The electricity sector is beginning an unprecedented move away from networks dominated by large scale utilities. Peer-to-peer power sharing arrangements and technologies such as rooftop solar are redefining traditional relationships between power companies and consumers. Soon residents and businesses will be able to produce their own electricity through microgrids, bypassing electric utilities, and sell excess electricity credits through a virtual trading platform.1 Electricity sales could generate valuable revenue streams for these producers, and lenders financing these projects will want to consider both the related receivables and the electricity produced by such projects as collateral.
But can a creditor obtain a security interest in electricity under UCC Article 9? Article 9 covers security interests in fixtures and personal property. Clearly, electricity is not real property or a fixture. But what kind of personal property is it? Article 9 assets fall within certain categories and types (see, e.g., §9-108). Knowing the correct Article 9 category or type for an asset is critical for determining the proper steps for creating and perfecting a security interest in that asset.
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