Will the Eagle Point Solar Decision Open Up the Midwest Solar Market?

17 Jul 2014

Eagle Point Solar’s victory is a big win for rooftop solar in Iowa and opens up the state to further solar investment.

On July 11, 2014, the Iowa Supreme Court ruled in favor of Eagle Point Solar (EPS), a Dubuque, IA based solar installer, affirming that the company was not acting as a utility when it arranged a third-party power purchase agreement (PPA) with the city of Dubuque. The ruling caps a two year battle between rooftop solar and the two leading utilities in the state, MidAmerican Energy and Alliant Energy. With this decision, the Iowa court system clarified the status of behind the meter solar installations, and opened up the state to further solar investment.

The history of the case goes back to 2012 when MidAmerican and Alliant challenged Eagle Point Solar, stating that the firm’s arrangement with the city violated the utilities’ exclusive right to sell electricity within a given area or region.  The Iowa Utilities Board (IUB) sided with the utilities, issuing a Declarative Ruling which defined EPS as a public utility, and therefore unable to sell electricity in Alliant’s state-granted exclusive monopoly territory. Eagle Point Solar appealed the decision and it was subsequently reversed in 2013 by the Polk County District Court.

Most recently, arguments both for and against Eagle Point’s utility classification were heard by the Iowa Supreme Court. Relying on the 8-factor “Serv-Yu “ tests, a piece of 1950s Arizona Supreme Court case law,  the court ruled 4-2 in favor of EPS. In the ruling, the court states that, “… Eagle Point is not providing electricity to a grid that all may plug into to power their devices and associated ‘aps’, or, more prosaically, their ovens, refrigerators, and lights. Instead, Eagle Point is providing a customized service to individual customers.”

The resolution will certainly increase the amount of behind the meter solar in the Hawkeye State through the installation of systems that are financed through third party PPAs and leases.  As the state is already home to decent insolation and a state tax credit for solar energy systems equal to 18% of system costs, it is now primed for both commercial and residential scale growth with the introduction of third party financing. If you would like to discuss financing or the development of commercial scale projects in Iowa, please give our Project Finance team a call.

Less directly – one has to wonder what the impact will be on the states where solar PPAs are neither illegal, nor fully enshrined in law – the “white space” on this DSIRE Map OF PPA Acceptance.   To date, legal precedent has been unclear, with Commissions and courts reaching from time to time for the Serv-Yu factors, but with somewhat indirect application to the case of a solar PPA.

Analysts remain uncertain of the rulings impact on other states in the region, chiefly solar in Minnesota and Wisconsin, but those in the solar industry are hopeful that it will spur solar deployment in neighboring states as well. In celebration and gratitude, Sol Systems sent Eagle Point Solar a box of cookies; what have you done for the solar heroes of the Midwest?

About Sol Systems

Sol Systems is a renewable energy finance firm that provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers.  Founded in 2008, Sol Systems focuses on meeting the industry’s most critical solar financing needs, including tax structured investments, capital placement, debt financing, and SREC portfolio management. To date, the company has facilitated financing for thousands of distributed generation solar projects and hundreds of millions in investment on behalf of Fortune 100 corporations, utilities, banks, family offices, and individuals. For more information, please visit www.solsystemscompany.com.

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William Graves

William Graves