Solar industry challenges Georgia Power

This spring, the state’s small but growing solar industry offered up a full-throated rebuttal to the Southern Co.’s longtime mantra, blasting it and its Georgia Power utility for misleading Georgia and national policymakers about the feasibility of solar energy in the Southeast.

“We directly challenge for the first time the accuracy of the company’s information about the viability of solar power as a renewable energy source in Georgia,” James Marlow and Lee Peterson said on behalf of the Georgia Solar Energy Association in first-time testimony at the state Public Service Commission.

Marlow, a solar businessman, and Peterson, an attorney, said Georgia Power and Southern Co. have downplayed evidence -- including U.S. Department of Energy data -- that shows the Southeast, Georgia and especially South Georgia are second only to the desert Southwest in solar potential.

They also said the utilities had exaggerated solar energy’s admittedly higher price by comparing it with the kinds of 24-7 power generators solar energy will never replace.

Georgia Power is aware of the potential for solar power here, they said. The issue, they said, is whether solar “deployment will be controlled and developed solely by the company.”

Georgia Power denies misrepresenting solar prospects. “The company is supportive of the development of solar [photovoltaic] and has gone to great lengths to promote and disseminate accurate information regarding solar PV,” company resource director Jeff Burleson said in testimony.

The solar association's push may be the start of a showdown between an upstart industry and a utility giant that could be either its biggest customer or biggest competitor: Georgia Power and Southern Co. are both beginning to invest in solar energy on their own.

The solar industry was testifying to regulators about a Georgia Power plan that seems to contradict the utility's past claims about solar energy.

After years of calling the Southeast too cloudy for viable solar energy, Georgia Power wants to build 2.5 megawatts of solar facilities in the state. The amount is tiny overall.  Georgia Power has 16,000 megawatts of generation in the state. But 2.5 megawatts is as much solar capacity as the utility buys now from the private solar market.

The company also wants to fund its solar projects by rolling the cost of their power -- roughly 17 cents per kilowatt hour -- into the regular rates paid by its customers.

That's another about-face.

For years, Georgia Power and the PSC have held that rank-and-file ratepayers shouldn’t pay for boutique energy products like solar power unless they agree to do so.  They said the price was too high.

Because of that, the utility buys only as much solar power as it has customers willing to pay $5 extra a month to get it. The company only pays vendors the 17 cents per kilowatt price for the first 100 kilowatt hours. The limits keep the utility’s solar buying small.

The solar industry isn’t opposing Georgia Power’s plan. “We’re happy for them to go out and build 2.5 megawatts of solar,” GSEA president Walter Brown said. “We can even provide them with cost data.”

But the industry wants the same financial treatment Georgia Power is proposing for itself. It wants the PSC to make Georgia Power buy a matching 2.5 megawatts of solar energy from the private market and pay for it through ordinary electric rates.

Given the size of Georgia Power’s customer base, the cost of putting 5 megawatts of solar into electric rates would hike the average residential customer’s bill 3 cents per month, according to both John Gornall, an attorney working with the solar association, and Georgia Power, when asked to sign off on his figure.

Georgia Power opposes the solar proposal.

In testimony Thursday, the company’s Burleson called it “nothing more than an attempt by GSEA to increase the level of solar procured by the company, increasing the cost to customers without providing additional benefits.”

The utility said its current solar purchase program ensures that it buys only as much as customers want.

“Unlike Georgia Power’s proposal, customers will not benefit from private developers installing additional solar projects in Georgia in the same way they will benefit by Georgia Power gaining experience with this technology,” Burleson said.

For at least the past several years, Southern Co. and Georgia Power have listed the growth of solar power among business risks disclosed to shareholders in filings with the Securities and Exchange Commission. The potential for more decentralized power generation conflicts with the company's business model and could shrink market share, the filings say.

The utilities began their own solar investment early this year, when Southern Co. announced a partnership with Ted Turner in a new utility-scale solar farm out west.

Georgia Power’s proposed projects are pilots: Burleson said the company wants to get a feel for the technology's economics.

“The reality is that solar is not cost effective during most hours of the year,” he said. “It’s just hard to make the economics work.”

Solar entrepreneurs, meanwhile, have been multiplying in Georgia, drawn by rising demand, dipping prices for solar panels and government incentives to help customers buy solar products.

Interest is so high that one $4.5 million, stimulus-funded matching grant program was tapped out 10 months after the Georgia Environmental Facilities Authority began taking applications last year.

“Never in my wildest dreams did I think my timing would be this good,” said Peter Marte, who got into the business three years ago and is now CEO of Atlanta-based Hannah Solar. “Because of the incentive dollars, it’s just gone from a crawl to a sprint, and now it’s going into a full-on run.”

But state policies, limits and laws are standing in the market's way, he said, in part because of the discouraging stance of Georgia Power.

Developers like Marte market solar installations to businesses as a kind of long-term hedge against rising electric bills. They make their money selling and installing solar equipment.

They can’t sell power. That point was driven home earlier this year, when a North Georgia private school contracted with a vendor for solar panels on the school's roof.

Unable to use tax credits, the nonprofit Rabun Gap Nacoochee School agreed to pay for the system over time by paying the vendor for its electric output.

The result was a cease and desist letter from Georgia Power, which said the deal violated monopoly rights set up in the state’s 1973 territorial act.

Georgia Power says it was protecting a law that protects consumers by ensuring that monopoly utilities are regulated.

“Commission regulation ensures that rates are fair and just, that suppliers have adequate plans to meet customers’ needs both near and long term, and that service is reliable and safe,” company spokeswoman Christy Ihrig said.

Private solar advocates say they don’t believe the territorial act applies to small and self-contained projects like the Rabun Gap one and that they intend to get that clarified by the Legislature.

“The territorial act is preventing the classic business model where the solar owners sell the power on the rooftop to the building owner,” the GSEA’s Brown said. "We understand the rationale for the act, but we don’t think it was intended for this.”

While private solar vendors can’t sell power to customers, customers can sell it to utilities. Georgia Power pays 17 cents per kilowatt hour up to 100 kwh.

Because the company buys only enough solar energy as its premium-paying customers demand, its purchases are limited. At the solar association’s urging, the PSC has raised Georgia Power’s total solar purchase caps from 500 kilowatts last year to 1.5 megawatts and then to 2.5 megawatts: Each time, the new cap was filled immediately.

Georgia solar entrepreneurs say the caps and other state limits on solar power are sending them out of state for business, particularly to states that require utilities to buy more nontraditional power than Georgia does.

“Georgia is really an aberration,” Marte said, adding that Hartsfield-Jackson International Airport helps the solar industry as much as Georgia Power does.

"We've got airplanes," he said. "We can go to New  Jersey or Massachusetts or Ohio."