Hot Takes For Solar Developers In Delaware: New Legislation and a Rush to Market

Morris James LLP
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On Friday September 17, 2021 Delaware Governor John Carney signed three unique bills all seeking to tackle different environmental issues, Senate Bills 2, 21, and Senate Substitute 1 for Senate Bill 24. This update will focus on Senate Bill 2 which facilitates development of community owned energy generating facilities and renewable energy in particular, solar power projects in the First State. Senate Bill 2 has since prompted solar developers to explore new opportunities for these projects. The date on which Delmarva Power will start accepting applications is just around the corner. In this article, we will give some background and practical pointers for solar developers and landowners seeking to take advantage of this new legislation.

Expanding Solar Power in the State

Over the last decade, there has been significant growth in the use of solar power in the United States and around the world. According to the Solar Energy Industries Association, the average annual growth rate in solar energy has been 42 percent over the past ten years. However, Delaware has arguably lagged behind this trend. Senate Bill 2 was passed in an effort to change that.

The bill, originally introduced in the Senate’s Environment & Energy Committee this past June, amends Titles 6, 26, and 29 of the Delaware Code relating to community-owned energy generating facilities and renewable energy. The legislation will involve a rulemaking by the Public Services Commission to culminate on March 11, 2022.

What the Law Will Do

Senate Bill 2 was enacted to eliminate current barriers to community-based solar photovoltaic systems in Delaware. The legislation sets up a regulatory process to be implemented by the Delaware Public Service Commission (PSC) with consumer protection provided by Delaware’s Department of Justice. Among other things, Senate Bill 2 will:

  1. Authorize multiple types of system ownership models, defined as “community-owned energy generating facilities”
  2. Allow a maximum system size of 4 megawatts (MW)
  3. Eliminate a previous requirement that all customers of a system be located on the same distribution feeder
  4. Eliminate a previous requirement that all customers of a system be identified before the system can be built
  5. Provide for the regulation of community-owned energy generating facilities by the PSC and specify the fees and other requirements for the system to be granted a Certificate to Operate
  6. Provide compensation to the system owner for 10% or less of unsubscribed energy
  7. Require system owners to certify that the system serves at least 15% low income customers; and
  8. Require the PSC to engage in rule-making in consultation with Delaware consumer protection authorities, and promulgate rules and regulations by March 11, 2022.
  9. This process has begun unfolding at a fast pace, with solar developers rushing to secure rights to suitable land, as well as prepare their applications.

What You Need to Know

Community solar projects could transform the way many Delaware individuals and institutions receive and pay for power, hopefully lowering costs. For example, community solar project customers can receive credit on electricity bills for power put back into the grid. A local health center could launch a community solar project and share solar credits with patients. There are endless possibilities. For now, potential Delaware solar developers need to focus on the nuts and bolts of approving these projects. Community solar developers should keep the following top of mind:

  1. Delmarva Power will start taking community solar applications on November 1, 2021.
  2. Applicants must make a specific showing as to control over the property targeted for the project as per the application.
  3. All Delaware counties and municipalities have their own separate zoning and building codes to be examined to determine required approvals for each project, which is separate from the Delmarva Power or PSC process.
  4. Agricultural activists in Kent County attempted to convince the Levy Court to put a moratorium on solar projects; that failed as of October 19, 2020, but an ordinance with new standards is being drafted now, so consider front-loading applications to obtain approvals under current laws.

Property owners, on the other hand, need to consider securing legal counsel to review any proposed agreements immediately if a solar developer has requested execution of a lease or option. We would appreciate hearing from you about your proposed project or interest in Delaware solar opportunities, and discuss how we might help with agreements, title insurance, zoning due diligence and approvals, regulatory approvals and related matters.

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