Water, water everywhere and nary a drop to drink. That basically sums up the situation with solar in Georgia.
Local Public Service Commissioner Lauren "Bubba" McDonald, Jr. put it best: "Georgia is the third best state for solar energy in the U.S., but ranks 35th in actual solar installs, even though the cost of panels has decreased 33 percent.” In fact, the state boasts the same solar potential as central Africa or India, with most parts of the state generating between 4.92 and 5.21 kilowatt-hours per square meter, per day.
Add all these factors up, and you have an untapped market opportunity. No surprise, then, that Georgia Solar Utilities company is backing the “Rural Georgia Economic Recovery and Solar Resource Act of 2013.” The new bill would create a unique financing model for solar, wherein third parties (like Georgia Solar Utilities) can submit proposals to the Public Service Commission for financing and aggregating solar.
The third party can pool the electricity from these solar installations and sell it back to the grid, while individual customers can offset a portion of their bills by receiving a pro-rata share of the monthly output from all the solar generating assets. This includes renters and other customers who can’t afford to own or install their own solar, due to Georgia’s prohibitions on PPAs and other third-party financing methods.
Some of the bill’s wonky details could really help the solar market in Georgia. For starters, the statute clears roadblocks like interconnection and grid access for generating assets, and the entire program is on an opt-in basis. Competitive bidding on construction and installation will create market incentives to help drive down soft costs. And, since PV and solar farms are covered under the statute, neighborhood homes in Atlanta could have solar on the roof while unused fields in the country can host 30-megawatt solar farms. If the sun is shining in either place, ratepayers in both places reap the benefits -- and this kind of geographical distribution helps decrease variability.
“The world has changed for the economics of solar in Georgia, but we’re stuck with 40-year-old laws that block us from taking advantage of it,” said Robert Green, CEO of Georgia Solar Utilities. “So we’re offering a conservative, no-brainer proposition: let a private company bear all the downside risk for investing in solar with no upward pressure on utility rates, and let ratepayers reap the upside of future cost savings as solar prices fall.”
It’s not all smooth sailing. Cost recovery, for example, is a dog-eared chapter in the solar naysayers’ handbook. The argument goes like this: solar imposes costs to the grid, such as wear-and-tear on distribution lines, which have operation and maintenance costs. Also, “cost-shifting” can occur as rates for non-solar-users rise as rates for solar-users fall.
The bill tactfully deals with this issue head-on by proposing a regulatory liability reserve for cost recovery and rate reduction. The third party pays the liability to the grid operator, and that money is then used to offset any unforeseen rate impacts from their solar projects. Any remaining money is reimbursed to solar subscribers as a rate-reduction dividend.
This strikes a good balance, but the devil is in the details. In addressing rates and compensation, solar advocates would be wise to keep a close eye on the Georgia docket to make sure that the full benefits of solar to grid operations (including reducing peak demand and preventing the need to build new plants at the margin) are made clear in the proceedings.
Hopefully, this statute will bring lots of solar on-line in the sunny state of Georgia, and help consumers develop more localized energy production. What’s more, it could serve as a model for deploying solar in other regulated states that have been resistant to retail deregulation and renewable portfolio standards.
Scott Thomasson, an energy consultant in Washington, D.C. who is familiar with the legislation, thinks the idea could catch on: “Many states still like their current regulated-monopoly models just fine, and they’re waiting to see what Georgia decides to do as a first-mover on solar. If Georgia adopts an approach like this, other states could easily replicate it, and we could see solar spreading like kudzu across the South.”
***Adam James is a Research Assistant for Energy Policy at the Center for American Progress and the Executive Director of the Clean Energy Leadership Institute. You can email him at firstname.lastname@example.org and follow him on twitter @adam_s_james.