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With New Law, South Carolina Sets a Foundation for More Solar Energy

south carolina solar expansion

Another state in the Southeast U.S. is recognizing the economic and environmental benefits of solar energy as commissioners, utilities and stakeholders in South Carolina are ironing out details of a new solar law that enables third-party leasing and contemplates the state’s two investor owned-utilities utilities, collectively, installing an estimated 300 megawatts (MW) of renewable energy by 2021, up from about 8 megawatts currently.

South Carolina joins North Carolina and Georgia in showing it can begin to turn a new leaf to toward cleaner energy development.  The new law is the South Carolina Distributed Energy Resource Program Act (S.B. 1189), which lawmakers in both the House and Senate passed unanimously and Gov. Nikki Hale (R), signed into law in June. Curiously, she waited until August to start promoting it (photo).

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South Carolina Gov. Nikki Haley (R) found this solar array to stage a ceremonial signing last month of the state’s new commitment to solar energy. CREDIT: Office of Gov. Nikki Haley
 
“When you look at North Carolina and you look at Georgia, they’ve been doing pretty well when it comes to solar energy, and they don’t have any more sun than we do,” Haley said at a press conference, according to The State newspaper in Columbia, SC.

The state’s two large investor-owned utilities – South Carolina Electric & Gas and Duke Power (including the former Progress Energy) – have the option to opt in, or out, of the program. If they opt in, they’ll get full rate recovery for meeting at least 2% of their five-year average peak power demand from renewable sources, most of which will likely be solar. If they opt out, no rate recovery for whatever path they pursue.

At this writing there appeared to be a significant and growing amount of public and lawmaker pressure to opt in. It was that public pressure that had been building for years which kicked off serious deliberations leading to the new law, according to Kenneth Sercy, Utility Regulation Specialist, and Hamilton Davis, Climate and Energy Director, at the South Carolina Coastal Conservation League, one of the bill’s biggest backers.

“What you’ve seen here is growing public interest in policies that boost investments in clean energy options,” Davis said. “The tide of public opinion is garnering more media coverage and that’s getting the attention of lawmakers.”

State Sen. Greg Gregory, who has been widely credited for leading the bill writing process, said, “It looks bad for us to just have a sliver of the solar power generating capacity as our neighboring states,” he told the South Carolina Radio Network . “I think this bill certainly starts us on the road to just catching up.”

Grant Reeves, who heads the South Carolina Solar Business Alliance, said he expects South Carolina Electric & Gas (SCE&G / SCANA) to throttle up its investments in solar, in part because its rates have been about 40% higher than Duke Energy’s rates. Higher rates mean a shorter time-frame for recovering costs.

Already, South Carolina Electric & Gas is pushing forward with two large projects totaling about 4 MWS.

The law is not a renewable energy requirement so South Carolina remains without a Renewable Portfolio Standard which could generate solar renewable energy credits, or SRECs. System owners can sell SRECs to help recoup their investment.

The law increases the maximum size of a solar system qualifying for what is widely viewed to be one of the better net metering policies in the country. The maximum size would jump from 100 kW to 1 MW.

The net metering law could change because it is subject to regulations that the Public Service Commission and interested parties hope to agree on by the March 2015.

Duke Energy is expected to hold out unless the net metering deliberations produce a less ratepayer-friendly regime. Currently, any excess power generated by a customer’s solar system earns a credit at the full per kilowatt-hour ‘retail’ rate. At present, that is the only economic incentive for residents and businesses to go solar in South Carolina besides the uncapped federal 30% Investment Tax Credit, which drops to 10% after 2016.

Lawmakers demonstrated an encouraging grasp of the value of small solar projects by requiring a utility that opts in to allocate one-half of the 2% for projects between 1-10 MWs and the other half comprised of solar projects under 1 MW. Of that second half, one-fourth of those must be 20 kW or smaller.

The other major feature of the new law authorizes the state to begin utilizing third-parties to finance in the form of leases provided that qualifying lease agreements pass muster with the state’s Public Service Commission.  Stay tuned on that too.

