dubuque-based developer Eagle Level’s lawsuit difficult Alliant Vitality’s refusal to interconnect a third-party-owned array to the grid. Eagle Level has additionally been central to the standoff in Wisconsin, after utility We Energies refused to interconnect photo voltaic co-owned by Eagle Level and the town of Milwaukee. 

The newest petitions associated to third-party photo voltaic in Wisconsin had been filed in Could. Vote Photo voltaic asks that the Wisconsin Public Service Fee enable a Stevens Level household to enter a third-party possession association for an 8.6-kilowatt system. The petition notes the power financial savings would assist them pay for school for his or her two teenage kids, and a third-party construction is critical to keep away from upfront prices. That household lives in territory served by Wisconsin Public Service Company, which like We Energies is a subsidiary of utility firm WEPCO. 

The Midwest Renewable Vitality Affiliation petition asks the fee for a declaratory ruling clarifying that third-party photo voltaic is authorized, and notes that it might be too costly and troublesome for each buyer who desires the association to file their very own petitions.  

Public hearings for each proceedings can be held on Nov. 2, and public feedback are being accepted via Nov. 9. 

“There may be merely no motive to consider that Wisconsin’s expertise with third-party-financed distributed power programs would monitor any in a different way than what we’ve seen in Iowa,” mentioned Michael Vickerman, program and coverage director for Renew Wisconsin. “Third-party financing won’t usher in mass defections from the grid, nor will it, by itself, push power charges greater. However it might definitely broaden the shopper base that Wisconsin photo voltaic contractors would serve, together with low- to moderate-income households who could have much less success accessing federal tax credit than their extra prosperous counterparts.” 

Iowa instance 

A 2021 report by Iowa’s state auditor confirmed {that a} whole of 80 public entities had put in photo voltaic, largely for the reason that 2014 courtroom resolution, saving a median of over $26,000 a yr on power because of this. The report famous that colleges have employed an additional trainer, averted closing and in any other case benefited from the financial savings. 

Because the Iowa ruling, Eagle Level has developed dozens of third-party-owned installations for Iowa colleges and municipalities, together with latest arrays put in on the fireplace station and water therapy plant within the metropolis of Hills, Iowa, and a 300-kilowatt array for Higher Iowa College. Eagle Level CEO Jim Pullen mentioned the corporate has signed about 20 contracts with municipalities simply this fall.   

“It’s not that sophisticated,” Pullen mentioned. “By and enormous I don’t consider the utilities have made any statements about [third-party ownership having] deregulated the market or destabilized the market. They deal with a third-party challenge precisely the identical as a customer-owned challenge. There’s no distinction from our perspective after we’re interconnecting, and so they don’t appear to care anymore.” 

The utilities that had opposed third-party possession in Iowa — Alliant Vitality and MidAmerican Vitality — didn’t reply to questions on their previous opposition to third-party financing or its present affect. Spokespeople for each utilities mentioned the businesses help renewable power and supply choices for purchasers to entry renewables, together with an Alliant program whereby the utility pays prospects to put utility-owned photo voltaic on their rooftops.  

“Alliant Vitality focuses on making renewable power accessible for everybody — with a purpose to preserve it reasonably priced for everybody,” says an announcement supplied by Alliant. “We help power insurance policies that guarantee a good, reasonably priced and dependable power community for all prospects and communities. … We help our prospects’ pursuits in photo voltaic via a wide range of mechanisms, together with utility-scale photo voltaic, community-based photo voltaic and interconnection of customer-owned programs.” 

The Iowa state auditor’s report notes that Iowa has 99 counties and 330 faculty districts. “If every county, every county seat, and every faculty district created a photo voltaic set up of the common measurement of those installations [already developed with third-party ownership], over the installations’ lifetimes Iowa taxpayers may count on to internet over $375 million in financial savings,” the report says. 

The Iowa state auditor additionally surveyed colleges and cities about public response, and located vital public help. The Bennett Group College District, for instance, credited its $53,000 power financial savings for serving to to maintain the varsity open to its 88 enrolled college students. Town of Cedar Rapids acquired suggestions that its panels — developed with Eagle Level — had been unattractive, and planted timber to enhance the view.

“At a excessive degree, third-party possession is doing precisely what we thought it might do” in Iowa, mentioned Josh Mandelbaum, a senior legal professional with the Environmental Regulation & Coverage Middle: “Offering higher selection and adaptability for people and organizations that need to pursue photo voltaic.” 

