The Southeast is putting itself on the map as an important cleantech market to watch.

Recent developments in the Carolinas show that clean energy markets there are growing rapidly, albeit with some friction as stakeholders try to establish new business and regulatory models to support the industry. How these markets grow could inform how the clean energy industry expands in other parts of the United States, too.

Duke proposes to expand solar in South Carolina

Duke Energy proposed several solar programs to the Public Service Commission of South Carolina this week for a total of 110 megawatts of solar power by 2021. Less than 2 megawatts of solar capacity is connected to Duke Energy in South Carolina today.

Passage of the Distributed Energy Resource Program Act, a landmark piece of legislation signed into law last year, opened the door for the expansion of solar in South Carolina. Duke is now taking a comprehensive approach to solar investment that includes 50 megawatts of utility-scale solar, and another 60 megawatts of solar via incentive programs for customer-sited distributed generation and a community solar program.

“This is a major win for the South Carolina solar market,” said Cory Honeyman, GTM research analyst.

A closer look at the proposal reveals a few noteworthy details, he added. First, the PPA offering for utility-scale solar is only 10 years, which is about half the length of contract offers made by most other utilities in the U.S.

Also, while the proposal could be perceived as a way for Duke to get into utility-owned distributed generation in a big way, it specifically refers to building projects between 1 megawatt and 10 megawatts. That means Duke is seeking to own commercial solar projects, and would not be competing with the leading residential solar installers, said Honeyman.

On the residential side, customers with projects smaller than 1 megawatt could earn rebates of about $5,000 for a typical rooftop installation under the plan. They will also benefit from net metering at the retail rate for the next 10 years, a rule that was established in a settlement agreement between energy stakeholders in South Carolina last year.

South Carolina Gas & Electric (SCG&E), meanwhile, appears to be backpedaling on that agreement with a new proposal for a buy-all, sell-all arrangement, which is akin to a feed-in tariff. Very few states in the U.S. have adopted this policy mechanism to date.

The solar advocacy group Tell Utilities Solar Won't Be Killed (TUSK) said a feed-in tariff raises tax concerns. It also takes away the ability for consumers to use the energy they produce.

“Consumers are forced to sell all of the energy generated on their roofs to the utility, get taxed on the sales, and then buy any power they need from the monopoly,” according to a statement from TUSK. “SCE&G's scheme would take South Carolina in the opposite direction of what the landmark solar legislation signed by Governor Nikki Haley intended.” 

Recent announcements from both SCG&E and Duke reflect the difficult relationships utilities have with distributed generation, where there are also a lot of other competing interests at play, said Honeyman.

“[South Carolina] is a state market where at this point there’s not a lot of installation activity, but it’s now very much at the forefront of innovating ways in which a utility [can] play a role in scaling up demand for solar, both from a centralized and customer-sited perspective,” he said.

North Carolina solar market hits $1.6 billion

While South Carolina is seeing a lot of foundational regulatory and legislative activity around clean energy, North Carolina is seeing its clean energy industry achieve double-digit growth.

Employment in North Carolina’s cleantech industry has grown by approximately 25 percent since 2012, according to the 2014 North Carolina Clean Energy Industry Census by the N.C. Sustainable Energy Association (NCSEA). The industry now includes 22,995 full-time employees and more than 1,200 firms conducting clean-energy-related business.

Annual revenues from clean energy activities have increased 15 percent since 2012, reaching $4.8 billion in gross revenues in 2014, up $1.2 billion from 2013.

The building efficiency sector is the largest in the state in terms of employment, the number of firms and revenue. But solar isn't far behind. While building efficiency was the top earner in 2014 with $1.9 billion in annual revenue, solar came close with annual earning of $1.6 billion.

According to the latest tally from GTM Research, North Carolina was the second-largest solar market in terms of new capacity added in 2014 and the fourth-largest solar market overall. Just a few years ago, North Carolina was among the bottom five U.S. states in terms of PV capacity.

“When I joined NCSEA as executive director in 2005, there was no real pathway for investors into our market," said NCSEA's Ivan Urlaub. "But through incremental steps and attainable goals, we have successfully accelerated the rate of clean energy adoption and acceptance, and North Carolina continues to progress as the region and nation’s clean energy hub, competing with the likes of California, Texas, New York and Massachusetts."

Growth has stemmed from the state’s renewable energy and energy efficiency portfolio standard and renewable energy investment tax credit, which is currently 35 percent of the installed system cost, up to 50 percent of the consumer’s tax liability in a given year.

State legislators are now debating whether or not to extend the tax credit, which is set to expire at the end of 2015. Utilities, regulators and interest groups are also trying to create a more comprehensive set of rules around distributed generation in the state though the regulatory process.

According to Urlaub, Duke Energy has indicated that it may file a motion to modify the terms of net metering this fall or winter. Customer groups, meanwhile, are looking to lift some of the technical and financial restrictions on distributed generation in North Carolina, including re-authorizing PACE loans, improving customer access to their energy usage data and lifting the ban on third-party sales arrangements.