Georgia’s solar potential faces new test

Georgia’s potential to expand its use of solar energy faces a key test this week.

A proposal to create a free market for solar energy and allow more companies to provide sun power to residents and businesses will get its first hearing at a House committee meeting Wednesday afternoon. Consumer advocates, utility representatives, members of the solar industry and an odd alliance of environmentalists and conservatives are expected to fill the room.

The committee will not vote on the legislation, House Bill 657, but the meeting is significant for Georgia, which gets less than 2 percent of its electricity from renewable fuels. While the state has dramatically shifted away from using coal in favor of natural gas and nuclear power, its electric utilities, particularly Georgia Power, are under pressure to increase their energy output from solar and other renewable fuels.

The falling price of solar power has made it more cost-competitive with traditional sources of electricity. Consumers and environmentalists are clamoring for cleaner, cheaper electricity, and a strong movement is forming to free residents and businesses from getting all their electricity from a regulated monopoly.

“We want to see a free market and basic economics: supply, demand, cost. It’s very simple. It’s what other states are doing. It doesn’t involve any special treatment,” said Lee Peterson, an Atlanta-based tax attorney for CohnReznick, a national firm that specializes in renewable-energy finance.

A combination of state laws and policies has created a tightly regulated electric utility market in Georgia where electric companies such as Georgia Power are required to provide power to all customers in their designated territory in exchange for recovering the cost of building power plants and transmission lines. Georgia Power wants to preserve this structure while others want to change the model to give more solar companies a chance to do business here.

Georgia installed 11 megawatts of solar electric capacity in 2012, ranking it 22nd nationally, according to the Solar Energy Industries Association, a national trade group. There is enough solar energy installed in the state to power 2,900 homes, according to SEIA data.

By contrast, California installed 438 megawatts of solar capacity during the second quarter of this year. Arizona installed 90 megawatts and New Jersey 75 megawatts during that time. All three states are known for their aggressive renewable energy policies, and California and New Jersey have a different regulatory structure that creates a competitive market for all energy providers. California and Arizona benefit from having more direct sunlight, Georgia Power says.

Whether Georgia’s nascent solar industry can grow affects the state’s economic development. Home-based solar companies frequently say they must do business elsewhere because other states have better tax incentives or aggressive policies for renewable energy. Outside companies say they are locked out of making significant deals here because policies favor a traditional, regulated structure for electric companies.

“The economics of solar are improving day by day,” said Mark Bell, the president of Atlanta-based Empower Energy Technology and chairman of the Georgia Solar Energy Association. “Our goal is to make sure we don’t have any additional market impediments. … I think those could really hamper the growth of solar in the state.”

Non-energy industries looking to move their business to Georgia may be attracted to the state’s low price of electricity per kilowatt hour, but increased environmental regulations on coal combined with other fees continue to make utility bills rise. Solar power is best used during peak times of the day and can help lower electricity bills.

“The state needs to be moving forward,” said state Rep. Rusty Kidd, an independent from Milledgeville and the bill’s sponsor. “I don’t look at it like a Democrat-Republican issue. It’s just an issue that’s good for the state.”

Georgia Power opposes HB 657 and any similar proposal, company spokesman John Kraft said. The utility leans on state law that prevents anyone other than a utility from selling electricity. That essentially protects the customer base of electricity providers.

The state’s efforts to add more solar to the grid have been sporadic and slow largely because of policies that renewable energy and consumer advocates say restrict the fuel’s use. Efforts at the Legislature to change state policy to make it easier for companies to build and sell sun power in the past have been quickly squashed.

Kraft at Georgia Power said some states “raced to change laws and mandate renewables at any cost,” and that consumers are benefiting from Georgia waiting for solar to become more economical.

The Georgia Public Service Commission, largely because of the efforts of one or two regulators at a time, has ordered Georgia Power to expand its solar output over the years. The utility says it now has “one of the fastest-growing solar programs in the nation.”

“We will soon have one of the largest deployments of utility-scale solar and distributed generation covering rooftops and idle land all across the state, all done without putting upward pressure on rates,” Kraft said.

The utility also is taking steps to maintain its control of that growth. One way is through a proposed tariff that would tack on an additional monthly charge of $22 for residential solar systems that aren’t a part of Georgia Power’s solar programs. According to the utility, the tariff covers the cost of Georgia Power supplying backup electricity when the solar panels aren’t in use, such as during rainy days or when they require maintenance, as all power units do.

“It will prevent customers without solar from subsidizing customers with solar,” Kraft said.

The tariff, which will not be voted on until later this year, has received significant opposition. Two PSC staff members said in a recent filing that the tariff would be a “significant deterrent for residential customers to actively engage in renewable energy alternatives and also deter their attempts to reduce their electric bills.”

Lawmakers, conservatives and environmental advocates have praised the PSC’s efforts to add solar to the grid but also point out some unintended tensions.

A July decision to order Georgia Power to add an additional 525 megawatts of solar capacity may take away some of the pressure on the Legislature to push forward immediately with HB 657 or other renewable-energy policies. Some lawmakers also are concerned about blurring the lines: It is the Legislature’s job to set energy policy, for example. The PSC implements it.

“The policy in this state has to be a partnership between the General Assembly and the governor; that’s where the policy for energy in this state has to come from,” said Rep. Don Parsons, R-Marietta, chairman of the House Energy, Utilities and Telecommunications Committee.

The fate of HB 657 and any other renewable energy bills is unclear going into an election year. Lawmakers likely will focus on other hot-button issues as well as their own elections.

That, however, hasn’t kept the lobbying dollars from flowing. Georgia Power’s political action committee has dispensed more than $22,000 in campaign donations since the legislation was filed in March. Some solar advocates have spent money taking House members to lunch or dinner to discuss solar issues or HB 657, according to reports filed with the Georgia Government Transparency and Campaign Finance Commission, formerly known as the state ethics commission.

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