Distributed solar capacity in the United States, which includes all solar power capacity other than utility-scale installations 1 MW or larger, totaled 12.3 gigawatts (GW) as of September. About 30% of that amount (3.7 GW) was owned by third-party owners. Third-party owners are private companies that provide either solar electricity or equipment to generate it to building owners or tenants, typically with little or no upfront costs.
There are three primary distributed solar ownership options: self-financing, utility/public financing, and third-party ownership (TPO). EIA recently included TPOs on its monthly and annual surveys of utility operations to help capture ownership trends across states. TPOs commonly enter into either power purchase agreements or solar leases. In EIA’s reporting, TPOs are defined as energy service providers, independent of how the payments are structured.
TPOs tend to be more common in the residential sector than in the commercial and industrial (CI) sectors. TPOs own 44% of distributed solar capacity in the residential sector, compared with 11% in the CI sectors. The residential sector accounts for 56% of distributed solar capacity but 84% of third-party-owned solar capacity.
California has the highest distributed solar capacity at 4.9 GW. Of that amount, about one third is owned by third parties. Arizona and Maryland have the highest shares of TPO capacity, and third parties own slightly more than half of their distributed solar capacity. Utilities did not report any TPO capacity in 20 states, all which have relatively low distributed solar capacity (about 0.3 GW total). Some states have (or had) laws restricting TPOs.