North Carolina Law Review

University of North Carolina School of Law

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Chapel Hill, NC 27514

Solar Financing in North Carolina: The Untapped Potential of Power Purchase Agreements

September 26, 2017

95 N.C. L. REV. 1599 (2017) 

 

Clean, renewable energy is an essential component of a modern energy policy. Rooftop solar photovoltaic (“PV”) systems constitute an important part of a state’s clean energy portfolio. But these systems are too expensive for most individuals and small businesses to buy outright. Instead, they must be financed. One of the main methods used in other states for financing rooftop solar PV systems is the power purchase agreement (“PPA”). Under a typical PPA, a third-party financier installs a solar PV system on a property owner’s rooftop and sells the electricity generated by the system to the property owner. The price for the electricity is usually lower than the price charged by the property owner’s public utility. But the North Carolina Utilities Commission (the “Utilities Commission”) has prohibited the use of PPAs in North Carolina. According to the Utilities Commission, the sale of electricity by a third-party financier under a PPA violates the competitive monopoly granted under state law to the public utility.

 

This prohibition against PPA will slow the spread of rooftop solar PV systems in North Carolina. In addition to the detrimental environmental effects this will have, there are also equitable effects. Without PPAs, only the wealthy are able to afford the economic benefits and environmental stewardship resulting from solar ownership.

 

This Article contends that PPAs do not implicate the traditional justifications for regulation by the Utilities Commission and are therefore outside the Commission’s authority to prohibit. The Article also offers both a legislative and a judicial solution to the current prohibition against PPAs in North Carolina. 

 

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