A Win for Solar Energy in Georgia: The Solar Power Free-Market Financing Act Becomes Law

On May 12, 2015, Georgia took a giant leap forward in the development of distributed solar power in the state, outpacing all other states in the region. With the enactment of HB 57, The Solar Power Free-Market Financing Act of 2015, signed into law today, Georgia becomes the first state in the Southeastern U.S. to legislatively approve private sales of electricity from onsite solar systems as a means of financing solar energy for Georgia businesses, institutions, schools, and homes.  The forward-thinking legislators in Georgia’s General Assembly, led by the bill’s sponsor, Representative Mike Dudgeon (R-Johns Creek), recognized that the ability to use the free market to finance solar systems in the most efficient and cost-effective ways the free market offers is a right of property owners throughout Georgia.  No longer can Georgia businesses, institutions and residents be told that the law prohibits the purchase of electricity from an onsite solar system financed by a third party that is not an electric utility.  “Georgia has created a market for solar energy financing that did not previously exist in the state or any other Southeastern states,” said Steve O’Day, head of the Sustainability Practice Group at Smith, Gambrell & Russell, LLP, and one of the principal negotiators of the legislation.  “It is the hope of all that worked on this legislation that Georgia will see a surge in free-market financing and development of solar energy projects at businesses, institutions, and homes across the State.”

What the Law Does

The Solar Power Free-Market Financing Act establishes that “solar energy procurement agreements” (SEPAs), known elsewhere in the country as “power purchase agreements” (PPAs) are a lawful way to finance the construction and operation of a solar electric generation system. A solar company can now finance the construction of solar panels for a home, business or institution in Georgia, including public schools, government buildings, colleges and universities, military bases, etc., and be repaid for the system through payment by the property owner for the electricity produced by the solar system.  What does it take to qualify as a SEPA?

  • SEPAs include any agreement—leases, PPAs, etc.—in which a solar company pays for the installation and operation of the solar system, and payments to the solar company “are based on the performance and output of the solar technology installed on the property”, that is—payment for the electrical output of the system.
  • The solar technology must be installed on property owned or operated by the person or entity using the power from the system.
  • The solar system must be connected to the utility’s distribution system “on either side of the … meter.”
  • The design capacity of the solar system must be at or below the “capacity limit”, which is a peak generating capacity, stated in alternating current (AC), that is no greater than:
    • 10 kW (kilowatts) for a residential system.
    • 125% of the actual, or expected, maximum annual peak demand of the premises the solar system serves, for all non-residential systems.
  • The solar system complies with all applicable state and local laws.
  • The solar company or the property owner/operator notifies the local electric utility at least 30 days before the solar system becomes operational.
  • Interconnection with the utility grid complies with the following:
    • For residential systems of 10 kW or less, and commercial systems of 100 kW or less: applicable safety, power quality, and interconnection requirements established by the National Electrical Code, National Electrical Safety Code, Institute of Electrical and Electronics Engineers, and Underwriters Laboratories
    • For larger systems: additional requirements only as “necessary to protect public safety, power quality, and system reliability.”

That’s it.  If a solar system’s construction and operation meets those requirements, the law makes clear that the sale of power by the owner of the system to the owner or operator of the property on which the system is located is a private transaction, does not make the solar system owner a public utility, and does not violate any rights the local electric utility has to exclusive provision of electricity to the public in its territory.

The law explicitly forbids the local electric utility from preventing or otherwise interfering with the installation, operation, and financing of solar systems under SEPAs authorized by the law.  It also explicitly forbids the local electric utility or the transmission or distribution grid operator from imposing any requirements for interconnection to the grid that exceed those “established by the National Electrical Code, National Electrical Safety Code, Institute of Electrical and Electronics Engineers, and Underwriters Laboratories” for most systems (residential systems 10 kW or less; commercial systems 100 kW or less), and for larger systems only those requirements “necessary to protect public safety, power quality, and system reliability.”

There are some quirks in the definitions of “property” and “premises” that will apply if one or more solar systems are being financed to serve properties that have more than one electric meter (such as schools, universities, multi-family housing, shopping centers, etc.), so consultation with knowledgeable legal counsel is advised.

The Solar Power Free-Market Financing Act should result in solar energy shining as brightly in Georgia as the sun on a clear summer afternoon.

The full text of the law can be found here.

For more information on the Solar Power Free-Market Financing Act, contact Steve O’Day.

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