Author: Sammy Fretwell Published: 11/19/2019 The State
For the second time in two years, a decision by South Carolina leaders threatens to cripple a major segment of the emerging solar power industry, sun energy boosters said Tuesday.
The S.C. Public Service Commission, in a much-awaited decision, sided with major utilities last week in setting the rates power companies must pay solar firms for energy.
The rates for Duke Energy and Dominion Energy are so low that industrial-scale solar developers won’t be able to get financing to continue building sun farms in South Carolina — and that could set back efforts to stabilize people’s utility bills, industry officials and conservationists said.
The rates will be the lowest in the country, and the contract lengths among the least attractive in the Southeast, according to the Solar Energy Industries Association, a national trade group.
“A solar ‘doomsday’ scenario just happened,’’ the Conservation Voters of South Carolina said in an afternoon email to its supporters and the media.
The PSC’s decision put customers of Duke and Dominion in the middle of a battle over solar energy’s future in the state.
Solar farm developers say attractive rates and long-term contracts would help the industry expand in South Carolina and force utilities to buy more solar energy.
That, in turn, would potentially reduce the state’s reliance on traditional forms of energy like coal, nuclear and natural gas. If utilities increase their use of solar power, customers would be less likely to see spikes in their utility bills from rising costs like those associated with coal and natural gas plants, sun farm developers say. Solar power also benefits the environment because it doesn’t release greenhouse gases like coal plants or create waste like nuclear reactors.
“By adopting exceedingly low rates to be paid by Duke and Dominion for independent solar power, and refusing to require contracts longer than ten years, the PSC has made it extremely difficult, if not impossible, for new solar projects to be financed and built,’’ according to a statement from the S.C. Solar Business Alliance, whose members include companies developing solar farms.
John Tynan, director of the Conservation Voters of South Carolina, said the Public Service Commission “basically decided to shut down solar competition and keep the utilities monopoly status quo.’’
But utilities dispute those assessments, saying the solar industry is doing fine in South Carolina. Utilities contend that providing higher rates to solar companies for power produced on sun farms would hurt customers. They say they would simply pass along costs to hundreds of thousands of customers in South Carolina. Duke and Dominion provide energy to most of the state.
Duke spokesman Ryan Mosier said his company “largely agrees with the commission’s ruling’’ on the rate solar energy companies would receive for solar power they produce.
“The solar industry continues to expand in the South, and we see no reason why that shouldn’t continue,’’ Mosier said in an email. “In the past, solar adapted to current market conditions and prospered. Duke Energy sees solar as a growing and important part of our overall energy mix.’’ Dominion said it is still evaluating Friday’s PSC ruling, but the company released a statement saying it supports adding more renewable energy to provide power.
Solar farms have popped up across South Carolina in recent years as the business and political climate for solar has improved. But solar companies in the past were getting better rates and contract terms from power companies than they are now being offered, critics say.
Southern Current, one of the state’s more prominent industrial-scale solar farm developers, has since 2017 announced plans for more than $800 million in investment by constructing 700 megawatts of new solar. The company employs about 100 full-time workers in South Carolina, said Hamilton Davis, the company’s director of regulatory affairs.
Last week’s PSC decision is the second since 2018 to threaten the solar industry. In 2018, the state Legislature failed to approve a bill that would have lifted a state-imposed cap on the expansion of rooftop solar after influential utilities persuaded lawmakers to kill the bill on a technicality. The Legislature’s failure to remove the cap threatened to grind the home solar industry to a halt.
Negotiations among Duke, Dominion and solar power advocates kept the industry going until the Legislature in 2019 approved the expansive Energy Freedom Act.
The 2019 law lifted the cap, while also setting a minimum 10-year contract length for solar energy projects that were in the works. But it said the PSC should also reexamine many solar issues, including the contract lengths and rates to be paid by utilities to solar farm companies in the future. That led to hearings at the PSC last month over solar rates and contract lengths.
The seven-member PSC voted Friday for the lower rates and to keep contract lengths at 10 years, with only Commissioner Justin Williams dissenting.
Rates approved by the PSC actually dropped some of the rates Duke and Dominion had been required to pay solar developers for many of their projects, according to the solar industry.
The drop in rates is complicated, but it boils down basically to this: Dominion’s solar rate for sun farm developers dropped from three cents to two cents per kilowatt hour, according to the S.C. Solar Alliance. Duke’s solar rate drops from 4.5 cents to three cents, the alliance and Duke Energy said Tuesday. The solar industry was seeking rates of around four cents.
PSC commissioners defended their ruling last week, saying it was the best decision they could make in the long-running dispute between major power companies and sun energy backers. Commissioner Swain Whitfield said he was sympathetic to the arguments for solar, but remained unpersuaded.
Commissioners expressed reservations about making utilities pay high rates for solar-farm produced energy. They also said solar companies had not made a good case for longer-term contracts.
“The record is completely without supporting evidence for terms and conditions that would allow us to establish longer contract terms at this time,’’ Whitfield said.
Commissioner Williams said the S.C. Energy Freedom Act that passed earlier this year was intended to help the solar industry. He questioned whether the commission was following the intent of the law in not setting longer-term contracts.
“I’m concerned by that because I recall hearing much testimony regarding the inability of solar companies to receive financing for contract terms that were shorter in length, such as the 10 year contract term.’’
How South Carolina utilities provide energy has been under the microscope since state-owned Santee Cooper and SCE&G — later purchased by Dominion — walked away from a twin nuclear reactor project they were building in Fairfield County. The companies had spent about $9 billion at the time they quit the construction project in 2017, citing high costs and problems with contractor Westinghouse.
Since then, solar energy boosters have seized the opportunity to promote power production from the sun. Only a fraction of the state’s energy production comes from solar power.