Solar advocates shouldn’t expect a quick surge in the amount of in-state solar energy on the state’s grid until the rules are ironed out probably next Spring. Attempts to increase the cap on an existing, modest, 25% state tax credit did not garner enough support. The credit is capped at $3,500 or 50% of a taxpayer’s liability – whichever is less – for the year the system is activated. Companies such as SolarCity and Sunrun pushed to authorize direct third-party sales, but fell short.

A large tax credit wouldn’t necessarily benefit how commercial solar projects are financed, according Colin Murchie, Director of Project Finance at Sol Systems, which tracks state solar markets. “Attempts to simultaneously implement this program together with a significant tax state tax credit could actually restrict the availability of finance and increase its costs,” Murchie said. 

Murchie said South Carolina faces a handicap that hampers solar development in North Carolina for how it enables Duke Energy there to control solar’s growth and who in the Tar Heel state benefits from it.  Such a complication could result in a shortage of tax equity that could otherwise fund third-party ownership of solar systems, Murchie said. “The market could develop more efficiently with a program that includes projects independent of a utility.”

South Carolina had been viewed as among several states in the Southeast with no interest in enabling a competitive market for solar energy.  While that’s still the case, at least engineering and procurement contractors could see growth in their business and third-party lessors could gain something of a toehold there, thereby expanding the constituency for clean energy and perhaps support for a more robust solar law.

The sentiment among most clean energy advocates is the new law is a step forward for solar in the Palmetto State. Whether South Carolina will see in-state growth in solar energy and related jobs remains to be seen.

“What we had was (sic) a lot of barriers, barriers that stood in our way when it came to solar energy,” Governor Haley said at the ceremonial signing. “Then we look at the fact that we want to find as many domestic resources as we can when it comes to energy.”

Jim Pierobon's picture

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Joris van Dorp's picture
Joris van Dorp on September 11, 2014

Thanks for the update Jim,

I’m puzzled though by the word ‘economic’ in the opening sentence:

Another state in the Southeast U.S. is recognizing the economic and environmental benefits of solar energy as commissioners, utilities and stakeholders in South Carolina are ironing out details of a new solar law that enables third-party leasing and contemplates the state’s two investor owned-utilities utilities, collectively, installing an estimated 300 megawatts (MW) of renewable energy by 2021, up from about 8 megawatts currently.”

Which particular economic benefits of solar energy are being recognised here? There are none, since solar energy depends rather fundamentally and uniquely on various direct and hidden subsidies, so there must be some kind of misunderstanding at work here?

I’d also like to know if anybody likes the look of that ‘solar tree’ in the picture. I’m afraid I think it looks rather ugly, but that is just my subjective opinion of course.


Jim Pierobon's picture
Jim Pierobon on September 11, 2014

Joris, 

Thank you for chiming in.

To you queston about the economic benefits . . . by economic I mean: 1) reduce reliance on ever-rising fuel supply costs tied to coal, natural gas and nuclear; 2) capitalize on the steadily declining cost of solar due to growing competition among solar panel makers AND the growing number of solar installers in South Carolina and the surrounding states.

Depending on your utility, but certainly if you’re a customer of SCG&E, the state’s decent net metering policy is another economic factor to consider for qualifying systems. That’s in part because SCG&E is the higher-cost provider of power, thus shortening the return on investments in solar energy. You can compare its policy to others in the U.S. starting on my blog at TheEnergyFix.com.

 

Joris van Dorp's picture
Joris van Dorp on September 11, 2014

Thanks for the additional info Jim,

Concerning net-metering, net-metering is a gross subsidy racket, because it grants households the right to sell their solar energy at a non-market fixed price even when there is no demand for it, and then the right to buy the same amount of energy back at the same price whenever they choose, even during times of peak demand. Clearly, this utterly undermines the functioning of the electricity market. It lays waste to basic principles of supply and demand. In Germany the effects of this total destruction of market functioning is evident and the costs tot society are extreme and rising there.

I’m all for solar energy, but only if the costs (and benefits) are transparently and completely billed to the owner of the solar installation. If that is the situation and solar power thrives, then I agree that there is a healthy economic development.

