BY SAMMY FRETWELL
Monson’s difficulties highlight why South Carolina is one of the least friendly states in the country for solar power.
Complicated laws, resistance from power companies, poor tax incentives and an emphasis on nuclear energy have kept solar from becoming much of a player in South Carolina – despite an abundance of sunshine, according to records reviewed by The State newspaper and interviews with those who track solar issues.
South Carolina’s interest in solar energy is so faint that national studies rank the state at, or near, the bottom in the use and promotion of sun power.
“The state is behind, not just as it compares to other states in the country, but internationally,” said Erika Hartwig Myers, a former official with the S.C. Energy Office who now is a renewable power consultant in Washington, D.C. “There are so many other places that have taken the initiative to spur the industry.”
Solar power is rising in popularity across the U.S. because it has shown to be a low-cost source of energy for businesses, charities, universities and homeowners. It’s also cleaner than coal power, which produces toxic air pollution. It’s renewable, unlike the finite amount of coal, oil and natural gas on the planet. And it doesn’t create deadly waste like that generated by atomic power plants.
President Obama has touted solar, along with wind and other renewable energy sources, as a way to create jobs and fuel a clean energy future for America.
Solar energy is typically produced in two ways.
- One is through homeowners, whose solar panels not only provide power to their houses but feed excess sun-fired electricity back to utilities for distribution to the power grid. Most home solar systems rely on a combination of sun power and traditional utility company power.
- The other way is through large solar farms developed specifically to send power to electric companies for general distribution, just like coal and other traditional power sources.
But proponents say using more alternate energy will provide a valuable supplement. It can diversify the nation’s power base and make the utility grid more reliable as excess solar energy is supplied to power companies, solar backers say.
Unlike South Carolina, states seeking to encourage the use of solar have rules that help homeowners and charities defray the high upfront costs Monson faced when he installed sun panels in Richland County. While the solar panel prices are dropping because of Chinese competition, a home system still can cost from $20,000 to $50,000.
States that support solar also have more liberal tax incentives – and requirements that utilities draw some of their power from solar, wind and other renewable energy forms.
At the center of solar’s challenges in South Carolina are major utilities, which have either opposed sun-friendly policies or stood on the sidelines as legislative bills to help the fledgling industry died.
During the past two years, utilities have spoken against a policy that could make solar cheaper for Monson and others, spoken against a bill requiring power companies to use more renewable energy and watched quietly as a bill to increase solar tax credits withered in the state Senate.
Records show that big utilities and the state’s electric cooperatives association have spent $2.2 million lobbying lawmakers in the past 2½ years.
South Carolina’s utilities and electric cooperatives say they are intrigued by solar’s potential but worry about moving too fast to promote sun power when coal, nuclear and the increasingly available natural gas are proven – and cheaper – technologies.
SCE&G, the Midlands’ largest utility, calls solar power “uneconomic today.” The Upstate’s Duke Energy says that while it is prepared to expand its solar footprint in South Carolina, it also questions the “real benefits and costs” of using increasing volumes of solar energy.
And state-owned Santee Cooper, which serves eastern South Carolina, says solar isn’t as dependable as traditional power sources because it doesn’t work at night. The state’s electric cooperatives have similar concerns.
“Solar only generates electricity when the sun is shining,” Santee Cooper spokeswoman Mollie Gore said. “So you need something else. You need something to keep the air conditioning going, whether it’s raining or not.”
Nonetheless, the state’s big utilities say they are not ignoring solar power. Utilities say they give customers credit on power bills for producing more solar energy than folks can use. Power companies also have undertaken their own projects to promote solar, such as the large rooftop system at the Boeing aircraft plant in North Charleston.
South Carolina’s deliberate pace toward adding solar power is reflected in national energy data.
While the South generally depends less on renewable energy than any other part of the country, the Palmetto State ranks behind many Southern states in solar capacity. Those states include North Carolina, Georgia, Florida and Tennessee, say researchers working with the U.S. Department of Energy.
At the national level, smaller, cloudier states, including Vermont and Delaware, are able to produce more solar energy than South Carolina, according to the National Renewable Energy Laboratory, a federally supported research institution.
No more than several hundred people use solar in South Carolina right now, records show.
“South Carolina isn’t even on the map,” said Carrie Hitt, vice president for state affairs with the Solar Energy Industries Association, a trade group.
