Third-party financing is an established financing solution in the United States, and it has recently emerged in the solar industry as one of the most popular methods of solar financing for consumers to realize the benefits of solar energy. Third-party financing of solar energy primarily occurs through two models: 1) a customer can sign a traditional lease and pay for the use of a solar system, or 2) a customer can sign a power purchase agreement (PPA) with a solar developer to pay a specific rate for the electricity that is generated each month by the solar system. More than 90 percent of New Jersey’s residential solar market has consisted of third-party owned systems since Q2 2013. In Q1 2014, more than 50 percent of New York’s distributed generation systems were third-party owned, and in California, Arizona and Colorado, 69 to 81 percent of installed distributed generation systems were third-party owned.
In Virginia SCC docket PUE-2015-00040, several intervenors raised the question of PPA legality in APCo’s service territory. As such, the Solar Research Institute is pleased to provide the results of legal research on this matter for general use by project developers within the Commonwealth of Virginia. Third-party PPAs appear to currently be lawful in APCo’s service territory pursuant to Code Section 56-577(A)(5)(a). It is important to note that SRI recommends that all companies consult with an attorney on this matter. This document does not constitute legal advice, only research that may be useful as developers examine projects in Virginia. SRI intends to provide an update following the hearing examiner’s ruling in case PUE-2015-00040.