But net-metering – as with the array of other subsidy policies – is funneling only the benefits to the owner of the solar system, while the costs are dumped on the public at large. Hence, such policies are the opposite of social justice. They directly make the poor poorer and the rich richer, since the poor don’t have the money to install solar and take part in the benefits, while they require electricity just like everybody and hence pay for the costs which are rising to cover the costs of solar power integration. 

Any appearance of economic benefit is merely the result of success in hiding the economic costs. I don’t think there is much controversy about this fact anymore, is there?

P.S. I don’t agree that the cost of nuclear is ‘ever rising’. Certainly the cost of nuclear power regulation is ever rising, in some countries, but that is wholely a matter of political scheming and could be reversed whenever the public decides its time to ask serious questions to their politicians about these schemes. I’m rather confident lately that this is going to happen sooner rather than later. “You can fool some people sometimes, but …… “

Jim Pierobon's picture
Jim Pierobon on September 11, 2014

Joris,

On the cost of nuclear’s ‘ever-rising’ regulations costs we agree. I think nuclear has a potentially bright future if the defacto way of building next-generation plants recognized the benefits of thorium-fed reactors for example. (I’ve written about that here.) But regulation IS a cost and at least in the U.S., it would not have any chance of holding on to its market share without massive federal subsidies — subsidies that even low-income ratepayers help pay for — especially in states such as South Carolina and Georgia, where solar is making inroads.

Joris van Dorp's picture
Joris van Dorp on September 12, 2014

I read your article on thorium, thanks for the link. As you know, I presume, thorium does not add anything special to the nuclear option. Uranium is a resource which can power humanity as far into the future as we may want or need. Thorium cycle implementation is decades away, while commercial uranium breeders can already be built today. Promoting thorium while denouncing uranium may be simply stealth anti-nuclearism.

But lets leave thorium for what it is. I welcome thorium development and liquid fueled reactor development as long as it does not distract from the need to implement the nuclear option ASAP. We cannot wait even more decades before scaling up nuclear big time.

Solar power has the characteristic that it may appear relatively light on subsidies in the beginning, but as more and more solar is added to any given electric grid, the integration costs rise quickly along with the solar market share. Please review the following recent presentation of this aspect.

http://www.worldenergyoutlook.org/media/weowebsite/2013/iew2013/presentations/parallelsessions/e/4E1Ueckerdt.pdf

The integration cost per kWh of additional solar energy delivered to a region rises and exceeds the cost per kWh of the solar power itself, long before solar even achieves a third of the market share. This point cannot be stressed enough. Even worse, the effect of growing market share of solar (or wind for that matter) on the shape of the residual electricity demand profile of a region is such that it damages the business case of baseload generation, including hydro and nuclear.

In other words: adding solar power to a region will seem largely affordable and effective initially, but will become exceedingly expensive long before significant co2 reduction is achieved and will ruin the market for clean baseload nuclear- or hydro power. So choosing solar power (or wind) concretely means slamming the door on nuclear power and opening the door for low-efficiency single-cycle natural gas peakers.

One can easily see why solar power is so popular and recieves much support and no resistance from the oil and natural gas sector. Regions which aim for increasing solar (or wind) power are unwittingly (?) commiting themselves to permanent natural gas dependence and thus assured exarcerbation of climate change. Is that really something which should be supported with public money? I deny that it is.

On the contrary, I view all regions which have very high targets for wind and solar market share as being an even greater threat to the environment than regions which have no policy for stimulating solar or wind at all. At least states which don’t support solar or wind with public money will be able to go nuclear relatively quickly when the time comes, while states which have gone overboard on wind and solar subsidies will lock-in fossil burning for decades. Germany and Denmark are prime examples of this horror.

Mark Heinicke's picture
Mark Heinicke on September 13, 2014

Joris:

Your last paragraph turns the renewables-will-save-all thesis on its head.  But you are a little vague on “very high targets for wind and solar market share”.  How high?  Of course it’s hard to generalize.. . if you had a country with the wind power of Denmark, the hydro of Norway, the solar of Arizona, the natural gas of Texas, a population of two million and a very well-managed grid with great weather forecasting, you might go to 80%. 

