In Iowa, solar is fighting back against utilities and winning
Last week, I wrote about the pushback that solar is getting from utility companies, who fear it will cut into their profits and break their monopolies. (The predictions in certain corners of the business world that solar is coming to “take their lunch” isn’t helping either.)
But there’s another story – which is that solar is fighting back and winning. The most recent evidence is a decision last week in Iowa’s Supreme Court, that has big implications for solar, both in the Midwest and elsewhere.
The case started this way: back in the summer of 2011, a company named Eagle Point began installing solar panels on the roof of a municipal services building in Dubuque, Iowa. The two had entered into a deal called a Purchase Power Agreement (PPA), under which Eagle Point would install and maintain the panels in exchange for use of the municipal building’s nice sunny roof and first dibs on the chance to sell any electricity generated by the panels to the building’s occupants.
As corn has noticed, Iowa is a place that gets a lot of sun, especially in the summertime. The Iowa Environmental Council estimates that the state could supply about 20 percent of its current energy needs through rooftop solar installations.
PPAs are popular lately because, like leasing solar panels, they require little or no down payment. Since you’re buying the electricity, though, rather than access to the panels, the PPA installer is responsible for maintaining and fixing them. To a utility, that looks a lot like someone trying to be a utility, whether or not they are calling themselves that, which is where Interstate Power and Light Company (IPL) came in.
IPL, the local utility, noticed the solar panels going up, and promptly complained to the Dubuque City Council. The local utility board agreed with IPL in March 2012, but Eagle Point appealed, and in April of last year, the Polk County District Court overturned the utility board’s decision, partly because, as the ruling put it, “The customer will still be connected to the grid, will still be an IPL customer, and must continue to purchase energy and capacity from IPL. Eagle Point is neither attempting to replace or sever the link between IPL and the city. it is simply allowing the city to decrease its demand for electricity from the grid.” In other words, the solar panels weren’t any more illegal than an energy-efficient appliance would be.
This time, IPL appealed. The case went to the Iowa Supreme Court, which ruled on July 11 — 4-2, with one abstention — that Eagle Point, indeed, had the right to install solar panels anywhere it liked in Iowa.
“There is simply nothing in the record to suggest that Eagle Point is a 600-pound gorilla that has cornered defenseless city leaders in Dubuque,” the ruling read. “Eagle Point is not providing electricity to a grid that all may plug into to power their devices and associated ‘aps’ [sic], or, more prosaically, their ovens, refrigerators, and lights. Eagle Point is providing a customized service to individual customers.”
IPL was, understandably, bummed. It had, it reported, lost nearly 600,000 kilowatt hours in sales to Dubuque since the solar panels were turned on in 2012. “We have a financing model that hasn’t changed,” said spokesman Justin Foss, a spokesman for IPC’s parent company, Alliant. “If nobody’s buying energy, in the middle of the night, there’s no one to pay for the power plant.”
Counting Iowa, that makes 23 states now where PPAs are legal, and the Iowa ruling is strong enough that it’s expected to have an effect on the status of PPAs in Minnesota, Wisconsin, and other sections of the Midwest where they currently operate in a legal gray area.
It is possible that PPAs will get to the point where they are directly competing with utilities. By their nature, they create an incentive for companies like Eagle Point to seek out anyone with a flat, sunny roof, and strike a deal with them to install panels there — not because it’s inherently noble, but because it’s going to bring them the cheddar.
But there’s no reason that they couldn’t strike a deal to sell to utilities some day either, the same way that coal, gas, and oil companies do now. The first utilities that figure out how to do business with solar providers, instead of suing them, could be doing pretty well for themselves in the future.