As utilities seek to add more renewable generation to meet renewable portfolio standards (RPS), they must choose between two procurement options—ownership or contracting.
Buy versus Build: A Qualitative Comparison of Financial, Tax and Regulatory Issues Influencing Utility Solar Procurement, a new report from the Solar Electric Power Association, explores the factors that impact a utility’s decision whether to buy (PPA) or build (own) solar generation. Considerations include:
- How imputed debt, cost of capital and accounting treatment affect the financial decision-making process
- Whether investor-owned utilities will be influenced by tax incentives to build solar generation
- Creative ownership structures that may help municipal and cooperative utilities monetize the benefits of tax incentives
- The effect of regulatory considerations, such as integrated resource planning and cost recovery risk, on a utility’s determination whether to build or buy?