So, one could say, “it depends.”  But everything I’m hearing points to something like 30-40% penetration as the max doable (feasible and affordable) in the typical European country.  That’s looking ahead at least a decade.  Would 30% be too high a target in your opinion?  (I’m speaking here of wind + solar.  Biomass is not renewable at least in current form, and most unlikely in any form. Geothermal and tidal might get serious  traction by 2050, closer if you live in Iceland..)

I share your advocacy of full-speed-ahead on practicable nuclear now.  Too bad (really bad) it’s not going to happen.  

And, while your penchant for hyperbole sometimes goes over the top, your word “horror” may not be too strong. 

Robert Bernal's picture
Robert Bernal on September 14, 2014

I’ve came to the conclusion that wind and solar is not compatable with nuclear, because of the lowering of the baseload threashload and that we need the power of nuclear to solve the excess CO2 mess. However, solar growth will continue, perhaps even if subsidy dropped to zero (because the tech is getting cheaper) thus we need to integrate the best storage, and plan for this disruption, anyways.

I believe we need to build lots of pumped hydro storage to integrate all three because it is the storage that requires the least amount of energy to make, has a rather good efficiency, is scaleable and is cheaper in the long run. Hopefully, natural gas prices will rise enough to make nuclear and pumped hydro economically sensible as well as ecologically.

Joris van Dorp's picture
Joris van Dorp on September 15, 2014

Solar power and wind power will never replace fossil fuels without subsidy, quite simply because the sun does not shine all day and the wind does not blow all day. They can only save (some) fossil fuel when they are backed-up by conventional fossil generators supplying the bulk of the energy. 

Without subsidy, there is no business case for solar or wind. This is the permanent political risk of solar and wind power: the risk that subsidies are removed at some point in the future. See Spain for a perfect example of this.

Only abundant cheap electricity storage would theoretically allow solar and wind to compete with fossils without subsidy, but there is no evidence that such cheap storage will ever be devised. The technological hurdles are monstrous, and underappreciated except by experts. Waiting for cheap storage to arrive is an unacceptable risk.

Joris van Dorp's picture
Joris van Dorp on September 15, 2014

Hi Mark,

Yes, I can appear hyperbolic, but I’ve joined the energy debate for most of my adult life. The first few years I was very nuanced, but this did not help. Then, when the subsidy racket started on large scale, I become a little more pointed. And since Fukushima, which allowed the anti-nuclear propagandists to kill nuclear power in many countries, I have decided that clarity is far more important than nuance. I call BS whenever I see it, and I do not attempt to soften my message. We need to put our foot down, or nothing will change. Anti-nuclearists need to feel hounded. They need to understand that they will be held to account sooner or later. That is why I call fraud when I see fraud, even though many might find the use of words like ‘fraud’ to be uncivilised or too heavyhanded. I don’t believe it is. It’s a matter of life and death now.

30% wind/solar would be the limit above which the costs for curtailment/storage start rising exponentially. Even before reaching 30%, profile costs start soaring already. Details can be found in the presentation and underlying report that I linked above.

Solar and wind power should only be installed along with a budget for funding their entire integration costs, and this total cost must be born entirely by the owner of the installations. This is the opposite of what is happening today. Today solar and wind power are financed almost completely by the public (and disproporitonately the poor, who pay the most relative to their income!), while the benefits are funneled into the pockets of the well-healed owners. This is a recipe for failure on multiple levels: environmental, social and financial. It’s a disgrace. It needs to be stopped immediately. See Spain as an example of how stopping this anti-social subsidy racket can be done quick and hard.

Environmental and economic constraints demand the building of cheap, clean energy. Solar and wind power have no role to play because they cannot deliver what is demanded, not now and not in the future. They only serve to complicate the task at hand, increase the cost of energy and magnify social inequality. Cui bono? Follow the money.

Mark Heinicke's picture
Mark Heinicke on September 16, 2014

Jim:

It doesn’t take too much reading between the lines to single out SC State Sen. Greg Gregory’s statement as conveying the true import of the new legislation: “It looks bad for us to just have a sliver of the solar power generating capacity as our neighboring states,” he told the South Carolina Radio Network . “I think this bill certainly starts us on the road to just catching up.”

