In a power purchase agreement(PPA), a third-party finances and owns the solar installation andreceives the available tax advantages and other incentives. Thethird-party then leases the system or sells the generated electricityto the building or site owner through a long-term contract. Severalstates are considering regulatory changes that would define third-partyowners of solar equipment as utilities (the PPA model), according tothe most recent report on Solar Market Trends Report by IREC. These regulations are generally unfavorable to the solar PPA model. If such rulings are made, third-party owners in these states maystill be able to lease solar facilities (as opposed to owning andoperating solar facilities) without being classified as utilities, buttheir ability to use the federal investment tax credit (ITC)will need to be clarified. If the federal ITC cannot be used as readilyunder the leasing model, PPAs will become less viable in these states.
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