National reports and solar policy analysts interviewed by The State newspaper point at five major reasons sun power hasn’t taken off in South Carolina.
Reason 1: Monopolies by power companies
South Carolina law gives power companies exclusive rights to provide energy in specific regions of the state – and they have been quick to defend those territories against competition from solar companies that offer low-cost sun panels.
Critics say power companies are afraid of losing money.
Power companies argue that, under state law, some types of solar energy businesses can’t operate here without being licensed as utilities, just like SCE&G and Duke Energy.
State law allows residents to buy solar panels outright – from any company – and operate them. But S.C. utilities say it is illegal for a solar company to own the panels on a property owner’s roof and sell the power to the property owner.
S.C. utilities say solar companies that sell power must be deemed utilities by the state Public Service Commission. But the law has never been tested.
If S.C. utilities are right, solar companies would have to go through a lengthy and expensive process to become a utility – and there is no guarantee the Public Service Commission would rule in favor of a solar company. That’s a key reason solar companies shy away from South Carolina.
In other states with more solar-friendly laws, including California and Colorado, sun power companies are thriving and homeowners are acquiring panels at low costs. Customers don’t buy the panel systems but pay solar companies over time for the right to use the panels. The amount solar companies charge customers each month often is low enough to cut their electricity bills.
South Carolina’s rules prompted a public clash last year when SCE&G filed a complaint against a small Connecticut company that was offering to provide free solar panels to churches, schools and nonprofit groups statewide to lower power bills. Instead of requiring churches and others to pay to lease solar panels, the company planned to keep government tax incentives and renewable energy credits that typically are available when people install sun-fired energy systems.
After learning of the complaint to the Public Service Commission, DCS Energy Inc. said it could not afford to fight the power company, and about 80 solar panel agreements unraveled across the state. Without the DCS solar panels, churches, schools and nonprofits could not afford to buy their own panels at the open-market price. Some of the largest systems offered by DCS were valued at $117,000, records show.
Changing state law to allow such arrangements isn’t popular with power companies. Senate Finance Committee records show that a solar tax credit bill last year was amended to exclude what are known as “third-party” companies, which include those that provide low-cost solar panels to homeowners like Monson or free panels to churches.
Since installing solar panels last year, Monson has seen his power bill drop about $70 per month. But that saving is wiped out by the $462 in loan payments he makes each month for the panels. In the next decade, he will receive federal and state tax credits for the solar panels, but they will cover only about half the $22,000 expense, he said.
Monson realizes he isn’t saving any money right now, but he installed the solar panels because he believes in the environmental benefits.
Reason 2: Bureaucracy
People who want to install solar panels at homes in South Carolina sometimes find themselves burdened by excessive paperwork and costly fees assessed from power companies and electric cooperatives.
Bryan Walsh, who runs a solar panel installation company in Virginia, said power company rules for installing and connecting solar have involved a lot of steps in South Carolina. Walsh helped several Oconee County residents, including Stephen Morrison of Long Creek, install solar panels at their homes. Morrison’s system was put in about a decade ago to help power his house and wood-working business. He and Walsh agreed that getting through the bureaucracy took some effort.
“The last job I did in South Carolina, the procedure for registering the system with the power company, compared to other states, was three to four times the amount of paperwork and baloney and hoops I had to jump through,” Walsh said.
Utilities and cooperatives dispute that, but a recent national report rated South Carolina dead last in the ease at which people can put in solar power panels. Freeing the Grid, an annual study that assesses two key solar energy policies, gave South Carolina failing grades in both categories. It was the only state in the country to receive failing grades in both.
Laurel Varnado, one of the authors of the report, said Palmetto State law is particularly restrictive on businesses that want to connect solar energy to the utility’s grid. That’s done through a limit on the size of a system. And utilities are allowed to charge higher fees than many states to hook up, she said.
South Carolina energy companies do not always provide good rates to customers for solar power that they produce and provide back to the power companies, she said.
In Monson’s case, it took him a year to persuade a local electric cooperative to cut a $50 monthly fee for his right to hook solar panels to the utility grid. After a year of complaints from Monson, the cooperative cut the fee to $16 per month. He’s appreciative, but still questions why any fee is needed.
Reason 3: No requirements to use solar power
Unlike North Carolina and 28 other states, South Carolina does not require power companies to draw a certain percentage of their energy from renewable sources, including solar, wind and biomass.
