Third-party solar, also known as third-party ownership, legislation is lagging behind in Wisconsin, and it is impacting Wisconsinites’ ability to afford a clean and reliable energy future.
The term “third-party solar” generally refers to solar installations that are financed through one of two non-traditional means. Under the first method, a solar installer covers the upfront costs of an installation on a customer’s property. The customer can begin using the clean energy right away, and they pay for the use of the equipment over time through a lease agreement. Under this model, they are “leasing” the solar equipment, allowing them to install solar while spreading out the upfront cost over time. By removing the hurdle of shouldering the entire cost upfront, solar becomes more accessible to the many ordinary energy consumers who want to invest in renewable energy.
The second method is a power purchase agreement (PPA), which is a financing arrangement where someone agrees to host the solar system on their property while the third-party provider continues to own, operate, and maintain the system. The customer buys the electricity produced by the system from the installer, and the installer benefits from tax credits. Together, the electricity sales and the tax-credit savings create a profit margin for the installer, and the customer has the opportunity to purchase clean electricity generated on-site without upfront installation costs.
Despite the opportunities both of these models present for people to expand renewable energy development and increase access to clean energy, the legal status of these options is in somewhat of a grey area, with different parties having opposing understandings of what is and is not allowed under Wisconsin law.
Wisconsin, like many other states, uses a public utilities system that functions as a regulated monopoly. Utility companies in Wisconsin are granted a monopoly over a specified territory and are regulated by the Public Service Commission of Wisconsin (PSC) in exchange. The goal of this structure is to protect people from bearing the cost of duplicative infrastructure while using regulation to ensure minimum service standards and reliability. However, as created through the Wisconsin Statutes, the current system of regulation does not leave a clear pathway for third-party solar development.
The main issue is the lack of clarification on whether third-party solar providers are “public utilities,” as defined in Wis. Stat. § 196.01(5)(a). Under the status quo, third-party solar owners apply for interconnection with an electric utility, and the utility may reject the application and designate the third-party solar projects as public utilities, in which case the customer cannot interconnect their system without an appeal to the PSC. Entities that qualify as public utilities may not operate without PSC regulation or without meeting all the requirements necessary to operate as a public utility in Wisconsin. Multiple third-party solar providers have petitioned the PSC for a declaratory ruling stating that the providers do not meet the statutory definition of a public utility; however, the PSC has avoided issuing such rulings. PSC regulation, with a system-by-system review, is not an option for third-party solar solutions because it eliminates projects’ economic feasibility due to the length and expense of PSC proceedings. Legislation is needed to clarify that third-party solar providers are not public utilities and need not be subject to the PSC’s regulation.
Surrounding states have taken this step, including Illinois and Minnesota. I have seen the benefits of this first-hand; my undergraduate institution in Illinois was able to pursue and install solar arrays on-site through a PPA when they would not have otherwise been able to justify the upfront cost of a solar installation. I was personally involved in a project to expand the on-campus renewable infrastructure to include battery storage, providing the school revenue for the grid-stabilization services that batteries provide. This is only one of countless examples of the real-life benefits provided by third-party solar arrangements – benefits that Wisconsinites are missing out on due to a lack of clarification from the legislature and the PSC.
No matter how many people wish for a cleaner and more affordable energy future, the legal hurdles to renewable development have to be removed for change to become economically feasible. Wisconsin’s regulation of third-party solar needs to catch up to the present day in order to make this future possible.
Anna Shoup was one of RENEW’s 2026 summer law clerks. She graduated from Olivet Nazarene University with degrees in Environmental Science and Philosophy. Anna is currently a rising 2L at the University of Wisconsin-Madison Law School, pursuing environmental or energy law. It is her hope to work for an environmental non-profit or government agency after graduation, and to use her career to help create a more renewable future.