·  Legal News, Analysis, & Commentary


Legal Issues in the Solar Industry

— April 15, 2021

When it comes to starting a solar business, there are more than a few factors to consider. Take some time to figure out what works for you and your business goals.

Before entering any industry, business owners need to know all the legal aspects related to it. Failure to do this may cause undesirable legal consequences. Owning or representing a solar business must follow these rules, too. Solar has become a trending industry in the U.S. in recent years. While this is true, entrepreneurs hoping to break into this field need to make sure they remain attentive and cautious before moving forward. While offering a solar power system to customers may seem like no big deal, certain legal issues must be understood before moving forward. It is important to note that solar energy businesses must follow regulations that more traditional business owners don’t worry about. They also have to be aware of and follow solar panel law. Keep reading for some important things to know before moving into this industry as a business owner.

Maintenance and Operation of Solar Systems

As an entrepreneur, you may delegate a solar system’s maintenance and operation to a third-party company or contractor. Include all these ongoing costs into your budget and manage the agreements you have with these service providers.

Land Rights Considerations

Rooftop solar panels adorn a house with intricate wooden trim.
Rooftop solar panels. Public domain photo by Photo-Mix, courtesy of Pixabay. CC0

One of the first steps to take in a solar business is to secure land rights. Usually, land rights will be established through an easement agreement or lease agreement. Each option has pros and cons to consider. You should hire a legal advisor to determine the project’s needs, which will help you figure out what is needed. You also need to consider the deductibility of the land’s cost for your income taxes. Usually, you won’t receive or need a fee title to the land to have it maintained. However, buying it does provide you with some benefits that will be helpful in this situation.

Risk Allocation

As a solar business owner, you will face several risks. Some examples of these risks include projects that don’t perform as expected and regulatory programs or modified or revoked incentives. These and other risks pose a serious threat to your business. While you can’t eliminate them completely, you can reduce them. For example, to find and evaluate risks, you should speak with others in this industry, as they will have more information and insight on this topic.

Construction and Installation of the System

Every construction stage of a solar panel system installation may require a unique agreement. For example, you may require an agreement for site improvements, one for getting power generation equipment, and more. These can all be combined into a single agreement in some situations, but this is not always the case.

Renewable Energy Credits

Entrepreneurs can take advantage of Renewable Energy Credits if they meet the requirements of the program. It can be complicated to understand, which means having someone who fully understands the company’s ins and outs and how to qualify.

Transaction Structure

There are three basic options when structuring a consumer-scale solar arrangement. One is a PPA or power purchase agreement, one is solar system ownership, and another is solar energy system leasing. Each of these offers pros and cons, but you will have to determine what best suits your needs.

Energy Regulation

If you begin to generate solar electricity, you may become a regulated utility. This is determined based on where the power is generated or where it is sold. This is something that is considered jurisdiction-specific, which means that you need to find out from your local area what the rules are.

When it comes to starting a solar business, there are more than a few factors to consider. Take some time to figure out what works for you and your business goals. Doing this will help you be successful in your business venture and ensure that you don’t face any serious or costly consequences because of a failure to follow the laws in place for your solar business. Being informed is the best way to avoid issues with your business.

Join the conversation!