The 2020 regular session of the West Virginia Legislature is drawing to a close without action on Power Purchase Agreements (PPAs). After several false starts in the state Senate and House of Delegates, legislation supporting PPAs failed to materialize this year.
West Virginians for Energy Freedom and our partner, Solar United Neighbors, are preparing to fight again in 2021.
Why it matters: The federal solar investment tax credit is rapidly decreasing.
The tax credit offsets 26% of total costs for projects completed in 2020. The tax credit decreases to 22% next year, and is set to expire altogether for residential projects and decrease to a permanent 10% for commercial projects in 2022.
Engaging in a PPA with a private, income tax-paying solar developer is the only way for tax-exempt institutions such as schools, governments, and churches to take advantage of the federal solar investment tax credit.
Legalizing PPAs will create good new jobs for West Virginians in the rapidly growing solar industry. Check out this economic impact report to learn more.
What happened: West Virginia lawmakers introduced but failed to move forward a bill, Senate Bill 611, to legalize on-site PPAs for renewable and alternative energy generation facilities.
S.B. 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).
The bill was single-referenced to the Senate Economic Development Committee. But the Chair of this committee, Senator Chandler Swope (R-Mercer, 06), never placed S.B. 611 on the committee’s agenda.
The big picture: A PPA is a common and popular financing tool that allows a developer to build and own an energy facility, such as a solar array, on a host customer’s property. The property owner purchases the electricity the facility generates at a fixed rate — typically lower than that of the local utility company — for a predetermined 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 state code.
This leads to confusion about whether or not PPAs are allowed here.
This lack of clarity prevents most solar developers from offering PPA contracts to their West Virginia customers.
The solution: West Virginia lawmakers can pass legislation to clarify that this type of energy financing is legal in our state.
Alternatively, the state’s Public Service Commission (PSC) could issue a ruling to clarify the legal status of PPAs for on-site renewable and alternative energy facilities in West Virginia.
What’s next: Although S.B. 611 did not become law during this legislative session, we 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 leadership support for a PPA bill during the 2021 legislative session.
Support for PPAs is growing among West Virginia lawmakers and the public:
More than 330 people sent 540 emails, calls, and letters of support for PPAs to their lawmakers during the 2020 regular legislative session.
Morgantown City Council, Bluefield Board of Directors, Huntington Mayor’s Office, Charleston City Council, and Jefferson County Development Authority all have issued statements of support urging legislators to act.
We will continue to educate lawmakers about how PPAs can expand access to solar and renewable energy in West Virginia and bring new jobs and economic benefits to the state.