This map shows Iowa as one of the states not allowing 3rd party PPAs, but that has changed after a recent court ruling. (The map is maintained by the Database of State Incentives for Renewables & Efficiency and NC State University. Source: http://www.dsireusa.org/solar/summarymaps/)
Like more and more Iowa business and communities, the City of Dubuque was interested in how a solar installation in their city could meet their energy needs. While solar installations require little maintenance and can help bring rising energy costs under control, electric customers like Dubuque face a number of questions when deciding whether to go solar.
Could energy tax credit programs help the city reduce the cost of the solar installation? Was there a way for Dubuque to enjoy the energy the solar panels provide without having to become an expert in solar operations and maintenance?
Late last month, an Iowa District Court ruling cleared the way for an important type of renewable energy partnership that can address those concerns. This is also a victory for distributive energy, referring to locally controlled or owned energy sources.
Dubuque concluded that partnering with a local solar business, Eagle Point Solar, would allow it reduce the risk and upfront cost of installing the solar system. The City planned to enter into an agreement known as a third party power purchase agreement with Eagle Point Solar. Under the agreement, Eagle Point Solar would assume the responsibility of financing and installing the solar system on city property and the City would purchase the energy produced in a long-term contract.
Third party power purchase agreements are a popular way to manage solar projects in the many states where they are allowed, but the Dubuque project was the first time one had been attempted in Iowa. The local electric utility objected to the agreement, and the Iowa Utilities Board ruled that it cannot proceed under Iowa law.
However, the Iowa Environmental Council and our allies recognize these agreements are a key option to have available to grow Iowa’s solar market, in addition to utility incentives and tax credits. The Iowa Environmental Council helped organize a Solar Coalition of state and national groups, represented by the Environmental Law & Policy Center, that supported Eagle Point Solar at the Iowa Utilities Board and then asked a judge to review the board’s decision.
Late in March, the Court overturned the Board’s interpretation of Iowa law, clearing the way for Iowa to join the other states allowing such agreements to support renewable energy development.
“Iowa has America’s 16th best solar resource, and tapping into that is going to require innovative solutions like PPA’s,” said Nathaniel Baer, the Council’s energy program director. “This ruling brings us closer to the conditions necessary for solar to play a bigger role in our state.”
The Council and its solar partners welcome the court’s ruling and are optimistic about the potential for the third party PPAs in Iowa. The agreements are especially useful for local governments, schools, non-profits as well as farmers and homeowners – all of whom may not have sufficient tax liability to take full advantage of incentives for renewable energy or may not have the upfront capital required for solar investments.
“Solar energy is an attractive option for Iowa because our state receives a great deal of solar energy at the same time our demand for energy is very high—hot summer days,” said Baer. “As Iowa homeowners and businesses continue to embrace solar, our coalition will keep working hard to overcome barriers along the way.”
While the Court’s ruling is still subject to appeal, the Council and its allies are hopeful it will stand. Stay up to date on this case and the Council’s other efforts to support solar energy by following the “solar” tag on the Council’s blog. To learn more about our energy program, visit iaenvironment.org.