But statistics show that South Carolina has ample sunshine to expand solar. Even though the state doesn’t get as much sun as the Southwest, a National Renewable Energy Laboratory report says South Carolina is among the top 20 states in the country in the lab’s sun power index.
The state’s lack of a renewable energy requirement for power companies is perhaps the single most important reason South Carolina isn’t farther along on solar. Nine of the top 10 states for solar energy have requirements that utilities gather some of their energy from renewable resources, according to the North Carolina Solar Center.
Sen. John Matthews, D-Orangeburg, said a bill requiring a renewable energy standard for South Carolina drew criticism from utility interests after he introduced the legislation last year. The bill would have required 20 percent of utilities’ power to come from renewable sources or energy efficiency measures. But it never got out of a Senate committee.
“I heard from some of them who said, ‘We are not going to support the bill,’ ” Matthews said, declining to name the utilities.
Susan Wise, a spokeswoman for the SunRun solar power company in California, said the lack of a renewable energy requirement is one reason her company is staying out of South Carolina.
Reason 4: Poor tax incentives
State tax credits for installing solar panels are so low that businesses often have less incentive to put in the sun-absorbing panels, solar boosters say.
South Carolina’s 25 percent tax credit for the cost of purchase and installation is lower than North Carolina’s and caps what an individual can claim at $3,500 per year for 10 years.
That keeps businesses that want to install bigger, more expensive solar panel systems from investing, said Andrew Streit, founder of the S.C. Solar Business Alliance.
A bill that would have raised the amount a business could claim to $2.5 million, much like North Carolina’s credit, died in the Legislature last spring. The bill also would have raised the tax credit from 25 percent to 35 percent, like North Carolina’s.
Streit and environmental lobbyists said power companies didn’t help much.
“When you have the largest block of energy lobbyists and corporations silent on that bill, that says something,” said Ryan Black, a legislative liaison with the S.C. Coastal Conservation League, an environmental advocacy group.
Reason 5: Nuclear popularity
Efforts to advance solar power in South Carolina have been unsuccessful for other reasons – most notably the grip nuclear power has on the state.
South Carolina, home to the 310-square-mile Savannah River Site nuclear weapons complex, is one of the nation’s top five producers of atomic energy.
SCE&G’s push to build two new nuclear reactors in Fairfield County just north of Columbia is a prime example of how solar takes a back seat to nuclear, environmentalists say. The plants are being built because the S.C. Legislature changed the law to make financing easier for the $10 billion project, they contend. It gave utilities the right to charge customers before plants are built.
“When you have a competing new technology, there will just be the natural inertia to side with nuclear,” the Conservation League’s Black said.
Other obstacles to solar energy include a general skepticism in the Legislature, given the Solyndra solar panel bankruptcy scandal in California, and historically low electricity rates. South Carolina has a reputation as having some of the lowest power rates in the country, which makes the case for another, less-proven form of energy less compelling, skeptics of renewable energy say.
But South Carolina’s average retail residential electricity rate this summer was higher than many states with more extensive solar programs, including Colorado, New Mexico and North Carolina, according to the U.S. Energy Information Administration.
To homeowner Monson, the state needs to change its position on solar “so we can move forward.”
Matthews, a veteran of the Legislature, said changing the state’s attitude toward solar and other forms of renewable energy, such as biomass and wind, will take some work.
“We are kind of a conservative state – there aren’t a lot of risk takers here,” he said. “To change that mindset is an uphill battle.”
Upfront incentive corporate state tax credit in South Carolina
In South Carolina, taxpayers may claim a credit of 25% of the costs of purchasing and installing a solar energy system. The maximum credit a taxpayer may take in any one tax year is $3,500 for each facility or 50% of the taxpayer’s tax liability for that taxable year, whichever is less. Unused credit, or credit that exceeds the annual cap, may be carried forward for 10 years.
Net metering of Solar Power systems in South Carolina
South Carolina has a net metering scheme that offers customers a 1:1 credit on their next bill for kwhs of solar generated power that is fed back into the grid. The good thing about net metering in South Carolina is that it is a 1:1 credit but the down side is that any excess kwh credits at the end of the year are forfeited to the utility without payment. As such South Carolina residents need to be careful to size systems so that the total production is not more than total consumption.
Renewable Portfolio standard in South Carolina
There is a renewable energy portfolio standard in South Carolina and because of this the utilities offer a standard price to purchase Recs form solar customers.