Disclosure: Rose Law Group represents solar developers that prevailed on this issue
Today, the Arizona Corporation Commission (ACC) voted to reject a request from the state’s investor-owned utilities to set two-year contract terms for renewable energy projects under the federal Public Utility Regulatory Policies Act (PURPA). Instead, commissioners voted unanimously to set contract terms at 18 years, providing renewable energy developers the financial certainty they need to develop new clean energy projects in the state.
PURPA was passed by Congress in 1978 to promote the independent development of renewable energy and cogeneration technologies as alternatives to fossil fuel-based energy production. By 2017, PURPA projects accounted for almost half (2000 of 4500 MW) of all solar energy production in the country.
Even in a state like Arizona, where solar and battery storage can cost billions of dollars less than coal power, short PURPA contract terms — like the two-year term proposed by utilities — make financing far too risky for capital-intensive projects with life times of 30 years. According to industry and Sierra Club experts, long-term contracts are therefore necessary to give renewable energy developers a reasonable opportunity to secure financing for these projects.