Georgia Power and green energy advocates said a new state law enacted in 2015 would make it easier for people to begin harvesting sunshine to power their homes or businesses.
A year and a half later, you have to look really hard to find a solar project in Georgia launched by the Solar Power Free-Market Financing Act.
So far there are only a handful in the state, according to people in the industry. One of the biggest is in Macon, where the city government recently signed a 20-year contract for an Atlanta company, Cherry Street Energy, to provide solar power to its administrative building. The city of Atlanta is in the bidding process for solar projects for up to 28 buildings under the same law.
Homeowner projects — one of the law’s intended targets — are even harder to find.
Metro Atlanta is far behind many other cities in terms of the number of residential roof-top solar power systems, ranking 45th out of 50 metros, according to Buildingzoom.com, which tracks building permits across the nation.
“I knew it would be slow progress. I had hoped it would move faster,” said Steve O’Day, an Atlanta lawyer who helped write the act, which was passed in the state legislature and signed by Gov. Nathan Deal.
O’Day, of the firm Smith, Gambrell & Russell, expects more cities, non-profits and homeowners to begin using the law in the next year or two.
“It wasn’t a home run,” said Peter Marte, whose Atlanta company, Hannah Solar, is one of Georgia’s largest solar contractors. It has installed solar on retail stores, parking lots, warehouses and offices throughout the Southeast.
But the legislation hasn’t brought any new work, Marte said. His Georgia customers either wrote a check or got conventional financing, he said.
“We had actually ramped ourselves up” after the law was enacted last year, said Russell Seifert, founder of Creative Solar USA, a solar installation contractor based in Kennesaw. The anticipated surge in business never materialized.
Lately, Georgia has become one of the nation’s fastest growing locales for solar power, but most of that growth has been due to big, industrial-scale solar farms that Georgia Power proposed or state regulators pushed on the utility.
The 2015 law was aimed at the little guy: homeowners, small businesses, churches and other non-profits that might struggle to pay $15,000 or more up front for a solar power system.
Instead, under the law, a third-party company pays to install panels on the customer’s roof or land, and keeps ownership of the system. The company then sells solar power to the customer or collects lease payments under a long-term contract. Before the law, utilities like Georgia Power, which are state-regulated monopolies, argued that such arrangements violated their right to be the only power provider.
Even with the new rules, solar industry experts say growth of such projects in Georgia has been slowed by several factors. One is that electricity rates are already lower than in many states. Another is that Georgia has some of the lowest incentives to invest in solar projects.
“There are more attractive markets” in other states, Seifert said. Third-party solar companies have been much more successful in California, Arizona, South Carolina and other states that offer bigger up-front tax breaks and rebates, he said.
Homeowners in Georgia can only expect to reap about half as much in tax credits or other incentives — $7,963 in Georgia vs. $16,000 on average in other states — for a typical residential roof-top system, according to a study released last month by Consumer Energy Alliance, which compared 15 states’ solar incentive programs.
Georgia homeowners can only count on the federal tax credit for 30 percent of the project’s cost — which all qualifying solar investors can get — plus relatively small “net metering” payments when their solar units feed more power into the grid than they consume.
Georgia Power spokesman John Kraft said the company opposes bigger incentives. They haven’t been needed “to move Georgia into a national leadership position for solar,” he said.
“That’s always been a philosophical point that we don’t (use subsidies to) shift costs from the solar customer to the non-solar customer,” he said.
Instead, Georgia Power has mostly relied on industrial-scale projects, which produce cheaper solar power than rooftop projects.
Since 2011, the utility has added 1,500 megawatts of renewable energy, mostly from contracts with owners of solar, wind and biomass power projects. Another 1,600 megawatts is slated to come online by 2021.
Georgia Power itself is one of the largest solar power operators in the state, with solar farms on five military bases that can generate more than 150 megawatts — enough to power 150,000 homes when the sun is shining. (One megawatt is roughly enough to supply 1,000 homes, but solar and wind power units only produce power when the sun shines or the wind blows and usually operate below maximum capacity.)
Road to ‘energy freedom’
Last year’s bill-signing was “a landmark day for solar,” said Norrie McKenzie, Georgia Power’s vice president of renewable development. The state’s largest utility, with 2.4 million customers, said it supported the new law.
The law removed a “barrier to energy freedom,” allowing homeowners, churches, small businesses and others to lower their power bills, said Georgians for Solar Freedom, an advocacy group that sprung up to support the bill.
Georgia Power didn’t get into the “third-party” solar business. But when the law went into effect in July 2015, it launched a new unit to consult with interested homeowners and to sell them solar energy systems.
In the first year of the program, more than 800 customers called up Georgia Power to investigate solar power. Only five have bought solar installations, according to the company.
“It’s definitely meeting our goals in terms of educating our customers,” spokesman Kraft said.
Steven Prediletto, an Atlanta financial advisor, said he went to Georgia Power’s solar program website the day after Gov. Deal signed the law.
“I wanted to be an early adopter and to support the solar leasing industry,” said Prediletto, who drives a Tesla electric car. But he said Georgia Power’s website didn’t have many details. He didn’t find out much more when he called the company over the next few months, he said.
He and his wife still took advantage of the new law, however. They installed a $30,000 solar power system on their Brookhaven home, financed through a lease deal with Dividend Solar, a San Francisco firm.
“I’ve got tons of neighbors who are very interested,” he said. His power bills have gone down, but so far he has gotten only a few small credits on his monthly power bill for the times he produced more power than he used.
The low subsidies “have been a challenge” for little solar projects like his, he said. “I think that’s why (solar) has been rolling out slower in Georgia.”
According to Buildingzoom.com, which tracks building permits across the nation, metro Atlanta has about 1.1 solar projects for every 10,000 residents, vs. a national average of 39 per 10,000. Other Southeastern cities such as Orlando, Charlotte and Birmingham are well ahead of 45th-place Atlanta, ranking 13th, 22nd and 33rd out of 50 metro areas, with 62.2, 36.8 and 3.6 solar projects per 10,000 residents, respectively.
‘Math doesn’t quite work’
Michael Chanin, of Atlanta, launched Cherry Street Energy last year to provide third-solar power projects under the 2015 law.
But residential projects are less attractive, he said, because their small scale, plus utilities’ relatively low residential power rates, leave little room for investors to make a profit.
“The math doesn’t quite work on the residential side,” he said.
Instead, he’s targeting cities, universities, private schools, hospitals and other non-profit organizations that might want him to install mid-sized projects under the new law’s provisions.
Those types of organizations can’t benefit from a federal income tax credit for 30 percent of the cost of a solar development. His company instead makes use of the tax credit, since it owns the solar project, and passes on some of the savings to non-profit customers through their long-term power contracts.
It’s “the perfect market to go after,” he said.
So far, he’s landed the $500,000 Macon project, and hopes he’s close on a few others. In August, Cherry Street Energy began work on the first phase in Macon, which will eventually provide about 20 percent of the Macon-Bibb County government center’s electricity.