Association for Public Policy Analysis & Management

What conditions are needed for the success of a state regulation such as third-party ownership for solar PV installations? In May 2015, the state of Georgia passed the Solar Power Free-Market Financing Act, allowing third parties to finance solar projects in residences, businesses or small communities and sell the electricity generated to the property owner. According to the DSIRE database, 24 states, DC and Puerto Rico allow third-party ownership (TPO). Georgia was the first state in the southeast to implement this regulation (NC Clean Energy Technology Center, 2018). One of the main concerns when implementing policies and programs that foster the deployment of distributed solar photovoltaic systems is that only wealthy households have the financial capacity of installing solar PV systems on their rooftops. Since utilities have to buy any excess electricity produced by residential solar systems, electricity rates increase. This negatively affects low-income households that cannot afford to install solar rooftops (Yamamoto, 2012). TPO allows households and businesses to host solar without high upfront costs and ownership responsibilities, eliminating part of the inequity created in the first place.

However, the installation of new solar systems through the use of TPO has not increased in Georgia at the same rate as in other states. According to the Atlanta Journal-Constitution, the growth in solar PV in Georgia comes from large solar farms developed by utilities, not from distributed systems. Other states have experienced much larger distributed solar development after the implementation of TPO. 90% of New Jersey’s residential solar systems and 50% of New York’s distributed generation systems are third-party owned (Solar Energy Industries Association, 2018).

This research project is aimed at answering the following research question:

• How can the state of Georgia take better advantage of the implementation of third-party ownership for its economic development?

The development of the project is organized as follows. First, I will conduct an analysis of the extensive literature around financing mechanisms for distributed solar. Then, I will compare the regulatory conditions in Georgia with other states where the implementation of TPO has driven the deployment of distributed solar systems. I will achieve this using semi-structured interviews to members of regulatory agencies and advocacy groups. Finally, I will assess the necessary conditions for the development of new business models that help overcome the barriers of accessing solar electricity for of low-income households and small businesses. This section will assess the economic benefits for businesses and home owners that decide to install solar in Georgia using TPO.

The results of the project can benefit Georgia in two regards. First, the proliferation of new business models centered on TPO would allow the creation of new companies and jobs. Secondly, the project will provide information to policy makers that can be useful for the development of programs and policies that complement TPO and help address inequalities created by this regulation.