We Energies and different utilities have argued that third-party possession undermines the utility’s capability to maintain up the grid and serve its prospects, for the reason that third-party proprietor is basically competing with the utility and the shopper is paying much less to the utility. The Wisconsin Utilities Affiliation supplied knowledgeable testimony through the petition proceedings — together with from a former California utility commissioner — concerning the destructive impacts of internet metering and photo voltaic proliferation. 

However Environmental Regulation & Coverage Middle senior legal professional Brad Klein argued that this “cost-shifting” argument, usually made by utilities nationwide, is separate from the authorized query of whether or not a third-party proprietor is functioning as a utility.

“A few of the arguments you see usually are not particular to the authorized query concerning whether or not offering financing choices creates a public utility; they’re extra broadside assaults on distributed power assets typically,” Klein mentioned. “We noticed that in Iowa — a mischaracterization of the affect of third-party financing.”

In the meantime, the concept that distributed photo voltaic unfairly shifts prices to prospects with out photo voltaic and jeopardizes grid reliability has been broadly challenged with proof displaying extra distributed photo voltaic typically makes the grid extra environment friendly and resilient, benefiting all prospects. 

“The affect of third-party financed photo voltaic on Iowa’s electrical charges? Negligible,” mentioned Renew Wisconsin’s Vickerman. “If something, the hole between Iowa’s and Wisconsin’s electrical charges has widened since 2014.”

An fairness challenge 

The Environmental Regulation & Coverage Middle cites a 1911 Wisconsin Supreme Court docket case, Cawker v. Meyer, whereby the courtroom dominated that an organization promoting warmth and energy to a number of neighbors didn’t represent a public utility due to its restricted scope. Case regulation says utilities’ rights to function as regulated monopolies have to be protected for the curiosity of consumers, not the utilities’ aggressive pursuits, furthering the argument for third-party photo voltaic as advocates see it. 

As soon as third-party financing turns into commonplace, the success and recognition of such arrays rely partially on internet metering insurance policies that usually apply equally to instantly owned and third-party-owned initiatives. 

In Iowa, advocates say utilities have carried out nothing for the reason that Supreme Court docket resolution to impede third-party-owned arrays particularly, however struggles over distributed photo voltaic continued. The Environmental Regulation & Coverage Middle and different advocates had been upset with a 2019 utility-backed invoice that will have gutted internet metering for all distributed photo voltaic, together with third-party-owned arrays. Finally 2020 state laws established inflow-outflow billing that may transition to a value-of-solar tariff. That compromise was supported by clear power teams, although they’ve clashed with utilities over its implementation. 

Third-party possession permits nonprofits like colleges, authorities businesses, church buildings, hospitals and social service businesses to gather tax advantages although they don’t pay taxes, since a non-public developer owns and operates the photo voltaic set up, passing their tax financial savings on to the shopper. The mannequin additionally makes rooftop photo voltaic possible for personal residents or different entities that can’t afford the upfront capital, and lower-income households who don’t earn sufficient to owe taxes that may very well be slashed via the credit score. Third-party possession turns into much more essential for the reason that Inflation Discount Act prolonged the federal funding tax credit score for photo voltaic, advocates say. 

“We’re targeted on getting extra of us and organizations and farmers and companies to personal extra of the power that’s round their properties — whether or not wind, photo voltaic, geothermal,” mentioned Jason MacDuff, president of Greenpenny, an Iowa-based, sustainability-focused financial institution that funds many third-party-owned photo voltaic initiatives. “They need to be capable to harness the facility and be capable to deploy it to allow them to protect their very own assets. That’s essential for financial growth, particularly in rural areas.” 

The Unhealthy River Tribe in northern Wisconsin was in a position to set up three solar-powered microgrids with battery storage via third-party possession, since they aren’t regulated by the Public Service Fee or topic to state regulation as a Native American tribe that will get energy from an electrical cooperative. The nonprofit that partnered with the tribe on the challenge, Cheq Bay Renewables, argued in a public remark within the Vote Photo voltaic case that third-party possession is a social justice and fairness challenge. 

“Fairness has risen in significance throughout all Federal and State choices, and ought to be utilized to TPF [third-party financing],” Cheq Bay Renewables president William Bailey wrote within the public remark within the Vote Photo voltaic case. “TPF is simply one other financing software to permit a extra speedy and equitable growth of fresh power. … This docket shouldn’t be about one household, however relatively may set coverage all through the state.”