It looks bad?  This is not a statement about energy, about cutting carbon emissions, or the economics of renewables.  It is about appearances, and arises from political considerations.  Governor Haley’s statement earlier in your piece evinces the same political slant.  Let’s keep up with the Joneses (North Carolina and Georgia), says the governor, rather than addressing what the real social and environmental consequences of the legislation might be.   

What really needs to be done, especially in a state where nuclear represents roughly half of its electrical generation, is to compare the levelized costs of solar versus nuclear per unit of carbon dioxide emissions avoided.  Actually, as Joris van Dorp pointed out earlier in these comments, levelized cost of watt-hours in itself is not a sufficient measure when it comes to the long-term costing of solar and wind—rather, what matters is the system LCOE, taking into account grid costs, balancing costs, and long term capacity adjustment.  (I add the end of this post the link that Joris gave us just in case anyone missed his reference to that cogent analysis.)  However, we can simplify in South Carolina’s case, since the small contribution of solar there has not and will not reach the scale at which these additional costs become significant.

In the age of AGW, the key, overriding, crucial, vital, massively important issue in any discussion of an energy technology is what it is doing to limit greenhouse gas emissions, and what its social and economic costs are in comparison with other viable forms of generation and conservation. Advocating solar as a good in itself misses this decisive point.   

Joris, here and elsewhere, has rightly denounced the social and economic injustices resulting from subsidization of solar energy, and his vehemence about the need for transparency is understandable. Jim, in your piece you cite Duke Energy’s resistance to net metering, with the implication that the corporation stands in the way of progress just so it can make a buck. To say that Duke Energy favors a “less ratepayer-friendly regime” is disingenuous.  It is a segment of the rate-paying public that Duke Energy is concerned about, a segment which already benefits from generous federal tax credits. Instead of pointing out that Duke Energy’s policy might spare the lowly non-solar customers unwise expense, you implicitly lament the absence of economic incentives for those who can afford a solar system. 

Incidentally, as a liberal Democrat I am no fan of big power companies, but the arguments for and against renewable energy should stand on their own merits rather than on who is making them. If a large corporation has a for-profit policy from which economic justice flows as a side effect, it’s worth considering. Also as a liberal Democrat, I share Joris’s antipathy to the burden placed on the general public by subsidies that benefit the few at the expense of the many.  There’s no mistaking that net metering is a subsidy typically clothed in the happy-sounding term “incentive”.

While I’m on the subject of transparency, I’ll advance a point in favor of a carbon tax.  Wherever the revenues from it were to go—renewables or otherwise—if made explicit, would help with transparency.

Here is, again, the link that Joris gave in an earlier post, to an analysis that bears reading by anyone who is serious about the impacts of renewable power generation:

http://www.worldenergyoutlook.org/media/weowebsite/2013/iew2013/presentations/parallelsessions/e/4E1Ueckerdt.pdf

 

 

Robert Bernal's picture
Robert Bernal on September 16, 2014

I was suggesting more PHS because we all know that wind and solar will cause a disruption.

Whatever the disadvantages are to PHS, they must pale in comparison (from an environmental point) to having to back solar and wind with natural gas for 15 plus hours a day. Besides, nuclear will need (much less of) it too, since there will be such a solar disruption in the daytime, lowering the baseload threshold. The PHS acts like a giant smoothing capacitor, so less nuclear capacity at site needs to be built and less overall would be closed down (due to NG taking over almost all baseload at night when solar maxes out, otherwise). I believe nuclear can be devised to be quickly load following with rather limited PHS storage (and if that isn’t quick enough, a relatively small amount of more expensive battery could fill the very short lived gaps). I know that the French actually do have a load following nuclear (but not real quick).

Also, NG will rise in costs as it gets distrubuted and used up quicker throughout the world, thus any solar enthusiasts, here, might want to consider what this means to your children should nuclear and PHS not be built. Nuclear and PHS gets cheaper (in relation to inflation) but the renewables requires far more NG (3/4ths of the time) that get ever more expensive (in relation to inflation, even). Thus, I believe that no matter what, PHS is also best from a monetary point (in the long run) as long as it is coupled to a planned modular nuclear deployment as a smoothing devise.

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