Nevada Assembly Bill 186, effective October 1, 2009, is expected to make financing the installation of renewable energy systems throughout the state easier for third parties. AB 186 clarifies the definition of “third-party ownership” allowing third-party providers to install, own, and operate a renewable energy system, such as solar, on a home or facility and lease the system to the property owner without being subject to the same regulations as a utility. Seeking a utility classification burdens non-utility entities with the expertise and capital required to finance renewable system installation yet lacking the resources to attain utility classification.
While the changes in AB 186 may seem small, the bill has major implications. “There are huge benefits from an economic perspective and a jobs perspective,” said renewable energy lobbyist Tom Clark. “Nevada is in a footrace with other Western states in trying to invite renewable companies. This law, along with other laws that provide incentives for renewable energy, sends a message that Nevada is the place to be when it comes to doing things related to renewable energy.”
Before AB 186, groups such as NV Energy contended that state law required companies that wanted to lease renewable systems, such as solar panels, to become public utilities. The classification was a major barrier for businesses that did not desire to become utilities and simply wanted to lease land or renewable systems. Besides regulatory oversight, being classified as a “utility” in Nevada means that rate changes by a third-party company would be subject to investigation by regulators. Additionally, legal staff at the Public Utilities Commission of Nevada pointed out that state law at the time made third-party ownership illegal.
The typical application for a third-party renewable system involves installing solar panels on top of buildings. An example would be a school that desires installation of a solar system but cannot pay the up-front costs. In the third-party system, a company comes in and shoulders the cost for the installation instead of the building owner. Then the company agrees with the school or office building to lease the solar system either though a low initial rate that slowly escalates over time or a higher flat rate set for a certain number of years.
Leasing solar panels has become a popular option for individual homeowners in some markets, notably California. As the law becomes finalized in December, the progression of similar programs in Nevada should be interesting.
Carlos L. McDade, Esq.