The Southeast solar equation: Collaboration + compromise = market growth
By Bob Gibson
The conservative, coal-friendly Southeast may seem an unlikely place for the latest phase of solar market growth in the United States, but at Solar Power Southeast, May 7-8 in Atlanta, the signs of a healthy regional boomlet were unmistakable.
The first-time event, sponsored by the Solar Electric Power Association (SEPA) and Solar Energy Industries Association (SEIA), drew 500 attendees – about double the number originally expected. And one of the largest contingents there was comprised of solar developers and equipment and service providers from the U.S.’s leading solar market in California, a sure indication that more projects and market expansion are in the offing.
More solar for Georgia: Ribbon-cutting ceremony at a 7-MW solar project in Dalton. In fact, SEPA’s recently released Solar Market Snapshot documents some of the momentum now building in the Southeastern market. North Carolina added 205 megawatts (MW) of new solar capacity in 2014, earning the state the No. 3 ranking in the nation for new solar capacity. It now has a total of 578 MW of solar installed, followed in the Southeast by Florida with 212 MW.How does your state rate for solar growth? Find out in the 2014 Utility Solar Market Snapshot here. The emergence of a Southeastern solar market has occurred in a relatively short time and, in some cases, is the result of surprising and surprisingly effective collaborative efforts that have reached across traditional political and industry divisions.
So what happened? The eight Southeastern states in the arc swooping down from Virginia to Mississippi have long been a blank spot on the U.S. solar map for a variety of reasons. The standard arguments against solar development in the region included the impression, largely false, that it was too cloudy for good solar production and had an abundance of relatively low-cost electricity. A less-than-friendly political environment had also yielded little in the way of policies to kick-start market growth. Georgia, the new and unlikely solar capital of the Southeast, provides a case study in what can happen when political and regulatory action is met with utilities’ own willingness to embrace change. The Georgia Public Service Commission became engaged in the effort to move solar forward two years ago when both the conservative Tea Party and more liberal environmental groups began to lobby for greater solar access and production. Though the state has no mandate requiring its utilities to provide power from renewables, the commission asked its largest utility, investor-owned Georgia Power, to find ways to accelerate solar. “Our number one goal in solar is to make sure that customers have the opportunity to participate, and our number two goal is to make sure that the utility is strong, that it is a partner, a successful partner doing good things,” Commissioner Lauren “Bubba” McDonald Jr. told the Solar Power Southeast crowd. The criteria for a successful utility-led program from the commission’s perspective included “no upward rate pressure and no subsidies,” he said, and two clear-cut alternatives for the way forward. “We said we could do it . . . either as partners, where we are all in, or as adversaries, where we might all fail,” McDonald recounted. “Fortunately, Georgia Power chose to be a partner.”Missed Solar Power Southeast?
Register now for Solar Power Northeast, coming this fall, here. By the end of 2014 Georgia had installed 108 MW of solar, most which Georgia Power put online. By the end of 2016, grid-connected solar is expected to exceed 1.3 gigawatts (GW). Georgia Power will contribute the majority of the new capacity, a total of 900 MW, with 565 MW coming from utility-scale projects). The state’s electric cooperatives have also jumped in, voluntarily, with two additional projects totaling another 165 MW. Even more growth is expected with the enactment of a new law, signed May 12 by Gov. Nathan Deal, that codifies the legality of third-party solar-leasing in the state.
The Solar Power Free-Market Financing Act allows third party leases and power purchase agreements (PPAs) for both residential and commercial solar installations but sets limits on both – 10 kilowatts for residential and 125 percent of a business’s electricity use for commercial. Matt Card, Vice President of Global Sales and Marketing at Georgia-based solar panel manufacturer Suniva, also sees limits to the law’s impact on the Georgia solar market. While the law reflects growing mass market acceptance of solar “as we continue to approach grid parity” he said, “lease programs are an interesting stage of life but not an end game. As markets evolve and costs come down, build-to-own will be looked on more favorably.” Face time breaks roadblocks North Carolina is another Southeastern state with pending legislation that would pave the way to third-party solar providers in the state. At the same time, legislative action now underway could repeal the state’s Renewable Energy and Energy Efficiency Portfolio Standard (REPS), the only renewable portfolio standard in the southeast. REPS has been one of the main drivers of solar growth in North Carolina, where solar is by far the leading renewable resource contracted to meet the standard.
Other key factors are the state’s 35-percent tax incentive for renewables, which can be stacked with the 30-percent federal investment tax credit to create a powerful financing tool. Another spur for solar growth here is North Carolina’s unique structure for compliance with the federal Public Utilities Regulatory Policies Act, which provides a 15-year fixed price contract for electricity delivered to utilities from renewable energy projects of 5 MW and under.Sign up for SEPA’s May 28 webinar on how utilities can build solar programs to build customer relations here. The result has been an abundance of solar projects both online and under development in North Carolina, with a large portion at the 5-MW level.
But the demand has also created a long queue of solar projects waiting for utility interconnection approval, and some applications have been on hold for more than two years. With pressure building on utilities to speed up efforts to clear the backlog, a handful of utility and solar developer representatives began meeting to find solutions. Speaking at Solar Power Southeast, two of the key participants — John Morrison of Strata Solar and Gary Freeman of Duke Energy – said that the face-to-face meetings helped resolve misunderstandings and uncover ways to shorten the interconnection process without sacrificing quality control.
One discovery, Morrison said, was that some of the backlog was due to speculative projects that were approved for interconnection, but in the end were not built. On the utility side, Freeman said, once a project was approved, that portion of grid capacity was locked up with the assumption that the project would go forward. Asking developers for a more substantial financial commitment at application time is one approach to freeing up the grid for shovel-ready projects. Another is for a utility to map its distribution systems to show where solar can be built without incurring costly grid upgrades. Face-to-face communication and collaboration were also critical in a successful campaign in South Carolina to pass a strong bill providing incentives for the state’s investor-owned utilities to add about 300 MW of solar over the next five years.
The new law also allows solar leasing and strengthens net metering. But more solar capacity and other gains are not the big story, said Mike Smith, Director of Corporate Strategy and Emerging Technologies for Central Electric, one of the state’s 20 electric cooperatives that worked together to build support for the bill. “We’re not taking a monster step in solar,” he said. “The significant step was that we collaborated before going to the Legislature — the utilities, conservation groups and solar advocates. We sat around a small table, where you could actually see each other. “It was a painful process at times, and no one walked away completely satisfied.
But in the end it was a really great step for us in South Carolina.”
Bob Gibson is SEPA’s Vice President for Education and Outreach. He can be reached at email@example.com.
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