West Virginia fails to legalize Power Purchase Agreements

The 2020 regular session of the West Virginia Legislature is drawing to a close without action on solar Power Purchase Agreements (PPAs). After several false starts in the state Senate and House of Delegates, legislation supporting PPAs failed to materialize this year.

Solar United Neighbors and our partner, West Virginians for Energy Freedom, are preparing to fight again in 2021.

The big picture: A Power Purchase Agreement is a common and popular financing tool. PPAs allow a developer to build and own a solar array on a host customer’s property. The property owner purchases the generated electricity at a fixed rate — typically lower than what the local utility company charges — for a set time period, usually 15-25 years.

• Similar to leasing, PPAs allow property owners to go solar with little to no upfront cost.
• PPA customers lock in long-term electric rates, which helps to stabilize their monthly budgets and avoid utility rate increases.
• PPAs are legal in at least 28 states, including West Virginia’s neighbors Virginia, Maryland, Pennsylvania, and Ohio. 

The problem: PPAs are not explicitly legal in West Virginia — although they’re not explicitly illegal either.

• 😕 This leads to confusion about whether or not PPAs are allowed in West Virginia.
• The lack of clarity prevents most solar developers from offering PPA contracts to their West Virginia customers.

The solution: Lawmakers could pass legislation to clarify that PPA are legal in West Virginia.

• Or… the state’s Public Service Commission (PSC) could issue a ruling to clarify whether PPAs are legal under current laws.

What happened: West Virginia lawmakers introduced but failed to move forward Senate Bill 611 (SB 611), which would legalize on-site PPAs for renewable and alternative energy generation.

• SB 611 was introduced by a bipartisan group of sponsors: Senate Judiciary Committee Chair Charles Trump (R-Morgan, 15); Senate Energy, Industry, and Mining Committee Chair Randy Smith (R-Tucker, 14); Senate Interstate Cooperation Committee Chair Sue Cline (R-Wyoming, 09); Senator Richard Lindsay (D-Kanawha, 08); and Senator Stephen Baldwin (D-Greenbrier, 10).
• SB 611 was sent to the Senate Economic Development Committee. The chair of this committee, Senator Chandler Swope (R-Mercer, 06), never placed SB 611 on the committee’s agenda. The bill never got a fair vote or even a hearing in committee.

Why it matters: The federal solar investment tax credit (ITC) is rapidly decreasing. 

• The ITC offsets 26% of the total costs of solar projects completed in 2020. The ITC decreases to 📉 22% in 2021, and then decreases to 📉 0% for residential projects in 2022. (Commercial projects permanently decrease to 📉 10% in 2022.)
• Entering into a PPA with a private, tax-paying solar developer allows tax-exempt institutions (such as schools, governments, and churches) to take advantage of ITC savings.
• Legalizing PPAs will create jobs for West Virginians in the rapidly growing solar industry.

What’s next: Although SB 611 didn’t become law during in 2020, we’ve made significant incremental progress toward our goal of legalizing PPAs in West Virginia.

• State legislative leaders have agreed to an interim study on PPAs. The study could result in support for a PPA bill during the 2021 legislative session.
• Public support for PPAs is growing. More than ✉️📞📄 330 people sent 540 emails, calls, and letters of support for PPAs to their lawmakers during the 2020 regular legislative session.
• Municipalities across West Virginia are have issued statements of support urging legislators to act, including: Morgantown City Council, Bluefield Board of Directors, Huntington Mayor’s Office, Charleston City Council, and Jefferson County Development Authority.
• Solar United Neighbors will continue to educate lawmakers about how PPAs expand access to solar and renewable energy in West Virginia and bring new jobs and economic benefits.