One of the reasons rooftop solar has become increasingly common across the United States is the spread of solar leasing or power purchase agreements, an arrangement by which customers "lease" their rooftops to companies that own and install solar on them, and then the customer buys back the energy generated by the solar panels.

This third-party financing is a nifty way for would-be solar customers to get around a lack of access to capital without taking out a loan. The only trouble is that many states don't allow it.

Are solar companies really utilities?

Selling electricity has been the preserve of state-regulated utilities, so in many parts of the country, it's currently not possible to install solar and sell electricity directly to consumers without being considered a utility. But things might be about to change. A test case brewing in Greensboro, North Carolina, is looking to shake up the status quo. Environmental nonprofit North Carolina Waste Awareness and Reduction Network (NC WARN) has teamed up with Faith Community Church in downtown Greensboro, a historically African-American church that wanted to lessen its carbon footprint.

Rather than simply raising money and installing panels, Faith Community Church decided it would use this opportunity to test the state's regulations over third-party solar — with the ultimate aim of catalyzing change across the country. To do so, the church asked NC WARN to install solar panels on its roof, and it's now buying back electricity at a much lower rate than it had previously been paying to Duke Energy.

Challenging monopoly control

Predictably, Duke Energy is not happy. In fact Duke is asking the N.C. Utilities Commission to fine NC WARN $1,000 for every day that it sells electricity to Faith Community Church. Duke’s deputy general counsel, Lawrence B. Somers, put it this way:

"It is ironic that NC WARN, an anti-utility advocacy group, has asked the commission for exemption from any regulation when it has admitted acting unlawfully as an unauthorized and unregulated utility itself."

Distributed energy requires new regulations

NC WARN remains undeterred. Nancy LaPlaca, the group's senior energy analyst, told MNN that not only is the group not a utility, but by seeking to define it as such, Duke Energy is revealing its desire to prevent competition from smaller, nimbler entities.

solar ppa map The legal status of third-party solar is somewhat unclear, even in states that "apparently" forbid it. (Photo: NC Clean Energy Technology Center)

This fight isn't just about North Carolina, either. By challenging the utilities, LaPlaca says, activists hope to unleash a wave of change in states across the country:

"We're not a utility, and any legislation that defines us as such is clearly outdated. According to the NC Clean Energy Technology Center, there are at least 20 states where the status of third party sales is somewhat unclear [see map above]. Yet what’s happening is that there are very few people challenging that, because solar companies simply don't have the money to fight Big Energy. The only place where someone did challenge it is Iowa, and the Iowa Supreme Court ruled in favor of a company called Eagle Point Solar ... We're hoping that our test case will result in similar clarity. Somebody has to challenge these monopolies."

This case should make for some interesting watching, for North Carolina and beyond.