Rooftop Solar/Distributed Generation: Four Important Steps for a Successful Project

Posted by James Pray Haley Van Loon Sheila Tipton in June 2016 on 6/10/2016

Rooftop Solar/Distributed Generation: Four Important Steps for a Successful Project (Download a PDF of this article)

Distributed generation has been a hot topic in Iowa and around the country. In 2014, the Iowa Supreme Court in Eagle Point Solar/SZ Enterprises agreed with BrownWinick’s argument that our client Eagle Point’s solar-powered behind the meter installations are not public utilities under Iowa law. Since that time, the interest in distributed generation has only intensified.

Installing on-site generation is an exciting possibility for businesses and individuals, but one that requires planning, expertise and foresight for a successful project. Before undertaking a distributed generation project, you should have firm command of all aspects of the project.

Working with Your Electric Utility

In order to begin the process you will need to identify your electric utility and submit an interconnection request. Some utilities have more experience with distributed generation than others. Utilities with more experience typically have a more streamlined process, while working with those with less experience may mean that you will have to invest additional time in helping the utility understand the process.

Be Prepared to Follow Interconnection Rules

The rules for utility interconnection are very detailed. Depending upon the size/capabilities of your proposed facilities, your utility will utilize different procedures to assess your request. As the capabilities of your facility increase, so too does the stringency of the review. You will want to understand in advance whether you will incur additional costs in order to make the interconnection. Depending on the power of the generation unit and its location on the local grid, the interconnecting utility may require a study to determine how the new generation unit will affect the reliability of the utility grid. If a study is required, the cost of that study will be passed on to the potential generator. Likewise, if the study determines that the utility will need to make changes to its system, the cost of those changes will generally be passed on to the potential user. Your facilities will also need to conform to a number of standards, including the state and federal electrical code. Interconnection facilities may also be subject to an initial assessment and inspection program to ensure the soundness of all equipment. It is also important to note that the Iowa Utilities Board is currently assessing the distributed generation rules. As a result, there may be significant changes in the future.

Will Your Dealer and Equipment Stand the Test of Time?

Distributed generation requires specialized equipment and installation experience. There are lots of vendors in this area and finding the right one is a key part of the process. In considering any proposal you should be sure to understand the costs involved and be provided with an estimate of how much electricity the system will produce and how much of your electric need will be satisfied. One often overlooked area involves the warranty associated with your system. You will want to be sure to negotiate a warranty that will treat you fairly and provide you security with your system for years to come.

Finding Ways to Pay for Your System

In addition to paying for a distributed generation system outright, many individuals and businesses utilize leases and third-party power purchase agreements in order to install the desired facilities. Lease terms vary, but these types of arrangements typically involve renting the system from a company for a fixed monthly rental payment no matter how much electricity is actually produced. Power purchase agreements involve a third-party developer who owns and operates a system on your property. In exchange, you purchase all electricity produced by the system at a per kWh set forth in your agreement. Before proceeding, you should get a full financial projection based on current and future uses and have the agreement carefully reviewed to ensure that your interests are protected.

In addition to the information above, the Iowa Utilities Board has provided a helpful guide for distributed generation projects which can be found on its website: https://iub.iowa.gov/sites/default/files/files/misc/IUB_Informational_Guide_Distributed_Generation.pdf

The BrownWinick Energy Team is one of the strongest teams in the state for professional expertise and quality service to clients with issues in the public utility regulatory areas, bringing both knowledge and experience to the table in this extremely complex and rapidly changing area. BrownWinick can provide the full service offerings of regulatory and litigation expertise, contract and real estate advice, taxation and commercial structure consultation, and legislative intervention.

BrownWinick's Energy Team:

Sheila Tipton, Chair
(515) 242-2438 
tipton@brownwinick.com

Phil Stoffregen
(515) 242-2415 
pes@brownwinick.com

James Pray
(515) 242-2404
pray@brownwinick.com

Rachel Rowley
(515) 242-2417
rowley@brownwinick.com

Haley Van Loon
(515) 242-2422
vanloon@brownwinick.com