Friday, February 28, 2014

How Securities Regulations Cast a Shadow on the Growth of Community Solar in the United States | UCLA Law Review

The cascading cost of solar photovoltaic technologies over the past five years presents a ripe opportunity to change the way people think about solar energy, and the nascent community solar model offers the vehicle for such change. Community solar offers any electricity ratepayer the opportunity to purchase a small portion—as little as one panel—of an offsite, local solar array in exchange for reductions in the ratepayer’s utility bill for the entire life of the solar system. By removing traditional siting and financial barriers to solar ownership, community solar drastically expands access to solar energy to persons of all socioeconomic levels while also conferring a host of ancillary benefits.

Although traditional financial barriers to solar ownership have been effectively eroded, inflexible securities regulations continue to pose a formidable threat to the fledgling community solar model by imposing onerous and expensive registration and information disclosure requirements—essentially creating a minefield of potential liability for community solar developers. Due to the novelty of the community solar model, however, courts have yet to consider whether this arrangement constitutes a “security” within the meaning of the Securities Act of 1933. Nonetheless, an analysis of the case law to date quite strongly suggests that community solar interests are, in fact, securities. On the other hand, this Comment posits that the policy underlying securities regulations points in both directions, and therefore the classification of community solar interests as securities is not as airtight as some judges might think.

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