Southern Co.’s solar efforts draw heat from skeptics

Once billed as the odd couple when it came to energy policy, Ted Turner and a subsidiary of Southern Co. have been making headlines by investing in large solar projects over the past few years.

In this case, the anomaly is not that Turner, a longtime environmentalist and philanthropist, and Southern, owner of the nation’s three largest greenhouse gas-contributing coal plants, are working together. It’s that all but one of these solar projects are in the Southwest, far away from Georgia and the Southeast where Atlanta-based Southern’s utilities operate.

This means Georgians won’t benefit directly from Southern’s investments in solar, a non-polluting source of electricity that is fast becoming cost-competitive with traditional sources of fuel such as coal and natural gas. Southern-owned Georgia Power has slowly shifted away from using coal to provide electricity, but environmentalists say the use of cleaner, renewable sources of fuel such as solar remain a long way off in this state because of legislative and regulatory boundaries.

Southern and Turner say their reason for teaming up in 2010 was simple: Both have a common goal to explore and develop new renewable energy projects.

“Turner Renewable Energy wants solar energy to be a meaningful component of the nation’s power sources, and to do that, we believe you have to work with the utilities. Southern has been a wonderful partner to us because of the expertise and experience they bring to power projects and their focus on developing all the energy resources our nation has to offer,” said Taylor Glover, president and chief executive of Turner Enterprises, in a statement.

The partnership focuses on buying large so-called utility-scale projects that other companies have built. These large solar farms typically sell electricity directly to a utility, in contrast to a homeowner or small business putting a few solar panels on a roof and getting the electricity that way.

There are more opportunities to invest in these large solar farms in the Southwest, Glover said.

Southern Co. executives say higher electricity prices, tax breaks and other subsidies have created a favorable environment for solar energy to flourish in the Southwest. The region also receives nearly twice as much sunlight as other parts of the country.

“So when we first thought about getting some experience in the renewable sector, we went to where the best resources are, and that’s the desert Southwest,” said Tom Fanning, Southern Co.’s chairman and chief executive officer.

The Southwest projects — a total of 70 megawatts in Nevada and New Mexico — are owned by Southern Co.’s wholesale energy unit, Southern Power, as part of a partnership with Ted Turner’s Turner Renewable Energy.

Unlike Georgia Power and other regulated utilities, the Southern Power-Turner partnership sells that electricity in the competitive wholesale energy market. The partnership recently bought a smaller, 2.5 megawatt project in North Carolina, a state that mandates the use of renewable fuels.

One megawatt of solar power can provide enough electricity for a large department store.

Skeptics and hurdles

The chief reason Southern has given for not investing more heavily in solar in Georgia and the Southeast is because the region’s electricity prices are low. Developing solar made little business sense because it was too expensive to compete with traditional forms of electricity.

Georgia Power until recently fought off pressure from environmental groups to add more solar electricity to its power grid, saying it would be too expensive for customers. Now the utility wants to add 210 MW of solar to its energy mix, saying improvements in technology, among other things, have led the renewable fuel to drop in price.

Critics say Southern’s moves are purely political. They argue that as long as one unit of Southern — one of the largest electricity providers in the nation — adds renewable fuels to its energy portfolio, those efforts can offset the company’s image that it gets the majority of its electricity from coal, even though that is no longer the case.

Southern’s image also is bolstered by its work with Turner, a philanthropist who helped launch the eco-cartoon series, Captain Planet and the Planeteers, and then helped finance a foundation by the same name.

“The fact that they are partnering, especially in the West, with Ted Turner probably helps alleviate some of the pressure that they would be feeling from Ted Turner and his folks in Georgia,” said Colleen Kiernan, director of the Sierra Club’s Georgia chapter.

In Georgia and most of the Southeast, coal used to be king. Southern’s utilities, including Georgia Power, gradually have reduced the amount of electricity they get from coal from 70 percent five years ago to 47 percent now. Still, two of Georgia Power’s coal-fired plants — Plant Scherer in Juliette and Plant Bowen, just west of Cartersville — are the nation’s top two contributors to global greenhouse gases in the United States, according to U.S. Environmental Protection Agency reports for 2010. Southern’s Plant Miller in Alabama is the third-largest contributor.

The company has said the large amounts of emissions are because these three plants are among the largest electricity generators in the nation.

“Coal has a lot more negative (impact) associated with it than folks in the past have realized,” said Lee Peterson, an Atlanta-based tax attorney for CohnReznick, a national firm that specializes in renewable energy finance.

“Southern, whether it wants to or not, has to do more renewables to satisfy its shareholder base,” Peterson said. “If you have to do renewables, the smart play is to do it somewhere else because you get to keep (the coal units) running in Georgia.”

Competition thwarted

The state’s legislative and regulatory climates have discouraged aggressive solar initiatives.

For example, some states let private solar companies lease panels to a homeowner or business and then sell that electricity at a fixed rate. In Georgia, Georgia Power and the state’s cooperative utilities argue that a private business that does that would be illegally operating as a utility.

Efforts to clarify this state law, developed in the 1970s to give utilities exclusive territorial boundaries, were thwarted by Georgia Power and the cooperative utilities during the 2012 legislative session. The bill’s sponsor, Sen. Buddy Carter, R-Pooler, hasn’t decided whether he will reintroduce the bill in 2013.

“We’re not there yet, we know it. But at the same time we’re encouraged by what Georgia Power has done,” Carter said, referring to the utility’s plan to add 210 MW of solar to its power grid.

Secondly, the state’s Public Service Commission must sign off on Georgia Power’s fuel mix, approving how much electricity the utility gets from coal, natural gas, nuclear and renewable energy. Regulators have been reluctant to mandate any use of solar energy, primarily because traditional fuels have been cheaper. What’s more, solar is an intermittent resource.

It’s unclear what’s next for Georgia Power or its parent. Southern wouldn’t comment on whether it would continue to buy more solar projects or give a target of how much solar it wants to add to its energy portfolio.

“Southern Power has a conservative business model,” company spokesman Steve Higginbottom said. “The company invests only in generation projects for which a substantial portion of the capacity is dedicated through long-term contracts with creditworthy customers.”

In Georgia, solar companies can build and install large and small solar systems, as long as they sell the electricity to Georgia Power. The utility has no plans to build or own any solar systems of its own. For now, it will continue to buy sun power from other companies.

“We think (that) is the best way to develop the business here in Georgia,” said Kevin Greene, an attorney for Georgia Power, at a recent Georgia Public Service Commission meeting.

One newly formed company, Georgia Solar Utilities is taking its request to build solar farms and then compete directly with Georgia Power to the state legislature after the PSC said it didn’t have jurisdiction to even consider the company’s request.

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